Is the relation between non-controlling interests and parent companies misleading?
Autor(a) principal: | |
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Data de Publicação: | 2020 |
Outros Autores: | , , |
Tipo de documento: | Artigo |
Idioma: | eng |
Título da fonte: | Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) |
Texto Completo: | http://hdl.handle.net/10071/20358 |
Resumo: | This article investigates whether different levels of investor protection affect the equity market’s valuation of non-controlling interests (NCIs) in a consolidated corporate entity. Using a set of publicly listed European firms, our findings suggest a positive (negative) association of NCIs with parent companies’ share prices in countries with low (high) levels of investor protection. We interpret the findings as evidence that when non-controlling investors are not well-protected, parent companies have an opportunity to extract rents from non-controlling owners, leading to a positive valuation of NCIs’ equity. However, in countries where non-controlling investors are well-protected, parent companies are not able to extract rents but still must monitor and govern the related subsidiary; thus, NCIs become a net cost, and the relation inverts. |
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Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) |
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Is the relation between non-controlling interests and parent companies misleading?Institutional characteristicsInvestor protectionLegal originNon-controlling interestsParent companiesValue releThis article investigates whether different levels of investor protection affect the equity market’s valuation of non-controlling interests (NCIs) in a consolidated corporate entity. Using a set of publicly listed European firms, our findings suggest a positive (negative) association of NCIs with parent companies’ share prices in countries with low (high) levels of investor protection. We interpret the findings as evidence that when non-controlling investors are not well-protected, parent companies have an opportunity to extract rents from non-controlling owners, leading to a positive valuation of NCIs’ equity. However, in countries where non-controlling investors are well-protected, parent companies are not able to extract rents but still must monitor and govern the related subsidiary; thus, NCIs become a net cost, and the relation inverts.SAGE Publications2020-04-15T15:35:39Z2021-01-01T00:00:00Z20212021-06-04T14:22:38Zinfo:eu-repo/semantics/publishedVersioninfo:eu-repo/semantics/articleapplication/pdfhttp://hdl.handle.net/10071/20358eng0312-896210.1177/0312896219896388Lopes, A. I.Lourenço, I.Soliman, M. T.Branco, M.info:eu-repo/semantics/openAccessreponame:Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)instname:Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informaçãoinstacron:RCAAP2023-11-09T17:39:53Zoai:repositorio.iscte-iul.pt:10071/20358Portal AgregadorONGhttps://www.rcaap.pt/oai/openaireopendoar:71602024-03-19T22:18:24.508096Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) - Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informaçãofalse |
dc.title.none.fl_str_mv |
Is the relation between non-controlling interests and parent companies misleading? |
title |
Is the relation between non-controlling interests and parent companies misleading? |
spellingShingle |
Is the relation between non-controlling interests and parent companies misleading? Lopes, A. I. Institutional characteristics Investor protection Legal origin Non-controlling interests Parent companies Value rele |
title_short |
Is the relation between non-controlling interests and parent companies misleading? |
title_full |
Is the relation between non-controlling interests and parent companies misleading? |
title_fullStr |
Is the relation between non-controlling interests and parent companies misleading? |
title_full_unstemmed |
Is the relation between non-controlling interests and parent companies misleading? |
title_sort |
Is the relation between non-controlling interests and parent companies misleading? |
author |
Lopes, A. I. |
author_facet |
Lopes, A. I. Lourenço, I. Soliman, M. T. Branco, M. |
author_role |
author |
author2 |
Lourenço, I. Soliman, M. T. Branco, M. |
author2_role |
author author author |
dc.contributor.author.fl_str_mv |
Lopes, A. I. Lourenço, I. Soliman, M. T. Branco, M. |
dc.subject.por.fl_str_mv |
Institutional characteristics Investor protection Legal origin Non-controlling interests Parent companies Value rele |
topic |
Institutional characteristics Investor protection Legal origin Non-controlling interests Parent companies Value rele |
description |
This article investigates whether different levels of investor protection affect the equity market’s valuation of non-controlling interests (NCIs) in a consolidated corporate entity. Using a set of publicly listed European firms, our findings suggest a positive (negative) association of NCIs with parent companies’ share prices in countries with low (high) levels of investor protection. We interpret the findings as evidence that when non-controlling investors are not well-protected, parent companies have an opportunity to extract rents from non-controlling owners, leading to a positive valuation of NCIs’ equity. However, in countries where non-controlling investors are well-protected, parent companies are not able to extract rents but still must monitor and govern the related subsidiary; thus, NCIs become a net cost, and the relation inverts. |
publishDate |
2020 |
dc.date.none.fl_str_mv |
2020-04-15T15:35:39Z 2021-01-01T00:00:00Z 2021 2021-06-04T14:22:38Z |
dc.type.status.fl_str_mv |
info:eu-repo/semantics/publishedVersion |
dc.type.driver.fl_str_mv |
info:eu-repo/semantics/article |
format |
article |
status_str |
publishedVersion |
dc.identifier.uri.fl_str_mv |
http://hdl.handle.net/10071/20358 |
url |
http://hdl.handle.net/10071/20358 |
dc.language.iso.fl_str_mv |
eng |
language |
eng |
dc.relation.none.fl_str_mv |
0312-8962 10.1177/0312896219896388 |
dc.rights.driver.fl_str_mv |
info:eu-repo/semantics/openAccess |
eu_rights_str_mv |
openAccess |
dc.format.none.fl_str_mv |
application/pdf |
dc.publisher.none.fl_str_mv |
SAGE Publications |
publisher.none.fl_str_mv |
SAGE Publications |
dc.source.none.fl_str_mv |
reponame:Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) instname:Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informação instacron:RCAAP |
instname_str |
Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informação |
instacron_str |
RCAAP |
institution |
RCAAP |
reponame_str |
Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) |
collection |
Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) |
repository.name.fl_str_mv |
Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) - Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informação |
repository.mail.fl_str_mv |
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1799134743184277504 |