Firm-Specific Factors Affecting the Private Benefits of Control in Concentrated Ownership Economies

We examine 54 large transactions in Israel - a concentrated ownership economy, and estimate the private benefits of control implied in the block price via an elaborated Barclay and Holderness (1989) methodology. Cross-sectional regressions indicate that private benefits, as a proportion of firm's market value, decrease wit firm's size, leverage and profitability, and increase when an individual or family control the firm. In general, our results are stronger and more significant than Barclay and Holderness (1989) findings in the U.S., possibly because the magnitude of private benefits in our sample is much higher than in a disperse-ownership economy such as the U.S