On the relation between ownership structure and capital structure


Autoria(s): Brailsford, T. J.; Oliver, B.R.; Pua, S.L.H.
Data(s)

01/01/2002

Resumo

The agency relationship between managers and shareholders has the potential to influence decision-making in the firm which in turn potentially impacts on firm characteristics such as value and leverage. Prior evidence has demonstrated an association between ownership structure and firm value. This paper extends the literature by examining a further link between ownership structure and capital structure. Using an agency framework, it is argued that the distribution of equity ownership among corporate managers and external blockholders may have a significant relation with leverage. The empirical results provide support for a positive relation between external blockholders and leverage, and non-linear relation between the level of managerial share ownership and leverage. The results also suggest that the relation between external block ownership and leverage varies across the level of managerial share ownership. These results are consistent with active monitoring by blockholders, and the effects of convergence-of-interests and management entrenchment.

Identificador

http://espace.library.uq.edu.au/view/UQ:61258

Idioma(s)

eng

Publicador

Blackwell Publishing Limited

Palavras-Chave #agency costs #capital structure #ownership structure #C1 #710401 Finance and investment services #350301 Finance
Tipo

Journal Article