discountinprivatetransactionssincethereisnomarketvalue
to compare the transaction price to.
Harouna,Sarin, andShapiro(2001)attemptto estimatethe
extent of the minority discount by classifying 9,566
transactionsin publiclytradedcompaniesintominorityand
majoritytransactionsbasedonownershipbeforeandafterthe
transaction;aminoritytransactionisonewheretheacquirer
haslessthan 30 percentoftheoutstandingequitybothbefore
and afterthetransaction, whereasa majoritytransaction is
one where the acquirer has 30 percent or less before the
transactionand morethan 50 percent after thetransaction.
Theyfindthatminoritytransactionsarevaluedatadiscount
of 20 to 30 percent on majority transactions in
market-orientedeconomiesliketheUnitedKingdomandthe
UnitedStatesbutthatthediscountissmallerinbank-oriented
economies like Germany, Japan, France, and Italy.
62
Moregenerally,thereisevidencethatinvestorsarewillingto
paypremiumstoacquirelargeblocksofshares,evenwhen
they arewell below the majority thresholdof 50 percent.
Barclay and Holderness (1989, 1991) report premiums in
excessof 10 percentforlargenegotiatedblocktransactionsin
the United States.
63 Nicodanoand Sembenelli(2000) extendtheanalysisto
look at block transactions in Italy and conclude that the
averagepremiumacrosslargeblocktradesis 27 percent;the
premium increases with block size, with premiums of 31
percentforblockslargerthan 10 percentand 24 percentfor
blocks smaller than 10 percent.
64