CORPORATIONS' OWNERSHIP CONCENTRATION: THEORETICAL ASPECT

Abstract

Corporate governance and its mechanisms, including ownership structure, have a long history of research. Many
scientific papers show that when the ownership concentration grows above a certain limit, it not only directly affects the
performance of firms and their value but also indirectly affects the mechanism of corporate governance. In the case of the
concentration of ownership, majority shareholders can gain significant control over the firm to obtain private benefits from
minority shareholders. In such circumstances, special attention should be paid to the concentration of ownership and its
relationship with the activities of the firm and its value.
The article highlights the essence of the concept of "ownership concentration" from the standpoint of corporate governance
and from the standpoint of the characteristic of the corporations' capital structure. The peculiarities of corporate governance
in Ukraine and in the world are generalized with their division into internal and external mechanisms. The concentration
of ownership as a tool of corporate governance is determined since the fact that there are shareholders with significant
stakes that have the necessary incentives and resources to monitor and discipline management. It is noted that the ownership
concentration can be considered as a tool to compensate for the shortcomings (ineffectiveness) of external mechanisms
of corporate governance. As a quantitative indicator of capital structure, the ownership concentration is measured by the
number of shareholders and the percentage of their individual or collective ownership of shares, considering exercising
control influence on the joint-stock company. The threshold of concentrated ownership is indicated, based on Ukrainian
legislation and existing approaches.