The Impact of Ownership Concentration on M&A Stock Market Performance: A Study of Acquiring Swedish Public Companies

Abstract

This paper estimates the effects of concentrated ownership of Swedish public companies prior, at and after the announcement of an acquisition. Exploiting the available access to detailed information regarding ownership and control structures in Swedish public companies, we are able to separate voting rights from cash flow rights to estimate ownership concentration. Using an event study, we analyse a sample of 249 completed transactions in 2017. We control for concentration of ownership, dual-class shares, size, leverage, relative P/E, payment method and cross border effects. Our findings show that voting rights of the largest shareholder in the range of 20% - 50% have significantly positive effects on firm performance. Whereas the use of dual-class shares is found to have a significant negative effect.