2.6 Conclusion

Ownership disclosure rules across countries have become more stringent between 1995 and 2005. A breakdown of the results suggests that the degree of countries' economie development is a relevant factor in explaining the differences between countries: developed countries tend to have more stringent ownership disclosure rules than transition and developing countries. The differences have become smaller over time, though, as most countries had settled for a 5% threshold for ownership disclosure by the end of the sample period. Convergence has also taken place within the European Union, where, interestingly, Member States have consistently set lower thresholds for disclosure than required by the European minimum rules in force during the sample period.

Furthermore, we have observed a large positive correlation between the variable for ownership disclosure and other variables that protect minority shareholders against controlling shareholders. The data also indicates that the stringency of countries' ownership disclosure rules is positively correlated to the degree of dispersed ownership. We have advanced two possible explanations for this. The first is that countries with dispersed ownership care more about ownership disclosure because such rules contribute to the efficiency of capital markets and thus lower the cost of outside equity. The second is based on public choice theory and posits that in countries with dispersed ownership, incumbent management lobbies for stringent ownership disclosure rules because such rules can shield management from hostile takeover attempts by alerting them of stakebuilding.

While our data indicates that there was convergence around the 5% level for initial disclosure by 2005, more recent developments suggest that in the future, countries' ownership disclosure rules may converge around the 3% level. It appears likely that beyond that point, the evolution of ownership disclosure rules will shift entirely to other aspects affecting their stringency. In particular, we can expect regulators to respond to financial innovation by expanding the definition of the stake that triggers disclosure, so as to ensure that the ultimate owner can be identified. Regulators may also require that more information be disclosed when the notification is made, so as to enable other investors and issuers to adequately assess the implications of major share ownership. Accordingly, future empirical research of ownership disclosure rules will have to focus not only on the threshold for disclosure, but also on these two dimensions of ownership disclosure rules affecting their stringency.