Multiple large shareholders’ relations with the largest shareholder and company’s value: a study of Russian public companies

Abstract

The goal of the current research is to identify, whether there are companies with large shareholders related to the largest shareholder (called related shareholders) among Russian public companies with dual-class shares and to understand how their presence is connected to the value of the firm. In order to achieve this goal, it was necessary to understand, whether market is more sensitive to the simple fact of the presence of related shareholders, or to the concentration of ownership and control in hands of the related shareholders, or to the presence of directors, closely connected to such related shareholders. The main findings of the research provide evidence, that companies with higher share in capital, held by related large shareholders will have higher market value in comparison to the companies with lower share in capital held by such shareholders. The share of directors, connected to the related shareholders, turned out to be positively related to the market value of the firm. On the contrary, the simple fact of related shareholders’ presence and of related directors’ presence in the company haven’t revealed any significant relationship with the market value of the firm. The positive nature of relationship with market value of the firm is caused by peculiarities of institutional and economic environment of Russia.