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Majority Shareholder

What is a 'Majority Shareholder'

A majority shareholder is a person or entity that owns more than 50% of a company's outstanding shares. The majority shareholder is often the founder of the company or, in the case of long-established businesses, the founder's descendants. By virtue of controlling more than half of the voting interests in the company, the majority shareholder has a very significant influence in the business operations and strategic direction of the company, though not all companies have a majority shareholder.

Explaining 'Majority Shareholder'

Majority shareholders differ in their approach to how the company is managed. While some continue to be heavily involved in the daily operations of the company, others may prefer to take a hands-off approach and leave the management of the company to the executives and managers. Majority shareholders who wish to exit their business or dilute their position may make overtures to their competition or private equity firms, with the objective of getting a good price for their stake. Since the majority shareholder usually has an iron grip on the fortunes of the company, a hostile bid for it is generally out of the question.

Who Is the Majority Shareholder?

The majority shareholder of a company may or may not be a member of upper management, such as the chief executive officer (CEO). In smaller companies with a limited number of total shares, the CEO may also function as the majority shareholder. In larger firms with significant market capitalization, such as numbers in the billions of dollars, the firm’s investors may include other institutions that possess a larger number of shares.

Majority Shareholders and Buyouts

In order for a buyout to occur, an outside entity must acquire over 50% of the target company’s outstanding shares. While a majority shareholder may hold more than 50% of a company’s stocks, he may not have the authority to authorize a buyout without additional support depending on certain corporate bylaws. In cases where a super-majority is required for a buyout, the majority shareholder can be the sole deciding factor only in cases where he holds enough of the company’s stock to meet the super-majority requirement, and the minority shareholders do not have additional rights to block the effort.


Further Reading


The role of majority shareholders in publicly held corporations: An exploratory analysis
www.sciencedirect.com [PDF]
We analyze 114 NYSE-or AMEX-listed corporations with majority shareholders. Majority shareholders are approximately equally divided between corporations and individuals and are typically both directors and officers. When majority blocks trade, stock prices increase …

Majority owner-managers and organizational efficiencyMajority owner-managers and organizational efficiency
www.sciencedirect.com [PDF]
We analyze 114 NYSE-or AMEX-listed corporations with majority shareholders. Majority shareholders are approximately equally divided between corporations and individuals and are typically both directors and officers. When majority blocks trade, stock prices increase …

Sub-optimal acquisition decisions under a majority shareholder systemSub-optimal acquisition decisions under a majority shareholder system
link.springer.com [PDF]
We analyze 114 NYSE-or AMEX-listed corporations with majority shareholders. Majority shareholders are approximately equally divided between corporations and individuals and are typically both directors and officers. When majority blocks trade, stock prices increase …

The value of voting rights to majority shareholders: Evidence from dual-class stock unificationsThe value of voting rights to majority shareholders: Evidence from dual-class stock unifications
academic.oup.com [PDF]
We analyze 114 NYSE-or AMEX-listed corporations with majority shareholders. Majority shareholders are approximately equally divided between corporations and individuals and are typically both directors and officers. When majority blocks trade, stock prices increase …

Micro-structure of Majority Shareholder Control & Incentive and Entrenchment Effect <span style=[J]' src='/thumbnails/?img=http%3A%2F%2Fen.cnki.com.cn%2FArticle_en%2FCJFDTotal-ZQDB200710008.htm' />Micro-structure of Majority Shareholder Control & Incentive and Entrenchment Effect [J]
en.cnki.com.cn [[J]' href='https:/api.miniature.io/pdf?url=en.cnki.com.cn%2FArticle_en%2FCJFDTotal-ZQDB200710008.htm'>PDF]
We analyze 114 NYSE-or AMEX-listed corporations with majority shareholders. Majority shareholders are approximately equally divided between corporations and individuals and are typically both directors and officers. When majority blocks trade, stock prices increase …

Majority voting and corporate control: the rule of the dominant shareholderMajority voting and corporate control: the rule of the dominant shareholder
academic.oup.com [PDF]
We analyze 114 NYSE-or AMEX-listed corporations with majority shareholders. Majority shareholders are approximately equally divided between corporations and individuals and are typically both directors and officers. When majority blocks trade, stock prices increase …

Shareholder activism and corporate governance in the United StatesShareholder activism and corporate governance in the United States
papers.ssrn.com [PDF]
We analyze 114 NYSE-or AMEX-listed corporations with majority shareholders. Majority shareholders are approximately equally divided between corporations and individuals and are typically both directors and officers. When majority blocks trade, stock prices increase …

Ownership structure and financial performance: Evidence from panel data of South KoreaOwnership structure and financial performance: Evidence from panel data of South Korea
www.econstor.eu [PDF]
We analyze 114 NYSE-or AMEX-listed corporations with majority shareholders. Majority shareholders are approximately equally divided between corporations and individuals and are typically both directors and officers. When majority blocks trade, stock prices increase …

The distribution of power among corporate managers, shareholders, and directorsThe distribution of power among corporate managers, shareholders, and directors
papers.ssrn.com [PDF]
We analyze 114 NYSE-or AMEX-listed corporations with majority shareholders. Majority shareholders are approximately equally divided between corporations and individuals and are typically both directors and officers. When majority blocks trade, stock prices increase …


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