TY  - JOUR
AU  - Dyck,Alexander
AU  - Zingales,Luigi
TI  - Private Benefits of Control: An International Comparison
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 8711
PY  - 2002
Y2  - January 2002
UR  - http://www.nber.org/papers/w8711
L1  - http://www.nber.org/papers/w8711.pdf
N1  - Author contact info:
Alexander Dyck
Joseph L. Rotman School of Management
University of Toronto
105 St. George Street
Toronto, Ontario
Canada M5S 3E6
Tel: 416/946-0819
Fax: 416/978-5433
E-Mail: adyck@rotman.utoronto.ca

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  - We construct a measure of the private benefits of control in 39 countries based on 412 control transactions between 1990 and 2000. We find that the value of control ranges between  4% and +65%, with an average of 14 percent. As predicted by theory, in countries where private benefits of control are larger capital markets are less developed, ownership is more concentrated, and privatizations are less likely to take place as public offerings. We also analyze what institutions are most important in curbing these private benefits. A high degree of statutory protection of minority shareholders and high degree of law enforcement are associated with lower levels of private benefits of control, but so are a high level of diffusion of the press, a high rate of tax compliance, and a high degree of product market competition. A crude R-squared test suggests that the 'non traditional' mechanisms have at least as much explanatory power as the legal ones commonly mentioned in the literature. In fact, in a multivariate analysis newspapers' circulation and tax compliance seem to be the dominating factors. We advance an explanation why this might be the case.
ER  -