106 Int. J. Corporate Governance, Vol. 1, No. 1, 2008 Copyright © 2008 Inderscience Enterprises Ltd. Takeovers, corporate control, and return to target shareholders Han Donker* and Saif Zahir College of Science and Management, University of Northern British Columbia, Canada E-mail: donker@unbc.ca E-mail: zahirs@unbc.ca *Corresponding author Abstract: In this paper, we investigated the impact of ownership concentration on the returns to target shareholders. In order to determine such impact, we have employed three models namely: • the atomistic shareholder model • the large shareholder model • the single shareholder model. We found empirical evidence that the degree of ownership concentration in target firms has a significant negative effect on the returns to shareholders. These findings are consistent with the theoretical takeover models which support a negative relationship between bid premium and ownership concentration of target firms. Keywords: takeovers; free-rider problem; corporate control; ownership structure. Reference to this paper should be made as follows: Donker, H. and Zahir, S. (2008) ‘Takeovers, corporate control, and return to target shareholders’, Int. J. Corporate Governance, Vol. 1, No. 1, pp.106–134. Biographical notes: Han Donker is an Associate Professor of Accounting at the University of Northern British Columbia (Canada) and he is the Editor-in-Chief of the International Journal of Corporate Governance (IJCG). He received his PhD in Finance from Tilburg University (CentER, The Netherlands). Previously, he worked as a manager of the Department of Business Administration at KPN Telecom in the Netherlands. His research focuses on empirical issues of takeovers, corporate restructuring and corporate governance. He is an author of many publications on corporate governance, mergers and acquisitions, and international accounting. Saif Zahir is an Associate Professor of Computer Science at the University of Northern British Columbia (Canada) and he is the Editor-in-Chief of the International Journal of Corporate Governance (IJCG). He received his MS and PhD Degrees in Electrical and Computer Engineering from the University of Wisconsin and the University of Pittsburgh respectively. His research areas are in corporate governance, business ethics, information technology and image processing. He authored more than 50 journal and conference papers in different areas. In addition he chaired many technical sessions in international conferences.