TY  - JOUR
AU  - Bebchuk,Lucian Arye
AU  - Zingales,Luigi
TI  - Corporate Ownership Structures: Private versus Social Optimality
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 5584
PY  - 1996
Y2  - May 1996
UR  - http://www.nber.org/papers/w5584
L1  - http://www.nber.org/papers/w5584.pdf
N1  - Author contact info:
Lucian A. Bebchuk
Harvard Law School
1545 Massachusetts Avenue
Cambridge, MA 02138
Tel: 617/495-3138
Fax: 617/812-0554
E-Mail: bebchuk@law.harvard.edu

Luigi Zingales
Booth School of Business
The University of Chicago
5807 S. Woodlawn Avenue
Chicago, IL 60637
Tel: 773/702-3196
Fax: 773/834-2081
E-Mail: luigi.zingales@ChicagoBooth.edu
AB  - This paper analyzes the inefficiencies that might arise in the ownership structure chosen at the initial public offering stage.  We show that, contrary to what is commonly believed, the desire of initial owners to maximize their proceeds leads them to choices that, although privately optimal, may be socially inefficient.  This distortion tends to be in the direction of excessive incidence of controlling shareholder structures and excessive divestment of cash flow rights.  Our analysis has far-reaching policy implications for dual class stock, stock pyramiding, sale of control rules, and public offerings of minority shares.  Among its positive implications, our analysis suggests reasons for the substantial differences in the incidence of control blocks across different countries.
ER  -