Active ownership - a study of Swedish investment companies

Abstract: In this thesis on value creation of active owners, publicly traded Swedish investment companies are examined. Their ability to add value to their portfolio companies is tested against a matched sample of peer companies. According to the principal agent theory, investment companies have incentives to control or align top management in companies they own. Previous research on ownership related to firm performance has shown a complex relationship where both ownership concentration and ownership identity, as well as interactions of these effects, affect observed performance. These findings form the basis offour hypotheses on value creation tested in the thesis using data on 45 portfolio companies and their peers. No significant difference in performance is found between the companies. However, there is weak evidence that large ownership by one or two investment companiesdecreases performance of the portfolio company.