The stock return performance of corporations that are partially owned by other corporations

A corporation may acquire minority ownership in another corporation and then attempt to exert control, either by monitoring management or by coopting management and transferring wealth to itself. A sample of fifty‐one corporations that have had a corporate partial owner for at least five years is matched against a nonpartially owned control group. Risk‐adjusted monthly stock returns of partially owned firms are significantly lower than those of control group firms, supporting the wealth transfer hypothesis. Firms with Victor Posner‐controlled partial owners perform worse than other partially owned firms.