Juan Bautista

Delgado García

Esther De Quevedo-Puente

Juan Manuel

La Fuente-Sabaté

THE IMPACT OF OWNERSHIP STRUCTURE ON CORPORATE REPUTATION: EVIDENCE FROM SPAIN

Keywords:

INTRODUCTION

There is a large body of research analyzing the influence of ownership structure on firm outcomes (e.g., [START_REF] Demsetz | The structure of corporate ownership[END_REF][START_REF] Gedajlovic | Management and ownership effects: Evidence from five countries[END_REF][START_REF] Miguel | Ownership structure and firm value: New evidence from Spain[END_REF][START_REF] Morck | Management ownership and market valuation: An empirical analysis[END_REF][START_REF] Tribó | Do the type and number of blockholders influence R&D investments? New evidence from Spain[END_REF]. Among these outcomes, several researchers have shown that ownership structure may affect corporate reputation [START_REF] Brammer | Corporate reputation and philanthropy: An empirical analysis[END_REF][START_REF] Brammer | Corporate reputation and social performance: The importance of fit[END_REF][START_REF] Fombrun | What's in a name? Reputation building and corporate strategy[END_REF]. The analysis of the influence of ownership structure on corporate reputation is relevant since corporate reputation influences stakeholders' responses toward the firm. For instance, corporate reputation affects a customer's choice among competing products [START_REF] Akerlof | The market for 'lemons': Quality under uncertainty and the market mechanism[END_REF], increases customer retention [START_REF] Caminity | The payoff from a good reputation[END_REF][START_REF] Selnes | An examination of the effect of product performance on brand reputation, satisfaction and loyalty[END_REF] and premium price [START_REF] Shapiro | Premiums for high quality products as returns to reputation[END_REF], makes the firm an employer of choice [START_REF] Stigler | Information in the labor country[END_REF][START_REF] Williamson | The economic institutions of capitalism: Firms, markets, relational contracting[END_REF], reduces contracting and monitoring costs because suppliers and partners are less concerned about contractual hazards [START_REF] Milgrom | Economics, organization and management[END_REF]; and also supports new product introductions and recovery strategies in the event of crisis [START_REF] Dowling | Creating corporate reputation[END_REF]. In this sense, corporate reputation affects a firm's future financial performance (e.g., [START_REF] Roberts | Corporate reputation and sustained superior financial performance[END_REF]Vergin & Quoronfleh, 1998).

However, the few studies analyzing the influence of ownership structure on corporate reputation [START_REF] Brammer | Corporate reputation and philanthropy: An empirical analysis[END_REF][START_REF] Brammer | Corporate reputation and social performance: The importance of fit[END_REF][START_REF] Fombrun | What's in a name? Reputation building and corporate strategy[END_REF]) have focused only on common law countries and on the impact of institutional ownership. Furthermore, they have considered institutional owners as a homogeneous group. Their evidence suggests three research issues that we address below.

First, we consider how this evidence applies in civil law countries, where large blockholders have an active role in corporate behavior. 1 Second, we argue that ownership R e v i e w C o p y 5 perceived as influencing future expropriation within the firm will serve as a signal that affects corporate reputation.

These signals that stakeholders use to build their expectations are influenced by the institutional context [START_REF] Gardberg | Corporate citizenship: Creating intangible assets across institutional environments[END_REF][START_REF] Wright | Institutional pressures, corporate reputation, and voluntary codes of conduct: An examination of equator principles[END_REF]. Thus one may suspect that the surge of concern raised by corporate scandals, the consequent interest in good governance as a determinant of firm behavior, and the more frequent presence and the relevance of large shareholders in civil law countries [START_REF] Faccio | The ultimate ownership of western European corporations[END_REF][START_REF] Porta | Corporate ownership around the world[END_REF]La Porta, López-de-Silanes, Shleifer, & Vishny, 1998;[START_REF] López De Foronda | Ownership structure, sharing of control and legal framework: International evidence[END_REF] have favored considering ownership structure as one of the determinants of expectations about firms' future behavior.

This ability of ownership structure to generate expectations makes it not only a corporate governance mechanism, but also a factor influencing the accumulation of one firm resource: corporate reputation.

Drawing on agency theory [START_REF] Jensen | Theory of the firm: Managerial behavior, agency cost and ownership structure[END_REF] and signaling theory [START_REF] Spence | Market signaling: Informational transfer in hiring and related screening processes[END_REF], we provide theoretical arguments and empirically analyze the influence of firm ownership structure on corporate reputation in Spain. We focus on four characteristics of a firm's ownership structure that we consider the most visible to stakeholders: degree of ownership concentration in the hands of the largest and the second largest shareholders, insider ownership -i.e., ownership in the hands of executive and ex-executive directorsand the type of the largest shareholder. By distinguishing among different types of shareholders and by examining a civil law country, our analysis complements previous research by [START_REF] Fombrun | What's in a name? Reputation building and corporate strategy[END_REF], [START_REF] Brammer | Corporate reputation and philanthropy: An empirical analysis[END_REF], and [START_REF] Brammer | Corporate reputation and social performance: The importance of fit[END_REF], which has focused only on the impact of institutional ownership in common law countries. Spain is an interesting setting for our study for several reasons. First, Spain is a typical civil law country, with concentration of ownership in the hands of a few large blockholders who are influential in organizational behavior [START_REF] Miguel | Ownership structure and firm value: New evidence from Spain[END_REF][START_REF] Tribó | Do the type and number of blockholders influence R&D investments? New evidence from Spain[END_REF] and thus should have a large and distinctive influence on stakeholders' expectations. Second, in Spain banks have traditionally maintained a large presence in firms, not only as creditors but also as controlling shareholders [START_REF] Ruiz-Mallorquí | Ultimate owner and takeover defenses in the controlling versus minority shareholders context[END_REF]. This large presence of banks, also common in other civil law countries, allows us to distinguish among different types of institutional investors in our analyses.

Third, during the last decades the Comisión Nacional del Mercado de Valores (Spanish National Stock Exchange Commission) has introduced significant changes with the aim of promoting transparency among quoted firms (see the Olivencia Report, 1998;the Aldama Report, 2003; and the Code of Good Governance, also known as the Conthe Code, 2006).

These advances have increased the information that quoted firms provide about their governance. Fourth, Spain has an index of corporate reputation comparable to other measurements analyzed in previous research. Finally, as Ruiz-Mallorquí and Santana-Aguiar ( 2009) have indicated, these characteristics of firms' ownership structure in Spain and the weakness of its corporate control market imply that the conclusions drawn from our study can be extended to other civil law countries with similar governance characteristics.

The paper is structured as follows. In the next section we explain how ownership structure conditions expropriation in the firm and how stakeholders' perceptions of that structure build their expectations about the firm's capacity to meet their interests. Then, we develop hypotheses relating ownership structure to corporate reputation, in the sense that characteristics that generate expectations of a higher expropriation reduce corporate reputation, while those which limit expropriation enhance corporate reputation.

OWNERSHIP STRUCTURE, EXPECTATIONS OF EXPROPRIATION, AND CORPORATE REPUTATION

In recent decades, academic research has emphasized the consequences of a firm's ownership structure (e.g., [START_REF] Demsetz | The structure of corporate ownership[END_REF][START_REF] Fama | Separation of ownership and control[END_REF][START_REF] Jensen | Theory of the firm: Managerial behavior, agency cost and ownership structure[END_REF][START_REF] Morck | Management ownership and market valuation: An empirical analysis[END_REF][START_REF] Shleifer | A survey of corporate governance[END_REF]. The ownership structure of a firm defines the combination of residual claims and decision control which has consequences on firm behavior [START_REF] Fama | Separation of ownership and control[END_REF]. These consequences of ownership structure are conditioned by the legal and institutional setting of the country in which the firm operates (La [START_REF] Porta | Law and finance[END_REF]La Porta, López-de-Silanes, Shleifer, & Vishny, 2002). Firms in common law countries are characterized by a dispersed ownership structure so that the manager-shareholder relationship is the main source of conflicts. In civil law countries, as is the case in Spain, large shareholders are more common and can use their voting power to extract private benefits (expropriate). This expropriation may take a variety of forms, such as diversion of corporate opportunities from a firm by its controlling shareholders, transfer pricing favoring the controlling shareholder at non-market prices, loan guarantees using the firm's assets as collateral, and so on (La [START_REF] Porta | Investor protection and corporate governance[END_REF]. These behaviors by controlling shareholders expropriate minority shareholders (Johnson, La Porta, Lopez-de-Silanes, & Shleifer, 2000) and the rest of the stakeholders in a firm [START_REF] Clarkson | A stakeholder framework for analysing and evaluating corporate social performance[END_REF][START_REF] John | Corporate governance and board effectiveness[END_REF][START_REF] Shleifer | Breach of trust in hostile takeovers[END_REF] [START_REF] Clarkson | A stakeholder framework for analysing and evaluating corporate social performance[END_REF][START_REF] John | Corporate governance and board effectiveness[END_REF][START_REF] Shleifer | A survey of corporate governance[END_REF].

If stakeholders perceive that ownership structure affects expropriation, they will take into account the ownership characteristics of a firm to generate their expectations about the firm's possibilities of satisfying their interests. That is, ownership structure will affect corporate reputation. Some research, although limited, has already shown that some characteristics of the ownership structures of firms are used as signals that influence corporate reputation. [START_REF] Fombrun | What's in a name? Reputation building and corporate strategy[END_REF] found that institutional ownership enhanced corporate reputation for firms listed in the Fortune survey of America's Most Admired Companies (AMAC). 2 Brammer and Millington (2005) and [START_REF] Brammer | Corporate reputation and social performance: The importance of fit[END_REF] found that corporate reputation was positively associated with the extent of longterm institutional ownership for a sample of UK firms. But it seems reasonable to ask how this evidence applies in a civil law country, where not only institutional investors but also other types of large shareholders influence corporate behavior. Other characteristics of ownership structure, such as insider ownership or ownership concentration in the hands of the largest shareholder, may also influence corporate reputation. Additionally, since institutional investors are a heterogeneous group with different behaviors (e.g., [START_REF] Borokhovich | Variation in the monitoring incentives of outside stockholders[END_REF][START_REF] Brickley | Ownership structure and voting on antitakeover amendments[END_REF][START_REF] Kochhar | Institutional investors and firm innovation: A test of competing hypotheses[END_REF]Ruiz-Mallorqui & Santana-Martín, 2009), they should have differentiated effects on corporate reputation.

One essential characteristic of ownership structure that stakeholders can perceive is ownership concentration in the hands of the largest shareholder. Such ownership concentration can generate diverse expectations. For firms with dispersed equity ownership, stakeholders will anticipate low incentives for the shareholders to monitor managerial actions [START_REF] Burkart | Large shareholders, monitoring, and the value of the firm[END_REF][START_REF] Fama | Separation of ownership and control[END_REF], and as a result, will expect expropriation by managers. This expropriation by managers can take a variety of forms, such as selling the firm's outputs or assets to another firm they own at below-market prices, just taking cash out of the company, or entrenching themselves in the job even if they are no longer competent to run the firm (La [START_REF] Porta | Investor protection and corporate governance[END_REF][START_REF] Shleifer | A survey of corporate governance[END_REF]. This expropriation leads to inferior outcomes that reduce the possibilities of satisfying stakeholder's interest. For example, if this expropriation happens, employees, customers, or suppliers will not see their interests of continued employment, service, or supply guaranteed. So, expectations of expropriation by managers will lead to expectations of lower chances that the firm will meet every stakeholder's interests. When shareholding is more concentrated, stakeholders may perceive that it is relatively easy for large owners to monitor managers, lessening their vulnerability to expropriation by managers [START_REF] Gedajlovic | Management and ownership effects: Evidence from five countries[END_REF][START_REF] Shleifer | Large shareholders and corporate control[END_REF]. But above certain levels of ownership concentration, stakeholders may perceive that controlling blockholders can also expropriate minority shareholders [START_REF] Porta | Corporate ownership around the world[END_REF] and the rest of the stakeholders [START_REF] Shleifer | A survey of corporate governance[END_REF].

Drawing on these arguments, we hypothesize a non-linear relationship between ownership concentration in the hands of the largest shareholder and corporate reputation; at low levels of ownership concentration, increases in ownership concentration favor monitoring to reduce expropriation by managers [START_REF] Gedajlovic | Management and ownership effects: Evidence from five countries[END_REF][START_REF] Miguel | Ownership structure and firm value: New evidence from Spain[END_REF]. This favors expectations of fulfillment of stakeholders' interests that will consolidate corporate reputation. However, past a certain point of ownership concentration, increases in ownership concentration may give large shareholders the power to expropriate.

This increases expectations that some stakeholders' interests may go unfulfilled and, therefore, will erode corporate reputation. [START_REF] Berle | The modern corporation and private property[END_REF], [START_REF] Jensen | Theory of the firm: Managerial behavior, agency cost and ownership structure[END_REF], or [START_REF] Fama | Separation of ownership and control[END_REF], but may also reduce the largest shareholder's ability to control the firm alone, which will reduce expropriation [START_REF] Bennedsen | The balance of power in closely held corporations[END_REF][START_REF] Bloch | Multiple shareholders and control contests[END_REF][START_REF] Edwards | Ownership concentration and share valuation: Evidence from Germany[END_REF][START_REF] Gomes | Sharing of control as a corporate governance mechanism[END_REF] Hypothesis 2b: The lower the difference between the first and second largest blockholdings, the higher the corporate reputation.

R

Insider ownership -i.e., ownership in the hands of executive and ex-executive directors -can also generate diverse expectations. Stakeholders may perceive that insider ownership serves as an alignment of interests in the case of managers [START_REF] Jensen | Theory of the firm: Managerial behavior, agency cost and ownership structure[END_REF], which can generate expectations of lower expropriation and therefore enhance corporate reputation. However, high stock ownership on the part of insiders can also signal their entrenchment, which prevents supervision by other stakeholders and favors expropriation [START_REF] Fernández | El papel supervisor del consejo de administración sobre la actuación gerencial. Evidencia para el caso español[END_REF][START_REF] Mcconnell | Changes in insider ownership and changes in the market value of the firm[END_REF][START_REF] Miguel | Ownership structure and firm value: New evidence from Spain[END_REF][START_REF] Morck | Management ownership and market valuation: An empirical analysis[END_REF]. If this effect is perceived by stakeholders, high levels of ownership concentration in the hands of insiders will erode corporate reputation.

These theoretical arguments suggest a non-linear relationship between insider ownership and corporate reputation.

Hypothesis 3: Insider ownership is positively related to corporate reputation at low levels of ownership, and negatively related at high levels.

Another essential and visible characteristic for stakeholders is the nature of the largest shareholder. The distinction of the largest shareholder is relevant since the monitoring activities can vary with their experience and incentives [START_REF] Demsetz | The structure of corporate ownership[END_REF][START_REF] Galve | Propiedad y resultados de la gran empresa española[END_REF][START_REF] Thomsen | Ownership structure and economic performance in the largest European companies[END_REF][START_REF] Tribó | Do the type and number of blockholders influence R&D investments? New evidence from Spain[END_REF]. Thus, the nature of the largest shareholder conditions its role in value distribution (Dyer & [START_REF] Graves | Institutional ownership and corporate R&D in the computer industry[END_REF][START_REF] Thomsen | Ownership structure and economic performance in the largest European companies[END_REF], the expectations of stakeholders about future value distribution, and, therefore, corporate reputation. The findings of [START_REF] Fombrun | What's in a name? Reputation building and corporate strategy[END_REF], [START_REF] Brammer | Corporate reputation and philanthropy: An empirical analysis[END_REF], and [START_REF] Brammer | Corporate reputation and social performance: The importance of fit[END_REF], described above, suggest that the presence of an institutional investor as the largest shareholder is a signal that can favor the building of corporate reputation. However, several researchers have stressed the importance of distinguishing the type of institutional investor (e.g., [START_REF] Bhattacharya | Institutional ownership and firm performance: Evidence from Finland[END_REF][START_REF] Borokhovich | Variation in the monitoring incentives of outside stockholders[END_REF][START_REF] Brickley | Ownership structure and voting on antitakeover amendments[END_REF][START_REF] Cornett | The impact of institutional ownership on corporate operating performance[END_REF][START_REF] Kochhar | Institutional investors and firm innovation: A test of competing hypotheses[END_REF]Ruiz-Mallorqui & Santana-Martín, 2009). In general, they distinguish between pressure-sensitive and pressure-resistant institutional investors. Pressure-sensitive institutional investors -e.g., banks -are institutional investors that are likely to have business relationships with firms in which they own an equity stake. Stakeholders can perceive that the double role of creditor and shareholder gives banks more information than other types of shareholders, making them more efficient monitors [START_REF] Gorton | Universal banking and the performance of German firms[END_REF][START_REF] Ingley | Corporate governance, institutional investors and conflicts of interest[END_REF][START_REF] Lehmann | Does the governed corporation perform better? Governance structures and corporate performance in Germany[END_REF][START_REF] Thomsen | Ownership structure and economic performance in the largest European companies[END_REF][START_REF] Zoido | Un estudio de las participaciones accionariales de los bancos en las empresas españolas[END_REF]. On the other hand, they may also expect that conflicts of interest with the rest of the stakeholders may also arise. In fact, one of the reasons for banks to be shareholders is the induced business relationships with the firms in which they invest [START_REF] Ruiz-Mallorquí | Ultimate owner and takeover defenses in the controlling versus minority shareholders context[END_REF].

Furthermore, banks can use their superior information and control in their own interestfor instance, by charging above-market interest, capturing all the firm's banking activities, or discouraging risky strategies [START_REF] Morck | Banks, ownership structure, and firm value in Japan[END_REF][START_REF] Shleifer | A survey of corporate governance[END_REF][START_REF] Zoido | Un estudio de las participaciones accionariales de los bancos en las empresas españolas[END_REF]. In contrast, pressure-resistant institutional investors -e.g., investment and pension funds -have no potential business links with the firms in which they invest, and they bear the cost associated with declines in value creation (Bhattacharya [START_REF] Bhattacharya | Institutional ownership and firm performance: Evidence from Finland[END_REF][START_REF] Borokhovich | Variation in the monitoring incentives of outside stockholders[END_REF][START_REF] Brickley | Ownership structure and voting on antitakeover amendments[END_REF]. Thus stakeholders should perceive them only as efficient monitors. 3

Other types of largest shareholder can also generate expectations. Stakeholders may perceive that a largest shareholder who is an individual or a family will likely be a founder or a founder's family successor and will therefore have an emotional involvement in the firm [START_REF] Galve | La empresa familiar en España. Fundamentos económicos y resultados[END_REF]. Such personal involvement may generate positive expectations, since the family shareholder will be more strongly interested in controlling expropriation than other types of shareholders for which the firm is only a piece in their portfolios [START_REF] Anderson | Founding family ownership and firm performance: Evidence from the S&P 500[END_REF][START_REF] Lehmann | Does the governed corporation perform better? Governance structures and corporate performance in Germany[END_REF]McConaughy, Mathews, & Fialko, 2001). However, family members have special ties and may ignore the interests of nonfamily stakeholders [START_REF] Barontini | The effect of ownership structure and family control on firm value and performance. Evidence from Continental Europe[END_REF][START_REF] Jara-Bertín | The contest to the control in European family firms: How other shareholders affect firm value[END_REF], who can perceive that family members can tailor value distribution to the objectives of the family (Gómez-Mejia, Núñez Nickel, & Gutiérrez, 2001;[START_REF] Morck | Family control and the rent-seeking society[END_REF][START_REF] Shleifer | Breach of trust in hostile takeovers[END_REF]. Thus, we expect a negative relationship between individual or family ownership and corporate reputation. for an eight-year period. The panel is unbalanced since not all firms are included in the MERCO ranking for the full eight-year period (see table 1). The total number of observations is 361.

- ----------------------------------------------------------INSERT The validity of GMM estimates depends on the absence of second-order serial autocorrelation in the residuals and on the validity of the instruments analyzed -note that first-order serial correlations are significant by way of construction. For this reason, Table 3 reports a second-order serial correlation test and a Hansen test for overidentifying restrictions that checks the validity of the selected instruments. These conditions are met in all of our analyses. Finally, to avoid overfitting biases and weak Hansen tests derived from the use of numerous instruments, we reduced the lags available for instruments and we collapsed the instruments [START_REF] Roodman | A note on the theme of too many instruments[END_REF].

Variables

Corporate Reputation. Corporate reputation information was obtained from the MERCO ranking. This index provides a score for the 100 best reputed companies in Spain and has been employed in previous research [START_REF] Fernández | The creation of value through corporate reputation[END_REF]. It is similar to Fortune's AMAC, which is the measure most commonly used in academic journals (e.g., [START_REF] Black | The market valuation of corporate reputation[END_REF][START_REF] Brown | How do reputations affect corporate performance? Stock market valuation of reputation for corporate social performance[END_REF][START_REF] Chung | Corporate reputation and investment performance: The UK and US expertise[END_REF][START_REF] Cordeiro | Do corporate reputations influence security analyst earnings forecasts? An empirical study[END_REF]Fombrum & Shanley, 1990;[START_REF] Hammond | The impact of prior firm financial performance on subsequent corporate reputation[END_REF]Riari-Belkaoui & Pavlik, 1991;[START_REF] Roberts | The value of a firm's corporate reputation: How reputation helps attain and sustain superior profitability[END_REF][START_REF] Fombrun | Corporate reputation: Research and practice[END_REF][START_REF] Sobol | Corporate reputation: A function of relative size or financial performance?[END_REF][START_REF] Srivastava | The value of corporate reputation: Evidence from equity markets[END_REF][START_REF] Vergin | Corporate reputation and the stock market[END_REF]. 4 The survey evaluates companies on six dimensions (economic performance, product quality, culture and workplace quality, ethics and corporate social responsibility, international and global presence, and innovation), each of which is disaggregated into three items. The items considered are shown in the Appendix. The ranking is built in two stages. 5 First, the survey proposes the 100 most reputable Spanish firms. Second, each of these firms is evaluated by several raters: financial analysts, NGOs, managers, unions, and consumer associations.

These ratings are verified through research into the firms' own reports and through a "merit questionnaire" created by MERCO analysts. Finally, the definitive ranking is drawn up and released.

In order to influence corporate reputation, information on ownership structure has to be perceived and interpreted by the firm's different audiences, who then form expectations about expropriation. Therefore, we analyzed the effect of ownership structure on corporate reputation as measured after the publication of information on the firms' ownership structure. We used the latest publicly available information on ownership structure for each of the years analyzed, because we assume that stakeholders will base their expectations on the most up-to-date available information. ownership are easy for stakeholders to obtain and perceive. Additionally, when several members of a family had stockholdings, we considered them as a single shareholder since we believe stakeholders will perceive that family members share interests. To account for the contestability of the largest shareholder's power, we used a third variable measuring the relative comparison of the first and second largest shareholdings. This was calculated as the difference between the first and second largest shareholdings divided by the largest shareholding. We used this relative comparison instead of the absolute difference between the first and second largest shareholder because the capability of the second shareholder to control the main one depends not only on the difference, but also on the level of ownership of each shareholder. For instance, the power of the second shareholder is not the same when the main shareholder holds a 24% stake and the second 20% as it is when the first holds 5% and the second 1%. Insider ownership was proxied by the percentage of stock controlled by executive and ex-executive directors. 6 In order to test for non-linear effects in the relationships analyzed, we used the square for ownership concentration of the largest shareholder and the square for insider ownership [START_REF] Mcconnell | Additional evidence on equity ownership and corporate value[END_REF][START_REF] Miguel | Ownership structure and firm value: New evidence from Spain[END_REF]. Finally, in order to capture the type of the largest shareholder we used four dummy variables, which identify the largest shareholder as a family or individual, a pressure-sensitive institutional investor (financial institutions), a pressure-resistant institutional investor (investment and pension funds), or "other." Our typology is similar to those employed by previous researchers [START_REF] Galve | Propiedad y resultados de la gran empresa española[END_REF][START_REF] Lehmann | Does the governed corporation perform better? Governance structures and corporate performance in Germany[END_REF][START_REF] Thomsen | Ownership structure and economic performance in the largest European companies[END_REF][START_REF] Tribó | Do the type and number of blockholders influence R&D investments? New evidence from Spain[END_REF]. In calculating all the variables we considered voting shares; non-voting shares are very rare in Spanish quoted firms, so using all types of shares should not change the results of our analyses. [START_REF] Brammer | Corporate reputation and women on the board[END_REF], we included as control variables three characteristics of the board of directors that can be perceived by stakeholders: board size, measured as the natural log of the number of directors; composition, measured as the proportion of independent directors and proportion of insider directors; and CEO duality. Research considering the influence of board size on its effectiveness has developed contradictory arguments. On the one hand, researchers argue that larger boards have more knowledge and skills at their disposal [START_REF] Forbes | Cognition and corporate governance: Understanding boards of directors as strategic decision-making groups[END_REF][START_REF] Pearce | Board composition from a strategic contingency perspective[END_REF], have greater ability to monitor [START_REF] Goodstein | The effects of board size and diversity on strategic change[END_REF], and enable the firm to form larger environmental linkages and secure scarce resources [START_REF] Dalton | Number of directors and financial performance: A meta-analysis[END_REF][START_REF] Pfeffer | Size and composition of corporate boards of directors: The organization and its environment[END_REF]Pfeffer & Salancik, 1978). On the other hand, researchers have also argued that oversized boards have problems of poorer communication and decision-making, and are easier for the CEO to control [START_REF] Jensen | The modern industrial revolution, exit, and the failure of internal control systems[END_REF][START_REF] Lipton | A modest proposal for improved corporate governance[END_REF][START_REF] Yermack | Higher market evaluation of companies with a small board of directors[END_REF].

Ownership

Stakeholders may perceive both effects, so the sign of the relationship between board size and corporate reputation is an open question. Board composition, and especially the presence of independent directors, has also been considered a relevant determinant of effectiveness. A greater proportion of independent directors should generate a perception of more effective control of managerial actions and an orientation towards the fulfillment of every stakeholder's interest, which should favor corporate reputation [START_REF] Baysinger | Corporate governance and the board of directors: Performance effects of changes in board composition[END_REF][START_REF] Dalton | Meta-analytic reviews of board composition, leadership structure, and financial performance[END_REF][START_REF] Freeman | Strategic management: A stakeholder approach[END_REF][START_REF] Johnson | The effects of corporate governance and institutional ownership types on corporate social performance[END_REF]Pfeffer & Salanzik, 1978;[START_REF] Zahra | Boards of directors and corporate social responsibility performance[END_REF]. In contrast, insider directors, being managers and directors at the same time, should be less able to monitor [START_REF] Dalton | Meta-analytic reviews of board composition, leadership structure, and financial performance[END_REF][START_REF] Hermalin | The effects of board composition and direct incentives on firm performance[END_REF] and less oriented towards other stakeholders, which should negatively (see meta-analysis and review by [START_REF] Dalton | Meta-analytic reviews of board composition, leadership structure, and financial performance[END_REF][START_REF] Kang | Board leadership structure and firm performance[END_REF][START_REF] Kang | Board leadership structure and firm performance[END_REF], agency theorists have traditionally argued that CEO duality should produce CEO entrenchment by reducing board monitoring effectiveness [START_REF] Dalton | Meta-analytic reviews of board composition, leadership structure, and financial performance[END_REF][START_REF] Finkelstein | CEO duality as a double-edged sword: How boards of directors balance entrenchment avoidance and unity of command[END_REF][START_REF] Lorsch | Pawns and potentates: The reality of America's corporate boards[END_REF] We also controlled for industry and year. Firm size was measured by the log of total assets.

There is ample empirical evidence that larger firms have better corporate reputations [START_REF] Cordeiro | Do corporate reputations influence security analyst earnings forecasts? An empirical study[END_REF][START_REF] Deephouse | The effect of financial and media reputations on performance[END_REF][START_REF] Dunbar | Corporate reputation and performance in Germany[END_REF][START_REF] Fombrun | What's in a name? Reputation building and corporate strategy[END_REF][START_REF] Riahi-Belkaoui | Asset management performance and reputation building for large US firms[END_REF][START_REF] Roberts | The value of a firm's corporate reputation: How reputation helps attain and sustain superior profitability[END_REF][START_REF] Sobol | Corporate reputation: A function of relative size or financial performance?[END_REF]. Large firms, being more visible in markets, are expected to be more closely examined by the different audiences and, therefore, to exhibit low expropriation that favors the building of corporate reputation. Smaller companies, which may even go unnoticed in the market, are expected to be less controlled and therefore less careful in the distribution of firm value, reducing corporate reputation.

Although the empirical literature shows ambiguous findings about the influence of firm age on corporate reputation [START_REF] Rao | The social construction of reputation: Certification contest, legitimation, and survival of organizations in the American automobile industry: 1895-1912[END_REF][START_REF] Schultz | Sticky reputation: Analyzing a ranking system[END_REF], we have introduced firm age because corporate reputation accumulates slowly [START_REF] Fombrun | Reputation: Realizing value from the corporate image[END_REF][START_REF] Schultz | Sticky reputation: Analyzing a ranking system[END_REF]. Companies that have remained in business through long periods of market supervision can be expected to have maintained their stakeholders' satisfaction, [START_REF] Weizsacker | Barriers to entry[END_REF], cited by Williamson, 1985).

Our third variable is Return on Equity (ROE). Previous research has frequently analyzed the influence of returns on corporate reputation [START_REF] Dunbar | Corporate reputation and performance in Germany[END_REF][START_REF] Inglis | Corporate reputation and organisational performance: An Australian study[END_REF][START_REF] Mcguire | Perceptions of firm quality: A cause or result of firm performance[END_REF][START_REF] Rose | The impact of corporate reputation on performance: Some Danish evidence[END_REF]. The possibilities of satisfying future demands of stakeholders are higher when the value created by the firm is higher and when expropriation is lower. Stakeholders will use previous firm performance to estimate future performance, and a higher expected value creation will lead them to expect satisfaction of their interests and thus will build corporate reputation.

Finally, we also controlled for industry and year by introducing temporal and industry dummies. To calculate industry dummies we used the CNAE (Spanish Code of Business Activities), which largely corresponds with standard SIC codes.

Sample selection bias

As indicated above due to the MERCO coverage of the 100 most reputable firms in Spain, there is a drop of observations in our sample. Therefore, we tested and corrected for sample selection bias following the procedure indicated by Semykina and[START_REF] Semykina | Estimating dynamic panel data models with sample selection[END_REF] and El Lahga and Moreau (2007). This procedure is similar to that proposed by [START_REF] Heckman | Sample selection bias as a specification error[END_REF] where i equals each individual, t equals time, and ε it is the random error for each observation.

RESULTS

Table 2 provides the descriptive statistics and pairwise correlations for all independent and dependent variables. These descriptive statistics for our sample show characteristics of a typical civil law country with high levels of ownership concentration in the hands of the largest shareholder (average = 24.3 percent). Ownership in the hands of the second largest shareholder is on average also high, but represents only a third of the average ownership by the largest shareholder (average = 7.6 percent). The descriptive statistics also show similar proportions of the different types of largest shareholder: family or individual, pressure-sensitive institutional, and pressure-resistant institutional investors.

-----------------------------------------------------------INSERT TABLE 2 ABOUT HERE ---------------------------------------------------------

The results of panel data analyses are shown in Table 3

-----------------------------------------------------------INSERT TABLE 3 ABOUT HERE ---------------------------------------------------------

The results show a non-significant relationship between second-owner concentration and corporate reputation in all the models (3, 8, 9, 10, and 11). However, they also show a negative and significant coefficient for the contestability variable (t = -2.53, p<0.05; t = -2.10, p<0.05; t = -3.29, p<0.01; and t = -2.00, p<0.05 in models 12 to 15, respectively).

These findings support hypothesis 2b: the lower the difference between the first and second largest blockholdings, the greater the corporate reputation. Finally,models 7,10,11,14,and 15 show the relationship between the type of the largest shareholder and corporate reputation. For these analyses we used dummy variables, so we had to exclude one type of shareholder to avoid a problem of multicollinearity. We excluded "other" firms, which became the comparison group. The results show negative and significant coefficients for pressure-resistant institutional owners (t = -3.39, p<0.001; t = -2.76, p<0.01; t = -2.09, p<0.05; t = -1.90, p<0.10; and t = -4.43, p<0.001) in all analyses (models 7, 10, 11, 14, and 15 respectively), and a negative and significant coefficient for pressure-sensitive owners (t = -2.63, p<0.05; t = -2.12, p<0.05; t = -2.20, p<0.05, and t = -2.12, p<0.05) in models 7, 10, 11, and 15 respectively. Family or individual ownership shows a positive and significant coefficient only in model 14 (t = 1.85, p<0.10). These results show that, compared to the comparison group, both pressure-resistant and pressure-

DISCUSSION AND CONCLUSIONS

Our research has analyzed the influence of ownership structure on a firm's reputation. Our results, for a sample of the most reputable firms in Spain, show that stakeholders consider characteristics of ownership structure when generating the expectations of future expropriation that lead to corporate reputation. Specifically, our results support the idea that high levels of ownership concentration in the hands of the largest shareholder erode corporate reputation. The lack of significance of the non-linear relationship between ownership concentration by the largest shareholder and corporate reputation may be due to the high levels of ownership concentration in Spanish firms.

These high levels of ownership concentration may not allow stakeholders to perceive any positive influences that might arise for lower levels of ownership. Our results also show a significant relationship between the contestability of the largest shareholder's power and corporate reputation: the lower the difference between the first and second largest blockholdings, the larger the perception of monitoring, which generates expectations of lower expropriation and finally fosters corporate reputation. Additionally, corporate reputation is positively related to insider ownership at low levels of ownership, and negatively related at high levels. Our analyses show that the presence of either pressureresistant or pressure-sensitive institutional investors erodes corporate reputation. This finding is not consistent with research by [START_REF] Fombrun | What's in a name? Reputation building and corporate strategy[END_REF], Brammer and[START_REF] Brammer | Corporate reputation and social performance: The importance of fit[END_REF][START_REF] Brammer | Corporate reputation and stock returns: Are good firms good for investors?[END_REF][START_REF] Brammer | Corporate reputation and stock returns: Are good firms good for investors?[END_REF], which has shown a positive effect of institutional ownership on corporate reputation; nor is it consistent with arguments that pressure-sensitive and pressure-resistant institutional investors behave differently (e.g., et al., 1988;[START_REF] Kochhar | Institutional investors and firm innovation: A test of competing hypotheses[END_REF]. Our result suggests that stakeholders in Spain, rather than perceiving institutional investors as active monitors of firm behavior, perceive them as traders concerned with short-term investment horizons [START_REF] Bushee | Do institutional investors prefer near-term earnings over long-run value?[END_REF][START_REF] Graves | Institutional ownership and control: Implications for long-term corporate performance[END_REF][START_REF] Laverty | Economic "short-termism": The debate, the unresolved issues, and the implications for management practice and research[END_REF]. In Spain, institutional investors usually maintain less stable investments than other types of largest shareholders, and thus may be perceived as focusing on short-term performance at the expense of long-run value. This perception implies an expectation of expropriation of rents that erodes corporate reputation.

Finally, family or individual ownership does not show a significant influence on corporate reputation. This finding suggests that the possible benefits of family ownership may counterbalance the negative effects, so that stakeholders do not have clear expectations concerning this type of shareholder.

Our findings suggest that stakeholders have more complex perceptions about ownership concentration of insiders than about ownership concentration of the largest blockholder. This result may seem especially surprising considering that firms in a typical civil law country like Spain traditionally have large shareholders. These perceptions may exist because corporate governance codes and the media, even in civil law countries, have traditionally placed more emphasis on managerial opportunism than on controlling shareholders' expropriation. This implication of our results suggests that stakeholders' expectations are influenced by the environmental context -e.g., the media and legal regulation.

Our findings with regard to control variables suggest that independent directors, board size, and CEO duality are related to corporate reputation. Our findings are consistent with arguments that board independence improves corporate governance (CNMV, 2006;OECD, 2004;Randoy & Jennsen, 2004) and suggest that those boards with a greater [START_REF] Baysinger | Corporate governance and the board of directors: Performance effects of changes in board composition[END_REF][START_REF] Freeman | Strategic management: A stakeholder approach[END_REF][START_REF] Hermalin | The effects of board composition and direct incentives on firm performance[END_REF][START_REF] Johnson | The effects of corporate governance and institutional ownership types on corporate social performance[END_REF][START_REF] Zahra | Boards of directors and corporate social responsibility performance[END_REF]. Our finding is also consistent with arguments by [START_REF] Pfeffer | The external control of organizations: A resource dependence perspective[END_REF] that outside directors may enhance the reputation and credibility of an organization and contribute to its legitimacy. The positive and significant influence of board size on corporate reputation also suggests that stakeholders perceive larger boards to have more knowledge and skills at their disposal [START_REF] Forbes | Cognition and corporate governance: Understanding boards of directors as strategic decision-making groups[END_REF][START_REF] Pearce | Board composition from a strategic contingency perspective[END_REF], to favor supervision of managerial actions [START_REF] Goodstein | The effects of board size and diversity on strategic change[END_REF] or to provide the firm with larger environmental linkages and secure scarce resources [START_REF] Dalton | Number of directors and financial performance: A meta-analysis[END_REF][START_REF] Goodstein | The effects of board size and diversity on strategic change[END_REF][START_REF] Pfeffer | Size and composition of corporate boards of directors: The organization and its environment[END_REF]Pfeffer & Salancik, 1978). These effects foster expectation of firms' value creation and at the same time of reduced expropriation, finally leading to building corporate reputation. Finally, our findings also show that CEO duality is negatively related to corporate reputation. This finding is consistent with previous arguments that CEO duality should produce CEO entrenchment by reducing board monitoring effectiveness [START_REF] Dalton | Meta-analytic reviews of board composition, leadership structure, and financial performance[END_REF][START_REF] Finkelstein | CEO duality as a double-edged sword: How boards of directors balance entrenchment avoidance and unity of command[END_REF][START_REF] Lorsch | Pawns and potentates: The reality of America's corporate boards[END_REF]. Expectations of CEO entrenchment negatively affect corporate reputation.

In sum, our paper makes three major contributions. First, we provide evidence of the impact of ownership structure on an outcome variable -corporate reputation -that has scarcely been analyzed before. Researchers have focused mainly on the role of ownership structure as a mechanism of corporate governance (e.g., [START_REF] Demsetz | The structure of corporate ownership[END_REF][START_REF] Gedajlovic | Management and ownership effects: Evidence from five countries[END_REF][START_REF] Miguel | Ownership structure and firm value: New evidence from Spain[END_REF][START_REF] Morck | Management ownership and market valuation: An empirical analysis[END_REF], but our findings show that the characteristics of ownership structure are also signals, which will translate into The "law and finance" approach has stressed differences both in levels of ownership concentration and in quality of law enforcement and accounting standards which lead to differences in the effects of ownership structures between civil law countries and common law countries [START_REF] Gedajlovic | Management and ownership effects: Evidence from five countries[END_REF][START_REF] Porta | Investor protection and corporate valuation[END_REF][START_REF] López De Foronda | Ownership structure, sharing of control and legal framework: International evidence[END_REF]. Specifically, in contrast to civil law countries, common law ones tend to protect investors better, which leads to more concentrated ownership in the case of civil law countries. However, as a consequence, controlling shareholders have the power to expropriate (La [START_REF] Porta | Investor protection and corporate valuation[END_REF], which is also favored by this lower protection. This difference in levels and effects of ownership concentration may also have different effects on stakeholders' perceptions and expectations. Lastly, our paper complements previous research analyzing how pressure-resistant vs. pressure-sensitive institutional investors have different influences in the firm (e.g., [START_REF] Borokhovich | Variation in the monitoring incentives of outside stockholders[END_REF][START_REF] Brickley | Ownership structure and voting on antitakeover amendments[END_REF][START_REF] Kochhar | Institutional investors and firm innovation: A test of competing hypotheses[END_REF]. Our paper suggests that stakeholders in Spain have similar perceptions of pressure-resistant and pressure-sensitive institutional investors.

One limitation of our study involves the structure of the sample. The MERCO index, like other indexes of corporate reputation, publishes scores only for the best reputed firms. Therefore our analyses refer to the influence of visible characteristics of ownership structure on differences among the most reputable firms, but not between reputed and nonreputed ones. This analysis should be an interesting future line of research. Additionally, in our research we employed the latest publicly available information on ownership structure for each of the years analyzed, on the assumption that stakeholders will use the most up-to- our assumption should not seriously bias our findings. Third, our measure of insider ownership considers only the percentage of stock controlled by executive and ex-executive directors. A more complete definition of insider ownership would consider stock controlled by all executives, but this information was not publicly available. Nevertheless, we believe our definition does include those executives with the largest shareholdings, and thus the most influential ones when forming expectations about a firm's future behavior. Fourth, in the analyses presented in the paper we have not considered the role of large shareholders' representatives on the board of directors, because of problems of collinearity. We performed additional analyses replacing the proportion of independent directors with the proportion of large shareholders' representatives on the board, and results for these analyses reinforce our conclusions: the proportion of large shareholders' representatives showed a negative relationship with corporate reputation. Results of these analyses can be obtained from the authors. Finally, our research focuses on a single civil law country, Spain; new analyses on other civil law countries should be an interesting future line of research.

Nevertheless, the study has a number of implications. Our chief conclusion, that corporate ownership structures influence corporate reputation, suggests that the welldocumented influence of ownership structure on financial performance results not only directly from expropriation. Previous research has found that corporate reputation improves financial performance (e.g., [START_REF] Black | The market valuation of corporate reputation[END_REF][START_REF] Roberts | Corporate reputation and sustained superior financial performance[END_REF]. If we link this evidence to our results, we can consider that part of the widely analyzed relationship between ownership structure and firm performance may be due to the effect of ownership structure on corporate reputation. In this sense, we can state that ownership structure is not Furthermore, we think that ownership structure can also affect the accumulation of other capabilities and resources -e.g., culture, knowledge, or innovation -in which stakeholders' attitudes, such as perception or effort, matter. Stakeholders take into account their expectations about value distribution and behave in a way that favors their best interests [START_REF] Aguilera | Corporate governance and social responsibility: A comparative analysis of the UK and the US[END_REF][START_REF] Cropanzano | Three roads to organizational justice[END_REF]. A change in the perceived characteristics of ownership structure (i. ownership structure has highlighted that differing institutional contexts affect the ownership structures of firms (e.g., La [START_REF] Porta | Law and finance[END_REF][START_REF] Porta | Corporate ownership around the world[END_REF]; these contexts might produce relationships different from those shown in our research. In particular, the "law and finance" approach (La [START_REF] Porta | Law and finance[END_REF][START_REF] Porta | Corporate ownership around the world[END_REF] suggests that new studies in a common law country might point to different effects of ownership structure on corporate reputation.

Finally, corporate reputation is commonly defined by the aggregate expectations of every group of stakeholders; but it would be interesting to disaggregate how each group of Shleifer, andVishny (1998, 2000), the commercial legal systems of most countries derive from a few legal families including the English (common law) system and the French, Spanish, and German ones (civil law systems, all derived from Roman law). These different legal systems generate significant differences among countries in the quality of law enforcement and accounting standards. Common law countries seem to protect investors better than civil law ones; as a result, there are also large differences among countries in ownership concentration in publicly traded firms and in the access of these firms to external finance. Firms in civil law countries with lower investor protection may need more concentrated ownership in order to avoid managerial expropriation. However, as a consequence these controlling shareholders have an active role in organizational behavior and the power to expropriate (La [START_REF] Porta | Investor protection and corporate valuation[END_REF].

[2] Since 1983, Fortune's AMAC has annually surveyed CEOs' and analysts' views of the 10-15 largest companies on a 64 industry list. Respondents are asked to rate a competitor's reputation on a 10-point scale (0=poor and 10=excellent) in terms of eight key attributes of reputation: (1) Financial soundness;

(2) Long-term investment value;

(3) Use of corporate assets; (4) Innovativeness; (5) Quality of the company's management; (6) Quality of its products and services; (7) Ability to attract, develop and keep talented people; and (8) Acknowledgement of social responsibility [START_REF] Chun | Corporate reputation: Meaning and measurement[END_REF].

[3] Scholars including Brickley and colleagues (1988) and Borokovich and colleagues (2006) have

shown that the type of institutional investors influences the tendency to support managerial decisions, but their arguments rest on the conflict of interest between managers and shareholders traditional in common law countries. We agree with Ruiz-Mallorquí and Santana-Aguiar ( 2009) that these arguments cannot be completely applied to civil law countries in which the main conflict of interest rests in the power of the largest shareholder to expropriate.

[4] Similar surveys have been developed in various countries. Nyhedsmagasin's ranking for Denmark have also been used in academic research [START_REF] Brammer | Corporate reputation and philanthropy: An empirical analysis[END_REF][START_REF] Brammer | Corporate reputation and social performance: The importance of fit[END_REF][START_REF] Dunbar | Corporate reputation and performance in Germany[END_REF][START_REF] Schultz | Sticky reputation: Analyzing a ranking system[END_REF].

[5] A thorough description of the MERCO methodology can be seen at its website: http://www.english.merco.info/show/mercoempresas/2004.

[6] Spanish quoted companies are requested to disclose the number of shares held by directors.

However, executives who are not members of the board are subject only to ordinary disclosure, i.e., if they hold 5% or more of the shares. This legal requirement meant that we had to define insider ownership as ownership by executive and ex-executive directors. Although our measure does not capture the full ownership of executives, it does capture the stock ownership of the most influential insiders, and thus of the ones most important to the formation of expectations about a firm's future behavior.

[7] In the case of a civil law country like Spain, the presence of large shareholders' representatives on the board may also negatively affect corporate reputation. However, owing to problems of collinearity we could not include this variable in our analyses. We performed additional analyses replacing the proportion of independent directors with the proportion of large shareholders' representatives on the board, and results for these analyses reinforce our conclusions: the proportion of large shareholders' representatives showed a negative relationship with corporate reputation. Results of these analyses can be obtained from the authors.

[8] Weizsacker (1980:72-73; cited by [START_REF] Williamson | The economic institutions of capitalism: Firms, markets, relational contracting[END_REF]

  Hypothesis 4a: Pressure-sensitive institutional investors are negatively related to corporate reputation. Hypothesis 4b: Pressure-resistant institutional investors are positively related to corporate reputation. Hypothesis 4c: Individual or family ownership is negatively related to corporate reputation. tested on firms included in the MERCO -Monitor Español de Reputación COrporativa (Spanish Monitor of Corporate Reputation) -ranking of the 100 top reputed firms in Spain for 2000-2007. The ranking is explained below. This index provides data for eight years, so we were able to use a panel data analysis and thus avoid the problems of unobservable heterogeneity in empirical analyses, and also compare our findings to those obtained by previous researchers. The initial sample comprised those firms included in the MERCO ranking for each of the years considered. From the initial sample we excluded firms for which information on ownership structure or board characteristics was not available. The final sample consists of a panel comprising 59 firms

  e., a change in the largest shareholder or an increase or decrease in the stock ownership of the largest shareholder or of insiders) may signal a different future distribution of value, changing the behavior of stakeholders, who seek to optimize their assignment in value distribution. These new behaviors will change the existing resource structure. Examining the influence of ownership structure on other resources would be a promising extension of our research. It would also be of interest to analyze the relationship between ownership structure and corporate reputation in other countries. Theoretical and empirical research on

  corporate reputation. High levels of ownership concentration in the hands of the largest shareholders or high differences in ownership concentration between first and second largest shareholders impair corporate reputation and should be compensated by introducing corporate governance mechanisms that favor corporate reputation, such as increasing the number of independent directors or avoiding CEO duality

	communicated to foster
	THE IMPACT OF OWNERSHIP STRUCTURE ON CORPORATE
	REPUTATION: EVIDENCE FROM SPAIN
	R e v i e w R e v i e w
	C o p C o p
	y y
	2

Page 5 of 48 Corporate Governance: An International Review Corporate Governance: An International Review

	R e v i e w
	C o p
	y
	6

  sample, variables, and methods; our fourth reports the results. We conclude by discussing how our findings relate to those of others, the limitations of our study, and potential directions for future research.

	section describes the
	R e v i e w
	C o p
	y
	Our third
	7

Page 7 of 48 Corporate Governance: An International Review Corporate Governance: An International Review

	Vishny, 1997) because expropriated resources benefit controlling stakeholders at the
	expense of others
	R e v i e w
	C o p
	y
	8

; Shleifer &

Page 8 of 48 Corporate Governance: An International Review Corporate Governance: An International Review

	R e v i e w
	C o p
	y
	9

Page 10 of 48 Corporate Governance: An International Review Corporate Governance: An International Review

	with a low difference between the two largest blockholders, improving corporate
	reputation. Where the difference is high, stakeholders can expect the largest shareholder's
	power to be less contestable. This reduces stakeholders' expectations of having their
	interest fulfilled and impairs corporate reputation.
	; López de Foronda et al., 2007; Maury & Pajuste, 2005). The second largest shareholder cannot itself expropriate, because the R e v i e w
	possibilities of expropriation are controlled by the largest shareholder. Thus the second largest shareholder has incentives to monitor both managers and the largest shareholder. C o p The incentives of monitoring should increase with ownership concentration of the second largest shareholder. Therefore, we expect that ownership concentration in the hands of a y
	second large shareholder will favor stakeholders' expectations of low expropriation and of
	future fulfillment of their interests, thus consolidating corporate reputation.
	Hypothesis 2a: Ownership concentration in the hands of a second largest
	shareholder is positively related to a firm's corporate reputation.
	The contestability of the largest shareholder's power depends on the difference in
	holdings between the largest and second-largest blockholders (Laeven & Levine, 2008;
	Maury & Pajuste, 2005). Stakeholders will anticipate lower expropriation in corporations
	11

Whetten, Page 11 of 48 Corporate Governance: An International Review Corporate Governance: An International Review

	2006;
	R e v i e w
	C o p
	y
	12

Page 12 of 48 Corporate Governance: An International Review Corporate Governance: An International Review

	&
	R e v i e w
	C o p
	y
	13

TABLE 1 ABOUT HERE Methodology

Since the dependent variable analyzed -corporate reputation-may present inertia in time -i.e., present values of corporate reputation may be conditioned by previous values-, we used a dynamic panel data analysis. The estimation approach used is

[START_REF] Arellano | Another look at the instrumental variables estimation of errorcomponents models[END_REF]

and

[START_REF] Blundell | Initial conditions and moment restrictions in dynamic panel data models[END_REF]

"System GMM (Generalized Method of Moments)." The system GMM estimator has a number of advantages. On the one hand, it controls for the possible problems of endogeneity of explanatory variables and, on the

Page 14 of 48 Corporate Governance: An International Review Corporate Governance: An International Review

  avoids non-observable constant heterogeneity arising out of the specific features of each firm that remain over time. Additionally, this estimation approach allows the introduction of more instruments than other GMM estimators, which improves efficiency.

	other, it
	R e v i e w
	C o p
	y
	15

Page 15 of 48 Corporate Governance: An International Review Corporate Governance: An International Review

  perceptions of major Spanish managers. In 2008, the survey was mailed to 12,800 Spanish top managers of the 3,000 firms with revenue higher than 50 million euros.The final 2008 sample comprised 1,215 questionnaire responses. This stage provisionally

	asks for the
	R e v i e w
	C o p
	y
	16

Page 16 of 48 Corporate Governance: An International Review Corporate Governance: An International Review

	as indirect ownership, but not full pyramidal ownership, since only direct and indirect
	R e v i e w
	C o p
	y
	database of "Significant shares for all quoted companies," and corporate governance reports
	for the period 2000-2007, and firms' financial statements, DICODI, and Who's Who in
	Spain databases for the period 1995-2007.
	17

Structure. The main sources of information for the independent variables were the databases from the CNMV (Spanish Stock Exchange Commission), the DICODI database for the top 50,000 Spanish companies, Who's Who in Spain, Thomson ONE Banker, and firms' financial statements. More specifically, we used data from the Ownership concentration was measured by the percentages of shares controlled by the largest and second largest shareholders. In our calculations we considered direct as well

Page 17 of 48 Corporate Governance: An International Review Corporate Governance: An International Review

  Since other corporate governance mechanisms such as the board of directors can also affect stakeholders' expectations

	Control Variables.
	R e v i e w
	C o p
	y
	18

Page 18 of 48 Corporate Governance: An International Review Corporate Governance: An International Review

	affect corporate reputation.
	R e v i e w
	C o p
	y
	19

7

Finally, although empirical evidence has not been conclusive

  . Expectations of CEO entrenchment should negatively affect corporate reputation. The information regarding these board characteristics was obtained from the Spencer Stuart Board Index published by Spencer Stuart Consulting, firms' corporate governance reports, and firms' financial statements. Three additional variables were used as controls, since they have frequently been related to corporate reputation in empirical research: firm size, age, and return on equity.

Page 19 of 48 Corporate Governance: An International Review Corporate Governance: An International Review

	so that stakeholders extrapolate 8 from previous behaviors to generate expectations of future
	behavior
	R e v i e w
	C o p
	y
	20

Page 20 of 48 Corporate Governance: An International Review Corporate Governance: An International Review

  . It consists in obtaining a probit estimation for each time period in which the dependent is a dummy variable gauging whether or not the firm is included in the MERCO index of the top reputed companies. The explanatory variables were ownership concentration in the hands of the main shareholder and second shareholder, insider added as exclusion restriction variables: variables that are included in the probit estimations but not in the GMM models analyzed. These estimates are used to compute the inverse Mill's ratios for each probit regression. For the selected sample we then estimated each equation augmented by the inverse Mills ratios calculated for each time period. A test of selection bias is the t-test of the significance of the coefficient for the inverse Mills ratios. T-tests for the inverse Mill's ratio showed significant coefficients for only 6 of the 15 models considered in our study. Additionally,

	Page 21 of 48	Corporate Governance: An International Review
	R e v i e w R e v i e w + β 19 (inverse Mills Ratio it ) + β 18 (ROE it ) representatives were also The following model is used to test the effect of ownership structure on corporate +d t +d i +ε it
	C o p y C o p + β 2 (ownership concentration largest shareholder it ) reputation: Corporate Reputation it = α + β 1 (corporate reputation it-1 ) + β 3 (ownership concentration largest shareholder squared it ) + β 4 (ownership concentration second largest shareholder it ) y
	+ β 5 (relative difference in ownership concentration between first and second largest
	shareholders it )
	+ β 6 (insider ownership it )
	+ β 7 (insider ownership squared it )
	+ β 8 (family or individual it )
	+ β 9 (pressure-sensitive institutional investor it )
	+ β 10 (pressure-resistant institutional investor it )
	+ β 11 (other it )
	+ β 12 (board size it )
	+ β 13 (percentage of independent directors it )
	+ β 14 (percentage of inside directors it )
	+ β 15 (CEO duality it )
	+ β 16 (size it )
	+ β 17 (age it )
		Corporate Governance: An International Review	21 22

ownership, the percentage of independent directors, firm size, age, and ROE. Due to methodological requirements, leverage and the percentage of directors who are shareholder the coefficients and significance levels of our hypothesized variables in the analyses remained almost identical after we included the inverse Mill's ratio, indicating that sample selection bias is not a concern in our study. We report results only for the models that test and correct for sample selection. Results for the uncorrected models and for probit models can be obtained from the authors.

Page 24 of 48 Corporate Governance: An International Review Corporate Governance: An International Review

	sensitive institutional investors impair corporate reputation, whereas family or individual
	ownership does not seem to affect corporate reputation.
	R e v i e w
	C o p
	y
	25

Page 25 of 48 Corporate Governance: An International Review Corporate Governance: An International Review

	Brickley
	R e v i e w
	C o p
	y
	26

Page 26 of 48 Corporate Governance: An International Review Corporate Governance: An International Review

	proportion of independent directors signal more effective control that discourages
	managerial or majority owner's expropriation, and an orientation towards fulfillment of
	every stakeholders' interest, which will favor corporate reputation
	R e v i e w
	C o p
	y
	27

Page 27 of 48 Corporate Governance: An International Review Corporate Governance: An International Review

  towards the firm. Second, we also contribute to the limited research on the factors that favor corporate reputation. Previous research analyzing the influence of ownership structure on corporate reputation has focused only on common law countries.

	stakeholders' responses
	R e v i e w
	C o p
	y
	28

Page 28 of 48 Corporate Governance: An International Review Corporate Governance: An International Review

	date information available, and since large blockholdings are relatively stable over time,
	R e v i e w
	C o p
	y
	29

Page 29 of 48 Corporate Governance: An International Review Corporate Governance: An International Review

	only a corporate governance mechanism that conditions actual expropriation, but also a
	signal that generates expectations about expropriation -expectations that favor or erode
	corporate reputation.
	R e v i e w
	C o p
	y
	30

Page 30 of 48 Corporate Governance: An International Review Corporate Governance: An International Review

  For practitioners, our findings suggest how managers and directors in civil law countries should communicate and manage ownership structure and board of director's characteristics to consolidate corporate reputation. On the one hand, corporate communications should emphasize any existing characteristics of ownership structure and of the board of directors that favor reputation, such as low levels of ownership concentration in the hands of the largest shareholder and low differences in ownership concentration between the first and second largest shareholders. On the other hand, directors and even large shareholders should try to change those characteristics of the board of directors that may generate negative perceptions -for instance, the nominations committee of the board of directors might suggest an increase in board size or in the number of independent directors, or the avoidance of CEO duality. When characteristics are difficult, even impossible, to change -e.g., high levels of ownership concentration in the hands of the largest shareholder, or high or low levels of insider ownership concentrationmanagers and directors should introduce compensatory mechanisms such as codes of conduct and communicate these mechanisms to stakeholders. Finally, our findings are also of interest for regulators, who should consider our findings that independent directors improve corporate reputation, and that directors who represent large shareholders impair it.

	Page 31 of 48	Corporate Governance: An International Review
		stakeholders perceives ownership structure in order to generate expectations that lead to NOTES
		corporate reputation. [1] According to La Porta, Lopez-de-Silanes,
		R e v i e w R e v i e w
		C o p C o p
		y y
		Corporate Governance: An International Review	31 32

Page 32 of 48 Corporate Governance: An International Review Corporate Governance: An International Review

  "Most Respected Companies," published by Financial Times; Manager Magazine's survey of Germany's largest manufacturing and service firms and Børsens

	Management Today;
	R e v i e w
	C o p
	y
	33

"Asia's Most Admired Companies," published by Far East Economic Review; "Britain's Most Admired Companies," published by

Page 33 of 48 Corporate Governance: An International Review Corporate Governance: An International Review

	explains that "people extrapolate the
	behaviour of others from past observations and this extrapolation is self-stabilizing, because it
	provides incentives for others to live up to these expectations [...]. By observing others' behaviour
	in the past, one can fairly confidently predict their behaviour in the future without incurring
	further cost."

TABLE 1 Structure of the Sample

 1

			Page
	Number of annual	Number of	Number of
	observations per	companies	observations
	company
	4	16	64
	5	10	50
	6	4	24
	7	9	63
	8	20	160
	Total	59	361

34 of 48 Corporate Governance: An International Review Corporate Governance: An International Review R e v i e w C o p y 35

TABLE 2 Descriptive Statistics and Correlation Matrix

 2

			Mean St. Dev.	1	2	3	4	5	6	7	8	9	10	11	12	13	14	15
	1 Ownership
		concentration first	24.34	23.71
		shareholder
	2 Ownership
		concentration second	7.57	7.46 -0.31***
		shareholder
	3 Difference between
		first and second	0.47	0.34 0.65*** -0.06
		largest shareholders
	4 Insider ownership	8.51	18.70 0.02	0.01	0.06
	5 Family or individual	0.28	0.45 0.18***	0.09	0.26***	0.03
	6	Pressure-sensitive institutional investor	0.24	0.43 -0.06	-0.07	-0.00	0.06	-0.35***
	7 Pressure-resistant institutional investor	0.23	0.42 -0.27***	0.13*	-0.20*** -0.04	-0.34*** -0.31***
	8 Other	0.23	0.42 0.18***	-0.21*** -0.06	-0.15** -0.34*** -0.31*** -0.30***
	9 Independent directors	0.48	0.25 -0.45***	0.51*** -0.15**	-0.05	-0.13*	-0.06	0.37*** -0.20***
	10 Insider directors	0.18	0.10 0.24*** -0.11*	0.24***	0.09 †	0.23***	0.01	-0.04	-0.27*	-0.24***
	11 Duality	0.72	0.45 0.07	-0.23***	0.04	0.07	0.13**	0.05	-0.09 †	-0.02	-0.09 †	0.29***
	12 Board size	2.63	0.28 0.03	0.03	-0.07	0.05	-0.16**	0.22*** -0.12*	0.06	-0.20*** -0.05	-0.19***
	13 Size	16.37	1.93 -0.42***	0.56*** -0.25***	0.02	-0.26***	0.04	0.20*** -0.01	0.59*** -0.14**	-0.16**	0.15**
	14 Age	78.32	48.18 -0.25***	0.50*** -0.08	0.03	-0.19***	0.04	0.10 †	0.12*	0.31*** -0.32*** -0.05	0.23***	0.48***
	15 ROE	0.11	0.18 0.03	-0.04	-0.01	-0.03	0.03	-0.04	0.16**	-0.12*	0.06	0.12*	0.05	-0.11*	-0.14**	-0.18***
	16 Corporate reputation	8.03	0.50 -0.10 †	-0.07	0.03	0.07	-0.07	0.22*** -0.08	-0.09	0.06	0.12*	0.11*	0.13*	0.20*** -0.08	0.00
	†p<0.10; *p<0.05; **p<0.01; ***p<0.001
	N= 361 observations.

TABLE 3 Results of Dynamic Panel Data Analyses of the Influence of Ownership Structure on Corporate Reputation

 3

															Page
		Model 1	Model 2	Model 3	Model 4	Model 5	Model 6	Model 7
	Reputation (t-1)	0.58 ***	0.61 ***	0.64 ***	0.66 ***	0.66 ***	0.56 ***	0.64 ***
		(0.07)		(0.06)		(0.05)		(0.06)		(0.06)		(0.07)		(0.05)
	Ownership concentration main shareholder	-0.01 †	0.01
		(0.00)		(0.01)
	Ownership concentration main shareholder squared			-0.00 *
				(0.00)
	Ownership concentration second shareholder					0.00
						(0.01)
	Difference in ownership concentration between the main and second shareholder							-0.14
								(0.11)
	Insider ownership									-0.00		0.01 **
										(0.00)		(0.00)
	Insider ownership squared											-0.00 **
												(0.00)
	Family or individual													-0.01
														(0.04)
	Pressure-sensitive institutional investor													-0.11 *
														(0.04)
	Pressure-resistant institutional investor													-0.11 ***
														(0.03)
	Board size	0.35 †	0.52 **	-0.09		0.28 †	0.05		0.18		'0.11
		(0.18)		(0.16)		(0.15)		(0.17)		(0.16)		(0.18)		(0.12)
	Independent directors	0.35		0.36 †	0.37 **	0.36 *	0.43 ***	0.38 ***	0.42 ***
		(0.22)		(0.20)		(0.12)		(0.16)		(0.09)		(0.11)		(0.10)
	Insider directors	-0.11		0.18		-0.20		-0.18		-0.36		-0.45		-0.17
		(0.33)		(0.34)		(0.25)		(0.35)		(0.25)		(0.30)		(0.18)
	Duality	-0.12 *	-0.09		-0.06		-0.08		-0.13 **	-0.15 **	-0.06 †
		(0.06)		(0.06)		(0.05)		(0.06)		(0.05)		(0.05)		(0.03)
	Size	-0.03		-0.01		-0.00		-0.02		-0.02		0.05		-0.00
		(0.03)		(0.03)		(0.02)		(0.02)		(0.02)		(0.03)		(0.01)
	Age	-0.00		-0.00		-0.00		-0.00 †	-0.00 *	-0.00		-0.00 *
		(0.00)		(0.00)		(0.00)		(0.00)		(0.00)		(0.00)		(0.00)
	ROE	0.42 ***	0.55 ***	0.33 **	0.38 **	0.35 ***	0.37 **	0.42 ***
		(0.11)		(0.12)		(0.10)		(0.12)		(0.10)		(0.13)		(0.11)
	Inverse Mills Ratio	-0.06		-0.13 *	-0.09		-0.11 †	-0.14		-0.01		-0.09
		(0.11)		(0.06)		(0.06)		(0.06)		(0.06)		(0.07)		(0.05)
	intercept	2.98 ***	1.87 **	3.07 ***	2.33 ***	2.97 ***	1.99 ***	2.70 ***
		(0.56)		(0.60)		(0.47)		(0.55)		(0.64)		(0.49)		(0.46)
	Time effect	Yes		Yes		Yes		Yes		Yes		Yes		Yes
	Industry effect	Yes		Yes		Yes		Yes		Yes		Yes		Yes
	F	104.17	***	132.97	***	80.66	***	82.74	***	79.32	***	949410.15	***	992.01	***
	d.f.	(22, 58)		(23, 58)		(22, 58)		(22, 58)		(22, 58)		(23, 58)		(24, 58)
	AR(1)	-4.62	***	-4.74	***	-4.53	***	-4.75	***	-4.42	***	-3.53	***	-4.32	***
	AR(2)	0.35		0.25		0.30		0.29		0.43		0.34		0.24
	Hansen	23.53		29.29		26.71		25.48		26.49		24.05		37.57
	d.f.	(21)		(24)		(21)		(21)		(21)		(24)		(36)
	Unstandardized coefficients.
	†p<0.10; *p<0.05;**p<0.01;***p<0.001

36 of 48 Corporate Governance: An International Review Corporate Governance: An International Review

TABLE 3 (continued) Results of Dynamic Panel Data Analyses of the Influence of Ownership Structure on Corporate Reputation

 3

	Page 37 of 48	Corporate Governance: An International Review
		Model 8	Model 9	Model 10	Model 11	Model 12	Model 13	Model 14	Model 15
	Reputation (t-1)	0.52 ***	0.52 ***	0.46 ***	0.51 ***	0.58 ***	0.59 ***	0.58 ***	0.58 ***
		(0.06)		(0.07)		(0.05)		(0.07)		(0.07)		(0.07)		(0.05)		(0.05)
	Ownership concentration main shareholder	-0.01 **	-0.00		-0.01 ***	-0.00
		(0.00)		(0.01)		(0.00)		(0.01)
	Ownership concentration main shareholder squared			-0.00				-0.00
				(0.00)				(0.00)
	Ownership concentration second shareholder	0.00		-0.00		-0.00		-0.01
		(0.01)		(0.01)		(0.01)		(0.01)
	Difference in ownership concentration between the main and second shareholder									-0.35 *	-0.22 *	-0.37 **	-0.24 *
										(0.14)		(0.10)		(0.11)		(0.12)
	Insider ownership	-0.00 **	0.01 **	-0.00 *	0.01 †	-0.00 ***	0.01 **	-0.00 ***	0.01 *
		(0.00)		(0.00)		(0.00)		(0.00)		(0.00)		(0.00)		(0.00)		(0.00)
	Insider ownership squared			-0.00 **			-0.00 †			-0.00 **			-0.00 **
				(0.00)				(0.00)				(0.00)				(0.00)
	Family or individual					-0.06		-0.12						0.08 †	-0.08
						(0.05)		(0.11)						(0.04)		(0.06)
	Pressure-sensitive institutional investor					-0.12 *	-0.16 *					0.00		-0.11 *
						(0.06)		(0.07)						(0.05)		(0.05)
	Pressure-resistant institutional investor					-0.19 **	-0.19 *					-0.11 †	-0.25 ***
						(0.07)		(0.09)						(0.06)		(0.06)
	Board size	0.42 *	0.75 ***	0.57 ***	0.55 **	0.22		0.35 †	0.38 **	0.33 *
		(0.17)		(0.18)		(0.14)		(0.19)		(0.18)		(0.20)		(0.14)		(0.14)
	Independent directors	0.24 **	0.31 **	0.22 *	0.25 *	0.25 *	0.24 *	0.35 ***	0.38 ***
		(0.09)		(0.12)		(0.10)		(0.11)		(0.11)		(0.10)		(0.08)		(0.11)
	Insider directors	0.25		0.23		0.24		-0.04		-0.15		-0.35		-0.43		-0.21
		(0.32)		(0.36)		(0.31)		(0.38)		(0.43)		(0.33)		(0.26)		(0.25)
	Duality	-0.12 **	-0.10 *	-0.15 **	-0.13 *	-0.10 †	-0.12 *	-0.08 †	-0.16 **
		(0.04)		(0.05)		(0.05)		(0.06)		(0.06)		(0.05)		(0.04)		(0.05)
	Size	-0.03		-0.00		-0.02		0.00		-0.01		0.02		-0.02		0.02
		(0.02)		(0.04)		(0.02)		(0.04)		(0.02)		(0.03)		(0.01)		(0.02)
	Age	-0.00		-0.00		-0.00		-0.00 †	0.00		-0.00		0.00		-0.00
		(0.00)		(0.00)		(0.00)		(0.00)		(0.00)		(0.00)		(0.00)		(0.00)
	ROE	0.39 ***	0.61 ***	0.44 **	0.33		0.25 *	0.35 **	0.37 ***	0.24 †
		(0.11)		(0.13)		(0.15)		(0.25)		(0.12)		(0.11)		(0.09)		(0.12)
	Inverse Mills Ratio	-0.16 *	0.01		-0.16 **	-0.04		-0.17 **	-0.02		-0.17 **	-0.09
		(0.06)		(0.06)		(0.06)		(0.07)		(0.06)		(0.06)		(0.06)		(0.06)
	intercept	3.27 ***	1.62 †	3.47 ***	2.67 **	3.21 ***	2.27 ***	2.88 ***	2.45 ***
		(0.54)		(0.90)		(0.39)		(0.93)		(0.72)		(0.62)		(0.49)		(0.41)
	Time effect	Yes		Yes		Yes		Yes		Yes		Yes		Yes		Yes
	Industry effect	Yes		Yes		Yes		Yes		Yes		Yes		Yes		Yes
	F	244.34	***	19900000.00	***	312.94	***	7110000.00	***	90.96	***	1790000.00	***	1849.04	***	5980000.00	***
	d.f.	(24, 58)		(26, 58)		(27, 58)		(30, 58)		(23, 58)		(24, 58)		(26, 58)		(27, 58)
	AR(1)	-2.79	**	-3.70	***	-3.47	***	-2.93	**	-1.76	†	-2.50	*	-2.30	*	-3.31	***
	AR(2)	0.10		-0.05		0.29		0.18		0.04		0.16		0.16		0.35
	Hansen	28.53		28.96		26.55		22.27		24.57		25.33		28.70		28.26
	d.f.	(27)		(33)		(36)		(41)		(24)		(27)		(33)		(36)
	Unstandardized coefficients.
	†p<0.10; *p<0.05;**p<0.01;***p<0.001
		Corporate Governance: An International Review

The effects of marriage on couples' allocation of time between

	market	and	non-market	hours.	SSRN	working	paper.	Online,
			R e v i e w R e v i e w R e v i e w R e v i e w
				C o p C o p C o p C o p
					y y y y

Corporate Governance: An International Review Corporate Governance: An International Review Corporate Governance: An International Review Corporate Governance: An International Review Corporate Governance: An International Review Corporate Governance: An International Review