The impact of founder ownership on outside investor transaction costs: evidence from Caribbean offshore economies
The impact of founder ownership on outside investor transaction costs: evidence from Caribbean offshore economies
Ceding ownership to outside investors provides a control dilemma for founders. In less developed capital markets with weaker formal institutions, we argue that retained founder director ownership can lower the transaction costs of external capital. Our argument rests on incomplete contracting and institutional theory, particularly highlighting the elevated status of the founding entrepreneur. Based on a longitudinal study of 146 listed Caribbean firms, we find that retained founder ownership reduces information asymmetry vis-à-vis outside minority investors. The reduced information asymmetry is even stronger for firms with a related party/subsidiary within a tax haven, and for firms with strong shareholder rights
Hearn, B.
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Randoy, T.
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Oxelheim, L.
4508b980-1e7e-4ccf-a64c-bd056a2fdc5c
10 December 2022
Hearn, B.
45dccea3-9631-4e5e-914c-385896674dc2
Randoy, T.
c186c352-f8e1-4c24-93e5-5694e4ab8f55
Oxelheim, L.
4508b980-1e7e-4ccf-a64c-bd056a2fdc5c
Hearn, B., Randoy, T. and Oxelheim, L.
(2022)
The impact of founder ownership on outside investor transaction costs: evidence from Caribbean offshore economies.
In Proceedings of the European International Business Academy 48th Annual Conference : Walking the talk? Transitioning towards a sustainable world.
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Abstract
Ceding ownership to outside investors provides a control dilemma for founders. In less developed capital markets with weaker formal institutions, we argue that retained founder director ownership can lower the transaction costs of external capital. Our argument rests on incomplete contracting and institutional theory, particularly highlighting the elevated status of the founding entrepreneur. Based on a longitudinal study of 146 listed Caribbean firms, we find that retained founder ownership reduces information asymmetry vis-à-vis outside minority investors. The reduced information asymmetry is even stronger for firms with a related party/subsidiary within a tax haven, and for firms with strong shareholder rights
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proceedings-eiba-2022
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Published date: 10 December 2022
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48th European International Business Academy (EIBA) Annual<br/>Conference 2022, Norwegian Business School, Oslo, Norway, 2022-12-08 - 2022-12-10
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Local EPrints ID: 509529
URI: http://eprints.soton.ac.uk/id/eprint/509529
PURE UUID: d6a62d4f-c8b2-4507-b417-e25bd242e7fc
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Date deposited: 25 Feb 2026 17:38
Last modified: 21 Apr 2026 01:57
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Author:
T. Randoy
Author:
L. Oxelheim
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