Ownership structure and minority expropriation in non-listed firms: The case for Multiple Large Shareholders

This paper investigates minority expropriation problems in closely-held corporations, where control is shared by a small number of blockholders. Using a large sample of Spanish firms for the years 1996 through 2000, we find that firms whose characteristics make them more vulnerable to minority expropriation tend to have controlling groups with stakes that are far removed from the 50% threshold, where expropriation is higher. However, because of adjustment costs, firms do not achieve an optimal ownership structure. Performance improves when the controlling group's ownership stake is higher and, for a given ownership stake, when the number of group members increases.