Benito Arruñada - Universitat Pompeu Fabra
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Education in Spain: Failure and Reform
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Effects of Ownership on Firms’ Performance: Evidence from Car Dealers

Vázquez, Luis, and Benito Arruñada (2001) “Effects of Ownership on Firms’ Performance: Evidence from Car Dealers,” Revista Española de Financiación y Contabilidad, 30(110), 1071-1092.
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This article compares the financial performance of a sample of 223 car distributors organized either as dealerships or as subsidiaries directly owned by manufacturers. We test if independently owned dealerships, in which there is less separation between ownership and control, provide better incentives for local management. We observe that average profitability of dealerships is 21.66 per cent higher than that of owned outlets. Labor productivity is also higher 5.52 per cent, whereas average labor cost is lower by 10.07 per cent. Controlling for market variables and other possible causes does not change the difference in profitability and only slightly reduces the differences in the other indicators.