Excess control and the risk of corporate expropriation: Canadian evidence

Corporate governance in Canada was examined by looking at the ultimate ownership structure of a large sample of publicly traded firms. Results suggest that small investors in Canada are vulnerable to corporate expropriation in largefirms. Despite the similarities in institutional indexes, Canada displays different patterns of ownership structure than sister Anglo-Saxon countries (the U.S. and the UK). More importantly, results suggest that excess control drives expropriation over and above the typical Jensen type of agency problems that are attributable to regular separation of ownership and control. Equally important, firms headquartered in Quebec appear to be undervalued vis-a-vis firms headquartered in the rest of Canada. Copyright (c) 2007 ASAC Published by John Wiley & Sons, Ltd.