Ownership concentration: 'Private benefits of control' and debt financing

Igor Filatotchev, Tomasz Mickiewicz

Research output: Preprint or Working paperWorking paper


Building on the ‘law and economics’ literature, this paper analyses corporate governance implications of debt financing in an environment where a dominant owner is able to extract ex ante ‘private benefits of control’. Ownership concentration may result in lower efficiency, measured as a ratio of a firm’s debt to investment, and this effect depends on the identity of the largest shareholder. Moreover, entrenched dominant shareholder(s) may be colluding with fixed-claim holders in extracting ‘control premium’. One of possible outcomes is a ‘crowding out’ of entrepreneurial firms from the debt market, and this is supported by evidence from the transition economies.
Original languageEnglish
PublisherUniversity College London
Number of pages33
Publication statusPublished - Dec 2001

Publication series

NameEconomics working paper
PublisherUCL SSEES : Centre for comparative economics


  • ownership
  • benefits of control
  • debt


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