Shareholder mobility in five European countries

How do ownership structures develop over time, and how do these structures relate to law? These questions have been addressed in a recent TILEC DP by Christoph Van der Elst (TILEC). Van der Elst analysed the data of a large sample of companies in five European countries and concludes that ownership concentration has decreased at a moderate pace over the last 8 years in France, Italy and Belgium, but has increased in Spain and the UK.
Despite the finding that ownership is increasingly dispersed in the former countries, the fact remains that the great majority of companies in continental Europe continue to have one controlling shareholder. Families and non-financial companies make up the largest shareholders in the European continental countries. Investment policies differ significantly between the different shareholder classes as well between different countries. Furhter, companies are increasingly confronted with the presence of foreign shareholders. Given the development of the investor protection rights, the results partly confirm the work of La Porta, Lopez de Silanes, Shleifer and Vishny (LLSV), who have argued that ownership concentration is a substitute for weak investor protection. However, Van der Elst emphasises that ownership has many other features and "law" cannot explain all ownership characteristics.