When is blockholding growth enhanced?
In this paper we test productivity differences among groups of firms with multiple controls. By using an exceptionally reach database, consisting of more than 4,000 Slovenian firms, each employing at least 50 employees or having their assets larger than two million euros (two criteria defining a small firm), and containing the information of firms’ ten largest owners and their financial statements for the period 2006-2014, we design all possible minimal controlling coalition types up to three dominant owners and examine which minimal controlling coalition type generates the highest expected total factor productivity (TFP). We show that the optimal blockholding coalition type, consistingof two members coalitions without dominant owners,was able to attain short-term efficiency of dispersed owners.Other blockholdingcoalition types stayed behind. A simple behavioristic principle is observed: short term efficiency of controlling coalition type decreases with the number of dominant owners and increases with the number of potential controlling (minimal) coalitions with different dominant owners.
Keywords: multiple shareholders, minimal controlling coalition, corporate governance, productivity of firm
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