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LONG‐TERM CORPORATE MINORITY‐LEVEL EQUITY HOLDINGS: AN OPTION‐THEORETIC PERSPECTIVE

Competitiveness Review

ISSN: 1059-5422

Article publication date: 1 January 1997

78

Abstract

The inverse relationship between means of long‐term economic performance measures of toehold targets and associated investing corporations suggests minority‐level equity holdings may often provide benefits that go beyond the total return provided by dividends and capital appreciation. Like security options, minority investments plausibly limit the downside risk associated with some corporate investment alternatives without limiting the upside potential that can be realized if the toehold target becomes very successful. Thus, a better corporate strategy may be to hold a portfolio of minority‐level equity investments than to hold an option on a mutual fund.

Citation

Bogert, J.D. and Rachakonda, S. (1997), "LONG‐TERM CORPORATE MINORITY‐LEVEL EQUITY HOLDINGS: AN OPTION‐THEORETIC PERSPECTIVE", Competitiveness Review, Vol. 7 No. 1, pp. 1-13. https://doi.org/10.1108/eb046341

Publisher

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MCB UP Ltd

Copyright © 1997, MCB UP Limited

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