Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/262033 
Year of Publication: 
2021
Series/Report no.: 
IFN Working Paper No. 1419
Publisher: 
Research Institute of Industrial Economics (IFN), Stockholm
Abstract: 
Ceding ownership to outside investors provides a control dilemma for founders. In less developed capital markets with weaker formal institutions, we argue that retained founder director ownership can lower the transaction costs of external capital. Our argument rests on incomplete contracting and institutional theory, particularly highlighting the elevated status of the founding entrepreneur. Based on a longitudinal study of 179 listed Caribbean firms, we find that retained founder ownership reduces information asymmetry vis-à-vis outside minority investors. The reduced information asymmetry is even stronger for firms with a related party/subsidiary within a tax haven, and for firms with strong shareholder rights.
Subjects: 
Founders
Ownership
Bid Ask Spreads
Institutions
Caribbean
JEL: 
D53
F23
G12
G15
G32
G34
Document Type: 
Working Paper

Files in This Item:
File
Size
486.19 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.