Abstract
Traditionally, the corporate finance literature has highlighted the benefits of ownership concentration as a control device for curbing managerial discretion, while the costs, such as potential minority oppression, have often been neglected. Portfolio-diversification considerations apart, the existence of small shareholders must remain a puzzle, unless they add value to the firm and get compensated for the value added. Indeed, recent literature points at potential benefits of dispersed shareholdings such as improving stock market liquidity and inducing managerial initiative. By reviewing costs and benefits of ownership concentration, this paper puts the role of ownership into perspective, while bringing the reader up to date with some recent developments. The paper may also serve as an introduction to the remaining essays.