Business groups, bank control, and large shareholders: An analysis of German takeovers

To analyze the consequences of concentrated ownership and bank control for the performance of acquiring firms, I employ a unique data set of 715 Germa n takeovers. First, I find that takeovers increase bidder value, but majori ty owners provide no clear benefit. Second, bank control is beneficial only if it is counterbalanced by another large shareholder. Third, the worst ta keovers are completed by firms that are majority-controlled by financial in stitutions. I conclude that majority control, whether exercised by a bank o r another shareholder, increases the likelihood of decisions that do not ma ximize shareholder value. Journal of Economic Literature Classification Num bers: G34, G32, G21. (C) 2000 Academic Press.