In Belgian corporate groups, complex pyramidal structures and interlocking ownership lead to separation of ownership and control. This may generate incentives for the controlling shareholder to divert resources within the group through intragroup equity sales. This in turn could lead to significant private benefits at the expense of the minority shareholders. We test this hypothesis by investigating the stock price reaction to the announcement of equity sales in Belgian groups. Our results suggest that intragroup equity sales create value for minority shareholders. Equity sales between group members and non-group members do not seem to affect the value for minority shareholders in Belgian groups.

This paper examines the value of government ownership in Europe during the global financial crisis. This crisis was an exogenous shock for European firms, which allows us to observe an out-of-equilibrium effect on the costs and benefits of government ownership. Using a comprehensive sample of 4737 listed firms in 28 European countries over the period 2005–2009, we find that firms with government ownership experienced a smaller reduction in firm value than firms without government ownership. This effect was driven by firms located in countries where the risk of expropriation by the government is lower, that is, countries with less corruption and better investor protection.