Concentrated ownership reduces capital market efficiency
In an efficient economy, capital should be rapidly redistributed – from companies and sectors in decline – to more profitable investment opportunities. In a working paper, cited by the Asian NewsLens, Swedish Entrepreneurship Forum’s Johan Eklund and Sameeksha Desai, Kauffman Foundation, write that a more concentrated ownership reduces capital market efficiency. Economies with highly concentrated ownership structures display economic entrenchment and persistent misallocation of capital.