How Does Firm Size Explain Cross-Country Differences in Ownership Concentration?

Abstract

Using a comprehensive international sample of 18,932 firms across 40 countries, we find that cross-country variations in ownership concentration are attributable to differences in firm sizes. Ownership concentration in large firms differs strikingly between countries. For example, large U.S. firms tend to have much more dispersed ownership structures than large non-U.S. firms. In contrast, the ownership concentration of small firms does not seem to vary across countries. Further analysis reveals that differences in ethical values and legal environments across countries can assist in explaining this cross-country variation in ownership across different firm size groups. Our results are robust to alternative blockholding proxies and firm size measures. Taken together, our findings not only provide novel and ethics-based explanations of corporate ownership structures around the world, but also potentially reconcile the presently conflicting views on whether U.S. ownership structures differ from those found elsewhere in the world.