Empirische Diplomarbeit die mit einer multivariaten Regression untersucht, ob sich die beobachtete Variabilität der Kapitalstrukturen von Unternehmen durch unterschiedliche Eigentümerstrukturen erklären lässt.
Table of Contents
1 INTRODUCTION
1.1 Problem and Objective of the Thesis
1.2 Organization of the Thesis
2 THE RELATIONSHIP BETWEEN CAPITAL STRUCTURE, MANAGEMENT OWNERSHIP AND EXTERNAL BLOCK HOLDERS – PRIOR RESEARCH AND HYPOTHESES
2.1 Capital Structure and Management Ownership
2.1.1 Incentive-Alignment Hypothesis
2.1.2 Signaling and Corporate Control Considerations
2.1.3 Management Entrenchment Hypothesis
2.1.4 Non-Linearity and Hypothesis Development
2.2 Capital Structure and External Block Holders
2.3 Interaction of Management Ownership and External Block Holders
3 ECONOMETRIC ANALYSIS OF OWNERSHIP AND CAPITAL STRUCTURE
3.1 Data and Model Specification
3.1.1 Sample Selection
3.1.2 Ownership Structure Variables
3.1.3 Measures of Capital Structure and Univariate Analysis
3.1.4 Additional Capital Structure Determinants
3.1.5 Variable Overview and Correlation Analysis
3.1.6 Multivariate Regression Models
3.2 Empirical Results and Theoretical Implications
3.2.1 Capital Structure and Management Ownership
3.2.2 Capital Structure and External Block Holders
3.2.3 Interaction of Management Ownership and External Block Holders
3.3 Robustness of Results
3.3.1 Multicollinearity, Heteroskedasticity and Non-Normality
3.3.2 Alternative Variable Definitions
3.3.3 Exclusion of Observations
4 CONCLUSION
4.1 Summary and Critique
4.2 Implications for Further Research
Research Objectives and Key Topics
This thesis investigates the impact of ownership structure on the capital structure of German companies to determine if managerial share ownership and the presence of external block holders significantly influence financing decisions. It addresses the lack of empirical evidence for Germany by applying a multivariate regression approach to a sample of 95 firms listed on the DAX, MDAX, and SDAX indices.
- Influence of managerial equity ownership on corporate leverage.
- Role of external block holders in monitoring management and impacting debt ratios.
- Theoretical frameworks, including incentive-alignment and management entrenchment hypotheses.
- Econometric analysis of capital structure determinants in the German institutional context.
- Robustness testing of results against multicollinearity and alternative variable definitions.
Excerpt from the Book
2.1.1 Incentive-Alignment Hypothesis
In their seminal paper on agency theory JENSEN/MECKLING proposed that the separation of ownership and control allows managers, the agents, to consume the firm’s resources to their own personal benefit and to the detriment of external shareholders, the principals. Nevertheless, those principal-agent conflicts can be mitigated by internal and external constraints reducing management discretion. Specifically, the incentive structure of management is significantly influenced by managerial equity ownership.
Managerial equity ownership is argued to align shareholders incentives with those of external shareholders, reducing the incentives to consume perquisites (hence incentive-alignment hypothesis). JENSEN/MECKLING derive in their model an optimum level of debt which minimizes total agency costs by balancing the agency costs of external equity and the agency costs of debt. Following this rationale, the relationship between capital structure and management ownership depends on the relative size of the agency costs of equity and debt at varying levels of management ownership.
The following discussion is based on SHORT/KEASEY/DUXBURY’s excellent description of the dynamics of JENSEN/MECKLING’s model considering the relationship between debt and managerial equity ownership. The model by JENSEN/MECKLING has three main variables, management equity ownership Si , outside equity ownership So , and external debt B . For a specified level of external finance (B + So) the optimal fraction of outside equity is given by E* = So/(B + So), where E* minimizes the total agency costs AT(E) incurred by external financing. The total agency costs are made up of the agency costs of outside equity ASo(E) and the agency costs of debt AB(E), such that AT(E) = ASo(E) + AB(E). This relationship is depicted in figure 1, showing ASo(E) as an increasing function and AB(E) as a decreasing function of E. The optimal ownership structure is determined by the minimum total agency costs of external financing AT(E*).
Summary of Chapters
1 INTRODUCTION: This chapter establishes the problem of how ownership structure affects capital structure, noting the inconsistency in empirical findings and defining the objective to analyze German listed companies.
2 THE RELATIONSHIP BETWEEN CAPITAL STRUCTURE, MANAGEMENT OWNERSHIP AND EXTERNAL BLOCK HOLDERS – PRIOR RESEARCH AND HYPOTHESES: This section reviews theoretical frameworks like the incentive-alignment and management entrenchment hypotheses, developing five hypotheses regarding the impact of managers and block holders on debt ratios.
3 ECONOMETRIC ANALYSIS OF OWNERSHIP AND CAPITAL STRUCTURE: This chapter describes the empirical methodology, including sample selection from German DAX indices, multivariate regression specifications, and detailed robustness tests to validate the findings.
4 CONCLUSION: The final chapter summarizes the empirical results, acknowledges the study's limitations regarding sample size and endogeneity, and provides recommendations for future research in corporate governance.
Keywords
Capital Structure, Ownership Structure, Management Ownership, External Block Holders, Agency Theory, Incentive-Alignment Hypothesis, Management Entrenchment, Debt Ratios, German Companies, Multivariate Regression, Corporate Governance, Financial Leverage, Monitoring, Endogeneity, Robustness Analysis.
Frequently Asked Questions
What is the primary focus of this research?
The research examines the relationship between corporate ownership structure and capital structure in German companies, specifically looking at how management and external block holders influence debt levels.
What are the central theoretical themes explored?
The work centers on agency theory, focusing on the incentive-alignment hypothesis, management entrenchment, signaling theory, and the active versus passive monitoring roles of large shareholders.
What is the core research objective?
The goal is to contribute to the empirical debate by testing whether equity ownership structure explains cross-sectional variations in capital structure, using German data from DAX, MDAX, and SDAX listed companies.
Which scientific methodology is utilized?
The study employs a cross-sectional multivariate regression approach, applying OLS and robust standard error estimates to analyze data collected from company annual reports and financial databases.
What does the main body of the paper cover?
The main body details the data set construction, defines ownership and control variables, specifies the econometric regression models, discusses empirical results for various hypotheses, and performs extensive sensitivity and robustness checks.
What characterises this study?
This study is characterized by its empirical focus on the German institutional context, its examination of both management and external block holder effects, and its rigorous multivariate testing of ownership impacts on debt.
Why is the German market specifically examined?
The German market is chosen because prior capital structure research is predominantly US-based, and Germany presents a unique institutional context with different ownership concentration patterns and bank involvement.
What does the robustness analysis imply?
The robustness analysis addresses potential econometric issues like multicollinearity and heteroskedasticity, confirming the stability of the core positive relationships despite challenges related to a relatively small sample size.
How are external block holders classified?
They are classified into categories such as "financial," "strategic," and "public," depending on the nature of the entity holding the stake, to test for variations in monitoring behavior.
- Arbeit zitieren
- Christian Funke (Autor:in), 2004, Ownership Structure as a Determinant of Capital Structure - An Empirical Study of DAX Companeis, München, GRIN Verlag, https://www.grin.com/document/185965
