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The power of a single large shareholder in Iberianfirms: friend or for?
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Agency costs as a result of the separation of ownership and control within a
firm can be a hurdle to the performance and profitability. It has been
suggested that these costs can be reduced by the presence of a single large
shareholder monitoring management and their decisions. On the contrary it
has also been argued that a large shareholder negatively affects firm
performance by deriving personal benefits from the firm and making suboptimal
decisions. This research aims to investigate the relationship between
the profitability of a firm and the level to which the shares of that firm are
concentrated into a single shareholder. A random effects GLS panel
regression is used to determine the effect of a large shareholder being
present in Spanish and Portuguese firms by studying firms listed on these
bourses over the period 2005 – 2014. The results show that a large
shareholder has a negative influence in the Portuguese market, and no
statistically significant effect in the Spanish market.