Ownership structure and corporate performance : Australian evidence

This paper seeks to analyse the relationship between ownership structure and corporate performance for fifty firms listed on the Australian Stock Exchange during 2002-2003. The study initially tests a two equation model similar to that in the existing literature, but is distinguished from prior literature by subsequently reclassifying leverage. By categorising leverage as an endogenous variable, an examination of the relationship between ownership and performance is undertaken through ordinary least squares and two stage least squares analysis of a three equation econometric model. Interestingly, empirical results illustrate the fact that managerial ownership impacts negatively on firm performance which is consistent with the management entrenchment hypothesis.

The impact of ownership structure on corporate debt policy : two stage least square simultaneous model approach for post crisis period : evidence from Kuala Lumpur Stock Exchange

Ownership concentration as a governance mechanism has received considerable attention among academician, practitioners as well as policy makers because large-block shareholders are increasingly active in their demands that corporations adopt effective governance mechanisms to control managerial decisions, which include corporate debt policy. Earlier study on the agency model of the firm widely recognizes that the managerial ownership and external debt play an important role in mitigating agency conflicts and enhancing firm value. They also found that increase in the external monitors, for example the institutional investors, can actually play a useful role in limiting agency problems in the firm. This paper, using 100 Composite Index companies from Brusa Malaysia between 1998 to 2002 explores the impact of institutional holdings on managerial ownership and debt policy in an integrated framework by using a simultaneous equations estimation procedure (2SLS). The findings show that there is a significant impact of institutional ownership which serves effective control mechanism on managerial ownership and corporate debt policy as hypothesized. Findings of such evidence suggest that institutional holding thus have played an important role in managers' strategic management decision and reduce agency conflict. In addition, corporate debt policy too is governed by managerial ownership and exhibited a negative relation.

Sources of liquidity commonality, asymmetric information and ownership structure in emerging markets : evidence from the Chinese stock market

Xinwei Zheng examines if common factors of liquidity can be determined by ownership structure measured by asymmetric information in an emerging market that has adopted an order-driven trading system. Using China as a case for the study, I select a broad sample of stocks from two separate Chinese stock exchanges to measure and
analyse the relationship. My empirical evidence seems significant and pervasive. These findings about the Chinese stock market provide useful pointers for understanding commonality in emerging economies and shed critical light
on a new dimension of the working of emerging markets.

Ownership structure, corporate governance and bank performance: Evidence from gcc countries

The paper examines the effect of ownership structure and board characteristics on bank performance of GCC counties. Evidence indicates that the extent of the foreign ownership level has a significant positive association with the bank performance. However, concentrated ownership does appear to have a significant negative impact on performance and institutional ownership does not have any significant effect on performance. Other governance variables such as CEO duality and board size appear insignificant impact on performance. These results suggest a need to strengthen the internal control mechanisms within banks of GCC countries.

Disproportionate ownership structure and IPO long-run performance of non-SOEs in China

This paper examines the relationship between ownership structures and IPO long-run performance of non-SOEs in China. Although non-SOEs underperform the market in general after IPO but the poor performance is mainly caused by the IPOs with ownership control wedge. Non-SOEs with one share one vote structure outperform those with control-ownership wedge by 30% for three years post-IPO performance in adjusted buy-and-hold returns. Non-SOEs with control-ownership wedge have higher frequency of undertaking value-destroying related party transactions. These findings suggest that non-SOEs need to improve corporate governance such as disproportionate ownership structure to better safeguard the interest of long-run shareholders.

Ownership structure and collateral requirements: Evidence from China’s listed firms

This paper examines the effect of ownership structure on collateral requirements using a sample of China's listed firms from 2007 to 2009. We find that compared to privately controlled companies, state-controlled companies are less likely to be required to pledge collateral, and such a difference is more pronounced for firms in troubled industries. The empirical results also show that the effect of state control on collateral requirements is weaker in companies with more foreign ownership. Moreover, the effect of state control on collateral requirements is weaker in companies with more third party guarantees. Finally, we find that the effect of state control on collateral requirements is more pronounced for firms operating in regions with more government intervention.

Disproportional ownership structure and pay–performance relationship: evidence from China’s listed firms

This paper examines the impact of ownership structure on executive compensation in China's listed firms. We find that the cash flow rights of ultimate controlling shareholders have a positive effect on the pay–performance relationship, while a divergence between control rights and cash flow rights has a significantly negative effect on the pay–performance relationship. We divide our sample based on ultimate controlling shareholders' type into state owned enterprises (SOE), state assets management bureaus (SAMB), and privately controlled firms. We find that in SOE controlled firms cash flow rights have a significant impact on accounting based pay–performance relationship. In privately controlled firms, cash flow rights affect the market based pay–performance relationship. In SAMB controlled firms, CEO pay bears no relationship with either accounting or market based performance. The evidence suggests that CEO pay is inefficient in firms where the state is the controlling shareholder because it is insensitive to market based performance but consistent with the efforts of controlling shareholders to maximize their private benefit.

The effect of ownership structure on leverage decision: new evidence from Chinese listed firms

This paper examines the effect of state control and ownership structure on the leverage decision of firms listed in the Chinese stock market. Our results show that state-owned enterprises (SOEs) have higher leverage ratios than non-SOEs, and SOEs in regions with a poorer institutional environment have higher leverage ratios than SOEs in better regions. We also show that the largest shareholding (the percentage of shares held by the largest shareholder) in the SOEs has a negative relationship with the leverage ratio, while the largest shareholding in non-SOEs has a non-linear relationship with the short-term and long-term debt ratios. Finally, this study also shows that the share split reform and the improvement of institutional environment both weaken the negative relationship and strengthen the positive relationship between largest shareholding and leverage of SOEs and non-SOEs to some extent. This paper documents how the financing behaviour of SOEs is more influenced by government intervention, while the financing behaviour of non-SOEs is more market oriented.

On institutional ownership and firm performance : a disaggregated view

We study the relationship between institutional ownership and firm performance in Finland. A systems approach is employed to investigate the potential two-way causality between firm performance and ownership structure. Three-stage least squares estimation technique is used to solve for the systems. The evidence suggests an endogeneity problem between firm performance and institutional ownership. However, the magnitude of the problem differs with respect to the concentration of ownership measure used. Our results show that a more equal distribution of the voting power among the largest institutional stakeholder may exert positive effects on firm performance. We also find a significant difference relating to firm performances and equity ownerships between the two classes of institutional investor. Consistent with the ownership structure in Finland, we find that a simple ownership concentration index does not influence firm performance.

Market based performance : do ownership structures, or firm policy choice matter?

This study examines whether the structure of share ownership or firm's dividend and debt policies provide explanation for firm performances in Malaysia. Firm performance, measured as Tobin's Q is modelled in a dynamic panel framework to estimate effects of director ownership, family ownership, foreign ownership, and firm's dividend and debt policy. The generalised methods of moments (GMM) method is used to estimated the models for 80 CI components companies listed on Main Board of Malaysia observed from 1999 to 2002. The findings reveal strong evidence of positive impact of firm's dividend and debt policy on firm performance. However, ownership structure seems to be less important for market based performance of Malaysian firms: These results are expected to provide guidelines to the investors regarding the significance of firm dividend policy, leverage policy and market to book value ratio as some of the key sources of value creation for Malaysian listed firms.