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Ownership concentration among entrepreneurial firms: The growth-control trade-off

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  • Lai, Shaojie
  • Liang, Hongyan
  • Liu, Zilong
  • Pu, Xiaoling
  • Zhang, Jianing

Abstract

There is much variation in ownership concentration among entrepreneurial firms cross-sectionally and over time. Growth potential, risk-sharing, and demand for external capital seem to be the main reasons behind the choice of low ownership concentration, and firms with diluted ownership show strong growth. After controlling for the firm fixed effects or the sample selection bias, we do not find any evidence suggesting a link between ownership concentration and other dimensions of firm performance. Therefore, the trade-off between growth aspiration and retention of dominant control of the firms may be critical in ownership structure decisions among entrepreneurial firms.

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  • Lai, Shaojie & Liang, Hongyan & Liu, Zilong & Pu, Xiaoling & Zhang, Jianing, 2022. "Ownership concentration among entrepreneurial firms: The growth-control trade-off," International Review of Economics & Finance, Elsevier, vol. 78(C), pages 122-140.
    • Handle: RePEc:eee:reveco:v:78:y:2022:i:c:p:122-140
    DOI: 10.1016/j.iref.2021.11.005
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