The Evolution of Ownership Disclosure Rules across Countries

Over recent years, a number of regulators have launched proposals to expand the obligation to disclose major share ownership in listed companies. This article shows that these are not stand-alone developments. Using a unique dataset comprising data from 25 countries over 11 years (1995-2005) and collected by the Centre for Business Research of the University of Cambridge, we empirically study the evolution of ownership disclosure rules across countries. The analysis demonstrates that these rules have become more stringent over time, in the sense that disclosure thresholds have been lowered, and that there has been convergence. A breakdown of the results suggests that the degree of countries’ economic development is a relevant factor in explaining the differences between countries. The analysis also suggests a positive correlation between ownership disclosure and other variables that protect minority shareholders, as well as a positive correlation between the stringency of countries’ ownership disclosure rules and the degree of dispersed ownership. In the article, we offer various possible explanations for these results. Going forward, while it appears unlikely that disclosure thresholds will be lowered much further, ownership disclosure rules can be expected to continue to evolve in other dimensions. Regulators are likely to broaden the definition of the stake that triggers disclosure, so as to ensure that the ultimate owner is reached. In addition, regulators may require 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.