Authors :
Dr. Yoser Gadhoum
Volume/Issue :
Volume 6 - 2021, Issue 11 - November
Google Scholar :
http://bitly.ws/gu88
Scribd :
https://bit.ly/3t34DOp
DOI :
https://doi.org/10.5281/zenodo.6348189
Abstract :
Financial theory takes it for given that the
ownership structure is diffused (Berles and Means, 1932).
Authors such as Gadhoum (1999, 2015) evidenced that
this is may be true only in America. In Canada, like many
other countries, the ownership is highly concentrated
mainly in the hands of the two largest owners, who are
most usually wealthy families. They used pyramidal
structure, cross-holdings, and multiple voting rights as
the most practical ways to attain their goals and to
entrench themselves. The minority holders cannot afford
financially and logistically to create a sustainable
coalition to tackle the pressure exerted by the blockholders on the decision-making like dividend distribution.
The aim of this paper is to show that large shareholders
polarize indeed the control of the company to their
interest. Cash payout was used in this paper as a tool of
usurpation of the small owners. Other mechanisms used
are not yet well studied, such as the benefits they get from
the internal capital market they create in their
conglomerates (like the keiretsu in Japan) and the tax
shield they use within their puzzling pyramidal structure.
The question that arises is how the capital market
regulations don't contain this situation to protect the
minority shareholders and monitor capital markets'
efficiency for a more robust economy. Is it a question of
politics resulting from lobbying? Further research should
address this issue.
Keywords :
Large shareholders, Minority Owners, Expropriation, Polarization of Voting Rights, Entrenchment.
Financial theory takes it for given that the
ownership structure is diffused (Berles and Means, 1932).
Authors such as Gadhoum (1999, 2015) evidenced that
this is may be true only in America. In Canada, like many
other countries, the ownership is highly concentrated
mainly in the hands of the two largest owners, who are
most usually wealthy families. They used pyramidal
structure, cross-holdings, and multiple voting rights as
the most practical ways to attain their goals and to
entrench themselves. The minority holders cannot afford
financially and logistically to create a sustainable
coalition to tackle the pressure exerted by the blockholders on the decision-making like dividend distribution.
The aim of this paper is to show that large shareholders
polarize indeed the control of the company to their
interest. Cash payout was used in this paper as a tool of
usurpation of the small owners. Other mechanisms used
are not yet well studied, such as the benefits they get from
the internal capital market they create in their
conglomerates (like the keiretsu in Japan) and the tax
shield they use within their puzzling pyramidal structure.
The question that arises is how the capital market
regulations don't contain this situation to protect the
minority shareholders and monitor capital markets'
efficiency for a more robust economy. Is it a question of
politics resulting from lobbying? Further research should
address this issue.
Keywords :
Large shareholders, Minority Owners, Expropriation, Polarization of Voting Rights, Entrenchment.
