Ownership concentration and board structure: Alignment and entrenchment effects in an emerging market

2022 ◽  
Author(s):  
Regina M. Lizares
Keyword(s):  
Emerging Market ◽  
Structure Alignment ◽  
Ownership Concentration ◽  
Board Structure

The Determinants of Financial Ratio Disclosures and Quality: Evidence from an Emerging market

2015 ◽  
Vol 1 (1) ◽  
pp. 188 ◽  
Author(s):  
Ben k. Agyei-Mensah
Keyword(s):  
Regression Analysis ◽  
Stock Exchange ◽  
Emerging Market ◽  
Negative Relationship ◽  
Ownership Concentration ◽  
Financial Ratios ◽  
Annual Reports ◽  
Executive Directors ◽  
Financial Ratio

This study investigated the influence of firm-specific characteristics which include proportion of Non-Executive Directors, ownership concentration, firm size, profitability, debt equity ratio, liquidity and leverage on the extent and quality of financial ratios disclosed by firms listed on the Ghana Stock Exchange.The research was conducted through detailed analysis of the 2012 financial statements of  the listed firms.  Descriptive analysis was performed to provide the background statistics of the variables examined.  This was followed by regression analysis which forms the main data analysis.  The results of the extent of financial ratio disclosure level, mean of 62.78%, indicate that most of the firms listed on the Ghana Stock Exchange did not overwhelmingly disclose such ratios in their annual reports.  The results of the low quality of financial ratio disclosure mean of 6.64% indicate that the disclosures failed woefully to meet the International Accounting Standards Board's qualitative characteristics of relevance, reliability, comparability and understandability.The results of the multiple regression analysis show that leverage and return on investment are associated on a statistically significant level as far as the extent of financial ratio disclosure is concerned. Board ownership concentration and proportion of (independent) non-executive directors, on the other hand were found to be statistically associated with the quality of financial ratio disclosed. There is a significant negative relationship between ownership concentration and the quality of financial ratio disclosure.  This means that under a higher level of ownership concentration less quality financial ratios are disclosed. The findings also show that there is a significant positive relationship between board composition (proportion of non-executive directors) and the quality of financial ratio disclosure.  JEL CLASSIFICATION: G3, M1, M2, M4.

Board structure, board committees and corporate performance in Russia

2017 ◽  
Vol 43 (10) ◽  
pp. 1073-1092 ◽  
Author(s):  
Irina Berezinets ◽  
Yulia Ilina ◽  
Anna Cherkasskaya
Keyword(s):  
Corporate Performance ◽  
Emerging Market ◽  
Panel Data Analysis ◽  
Gender Diversity ◽  
Board Independence ◽  
Board Structure ◽  
Company Performance ◽  
Public Companies ◽  
Content Type ◽  
Board Committees

Purpose The purpose of this paper is to investigate the link between board structure and performance of public companies in Russia – an emerging market with unique institutional background and a variability of corporate governance (CG) practices across its companies. Design/methodology/approach Panel data analysis was applied on a sample of 207 Russian companies that frequently traded in the Russian Trading System during the period 2007-2011, in order to test hypotheses on the relationships between board size, board independence, gender diversity, presence of board committees and financial performance, as measured by Tobin’s Q. Findings The results show a positive relationship between Tobin’s Q and the board’s gender diversity. The analysis demonstrates that smaller and bigger boards are associated with a greater Tobin’s Q value. Originality/value The findings provide additional evidence of how board structure is related to its effectiveness and corporate performance in countries with concentrated ownership, highly variable CG practices and a lack of proper implementation of corporate law and governance codes. The paper contributes to the existing empirical evidence on the advantages of small and large-sized boards and on gender diversity, and is the first investigating the relationship between Russian companies’ board committees and market-based performance. The results regarding board independence and committees suggest that these mechanisms are still not widely recognized for their role in CG and company performance in Russia.

scholarly journals The structure of corporate ownership and firm performance: Sri Lankan evidence

2013 ◽  
Vol 11 (1) ◽  
pp. 723-734 ◽  
Author(s):  
Athula Manawaduge ◽  
Anura De Zoysa
Keyword(s):  
Firm Performance ◽  
Performance Measures ◽  
Ownership Structure ◽  
Emerging Market ◽  
Ownership Concentration ◽  
Sri Lankan ◽  
Accounting Performance ◽  
Listed Firms ◽  
Strong Positive Relationship ◽  
The Impact

This paper examines the impact of ownership structure and concentration on firm performance in Sri Lanka, an emerging market in Asia. The study estimates a series of regressions using pooled data for a sample of Sri Lankan-listed firms to investigate the impact of ownership concentration and structure on firm performance based on agency theory framework, using both accounting and market-based performance indicators. The results of the study provide evidence for a strong positive relationship between ownership concentration and accounting performance measures. This suggests that a greater concentration of ownership leads to better performance. However, we found no significant impact using market-based performance measures, which suggests the existence of numerous market inefficiencies and anomalies. Furthermore, the findings of the study show that ownership structure does not have a significant distinguishable effect on performance.

scholarly journals The influence of firm, industry and concentrated ownership on dynamic capital structure decision in emerging market

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Razali Haron ◽  
Naji Mansour Nomran ◽  
Anwar Hasan Abdullah Othman ◽  
Maizaitulaidawati Md Husin ◽  
Ashurov Sharofiddin
Keyword(s):  
Capital Structure ◽  
Emerging Market ◽  
Generalized Method Of Moments ◽  
Dynamic Environment ◽  
Order Theory ◽  
Ownership Concentration ◽  
Content Type ◽  
Dynamic Panel Model ◽  
The Impact ◽  
Dynamic Capital Structure

Purpose This study aims to evaluate the impact of firm, industry level determinants and ownership concentration on the dynamic capital structure decision in Indonesia and analyses the governing theories. Design/methodology/approach This study uses the dynamic panel model of generalized method of moments-System (one-step and two-step) by using a panel data from 2000 to 2014 to examine the relationship between the determinants and leverage. The results are robust to the various definitions of leverage, heterogeneity, autocorrelation, multicollinearity and endogeneity concern. Findings Growing firms and firms operating in a highly concentrated industry use high level of debt, taking advantage of the tax shield (trade-off theory). However, if the firms are operating in a highly dynamic environment, they take on less debt as to avoid bankruptcy risk. Firms in Indonesia opt for debt financing perhaps to act as a controlling mechanism to mitigate agency conflicts that may exist between the large controlling shareholders and the minority. Aged and highly profitable firms with high tangible and intangible assets and liquidity level operating in a high dynamic environment follow the pecking order theory. Research limitations/implications This study does not perform each industry regression individually. All the industries are pooled together, as the main focus of this study is to examine the factors affecting leverage of firms in general without giving particular attention to individual industry. Originality/value The insights on the impact of ownership concentration and industry characteristics are novel especially on Indonesia, thus fill the gap in the literature.

What drives board committee structure? Evidence from an emerging market

2019 ◽  
Vol 35 (3) ◽  
pp. 373-397 ◽  
Author(s):  
Pornsit Jiraporn ◽  
Ali Uyar ◽  
Cemil Kuzey ◽  
Merve Kilic
Keyword(s):  
Corporate Governance ◽  
Audit Quality ◽  
Emerging Market ◽  
Panel Data Analysis ◽  
Positive Association ◽  
Developed Countries ◽  
Board Structure ◽  
Ceo Duality ◽  
Content Type ◽  
Board Committees

Purpose Board committees enable boards to function effectively, as committees improve the quality of corporate governance by fulfilling specific, assigned tasks. This study aims to explore how board structure, CEO duality and audit quality are associated with board committee structure in the context of an emerging market, namely, Turkey. Design/methodology/approach The sample consisted of 122 firms listed on the Industrial Index of Borsa Istanbul for the years between 2012 and 2014, inclusive, and this yielded 366 firm-year observations. To test the hypotheses, the panel data analysis method was used, which enabled the elimination of certain problems, such as multicollinearity and estimation bias, as well as specification of the time-variant association between the predictor variables and the output variable. Findings Board size, board independence and firm size had a positive association with the number and size of board committees, whereas CEO duality had a negative association with the number and size of board committees. Moreover, the appointment of female members on audit and corporate governance committees was more frequent in firms that had a high proportion of women on their boards. Finally, audit quality was positively associated with the existence of risk committee, the overall diversity of board committees and the diversity of corporate governance committees. Research limitations/implications The study is not free from limitations. It covers the time span between 2012 and 2014; thus, readers should be cautious about generalizing these results longitudinally, as a different time periods could possibly yield different results. The second limitation concerns the fact that only industrial firms were sampled; thus, these findings may not be valid in other sectors. Practical implications The paper shifts the attention of researchers from overall board structure to board committee structure. The results of the study provide insights for policymakers, boards and shareholders. Policymakers can formulate boards and committees by considering these findings. Boards can benefit from the conclusions of this study in shaping their own structure and sub-committee structures. Current and potential shareholders may find the results of the study instructive in making investment decisions. Originality/value This study investigates the factors associated with the structure of overall and specific board committees. Additionally, while most prior research on board committees has sampled firms that are domiciled in developed countries, this study examines the subject in an emerging country context, namely Turkey. Moreover, this study adds to the literature by examining the association between audit quality and board committee structure, which has been largely neglected in prior literature.

scholarly journals Dividend policy and corporate governance in Saudi stock market: Outcome model or substitute model?

2015 ◽  
Vol 12 (2) ◽  
pp. 74-91 ◽  
Author(s):  
Amina Hamdouni
Keyword(s):  
Corporate Governance ◽  
Cash Flow ◽  
Dividend Policy ◽  
Good Governance ◽  
Free Cash Flow ◽  
Ownership Concentration ◽  
Board Structure ◽  
Governance Mechanisms ◽  
Corporate Governance Mechanisms ◽  
Debt Policy

Theories suggest that corporate governance mechanisms affect corporate dividend policies. This study extends and tests the implications of two extant static agency models making opposite predictions. The outcome model predicts an increase in dividends when the corporate governance mechanisms improve, because shareholders are better able to force managers to disgorge cash. In contrast, the substitute model suggests that an improvement in the corporate governance mechanisms reduces the role of dividends in controlling agency costs, leading to a decrease in dividends. This paper investigates the dividend policy for firms listed on Saudi Arabia Stock Exchange. This is a case study of Saudi Stock Market, where the determinants of dividend policy have received little attention. This study use a panel dataset of non-financial firms listed on Saudi Arabia Stock Exchange between the years of 2007 and 2010. Based on a panel of 366 firm year observations of 99 Saudi firms, we provide evidence in outcome model or substitute model with ownership structure, board structure and debt policy. Three Tobit models are specified: In the first, we construct a governance index based on eight criteria: seven criteria which capture various aspects of a firm’s structure, policies and practices that constitute good governance and a criterion that examines the company’s compliance with Shariah law in all its activities. Therefore, we estimate the effect of corporate governance on dividend policy in the first model. In the second, we investigate how dividends interact with corporate governance mechanisms in a panel of data. We explore the relation between dividends and ownership structure (ownership concentration and managerial ownership), board structure (board size, Board independence and Chairman-CEO duality) and debt policy. In the final, another test of the substitute and the outcome models is built on the Jensen (1986) free cash flow theory, which states that dividend policy can extract surplus cash from management control by reducing free cash flow. In this third model, we examine how corporate governance improvements affect the dividends’ sensitivity to free cash flows by focusing on the coefficients on the interactive variables of the ownership structure, board structure, debt policy and the free cash flow. For the three models, we divide sample in two subsamples and we compare the results obtained by using criteria of company’s compliance with Shariah law. For the effects of corporate governance (measured by corporate governance score) on dividend levels, we find that dividend policy is a substitute model for good governance for all Saudi Arabia firms. When we select only Shariah compliant firms, results indicate also that dividend policy is a substitute model for good governance but results are insignificant. When we select only Non-Shariah compliant firms, results indicate the same conclusion. We find that governance is associated with fewer dividends, supporting the substitute model and indicating the influence of good governance by forcing less cash to be returned to investors. For the effects of corporate governance mechanisms on dividend levels, we find that the only variable affect the dividend levels for Non-Shariah compliant firms is the separation in the functions of chairman and of CEO supporting the substitute model. For Shariah compliant firms, dividend policy is an outcome for the separation in the functions of chairman and of CEO, and ownership concentration. Governance through the separation in the functions of chairman and of CEO and ownership concentration influences firms by forcing more cash to be returned to investors. For the effects of the corporate governance improvements on dividends’ sensitivity to free cash flow, our results support the substitute hypothesis for Shariah compliant firms regardless the board independence, board meeting, managerial ownership and debt. Improvements in these corporate governance mechanisms reduce firms’ need to force out the free cash flow through dividends. For Non-Shariah compliant firms, our results support the outcome model for managerial ownership and ownership concentration

scholarly journals Ownership structure, corporate performance and failure: Evidence from panel data of emerging market the case of Jordan

2009 ◽  
Vol 6 (4) ◽  
pp. 96-114 ◽  
Author(s):  
Rami Zeitun
Keyword(s):  
Ownership Structure ◽  
Emerging Market ◽  
Negative Relationship ◽  
Institutional Ownership ◽  
Performance Measure ◽  
Ownership Concentration ◽  
Tobin’S Q ◽  
Government Ownership ◽  
Tobin's Q ◽  
The Impact

This study investigates the impact of ownership structure (mix and concentrate) on a company’s performance and failure in a panel estimation using 167 Jordanian companies during 1989-2006. The empirical evidence in this paper shows that ownership structure and ownership concentration play an important role in the performance and value of Jordanian firms. It shows that inefficiency is related to ownership concentration and to institutional ownership. A negative correlation between ownership concentration and firm’s performance both, ROA and Tobin’s Q, is found, while there is a positive impact on firm performance MBVR. The research also found that there is a significant negative relationship between government ownership and a firm’s accounting performance, while the other ownership structure mixes have significant coefficients only in Tobin’s Q using the matched sample. Firm’s profitability ROA was negatively and significantly correlated with the fraction of institutional ownership, and positively and significantly related to the market performance measure, MBVR. The result is robust when indicators of both concentration and ownership mix are included in the regressions. The results of this study are, to some extent, inconsistent with previous findings. This paper also used ownership structure to predict the corporate failure. The results suggest that government ownership is negatively related to the likelihood of default. Government ownership decreases the likelihood of default, but has a negative impact on a firm’s performance. The results suggest that, in order to increase a firm’s performance and decrease the likelihood of default, it is reasonable to reduce government ownership to some extent. Furthermore, a certain degree of ownership concentration is needed to increase the firm’s performance and to decrease the firm’s chance of default.

Ownership Concentration and Firm Performance in India

2020 ◽  
pp. 097215091989439
Author(s):  
Tripti Nashier ◽  
Amitabh Gupta
Keyword(s):  
Firm Performance ◽  
Emerging Market ◽  
Ownership Concentration ◽  
Governance Mechanism ◽  
Accounting Performance ◽  
Concentrated Ownership ◽  
Developed Markets ◽  
Corporate Governance Mechanism ◽  
Generalised Method Of Moments ◽  
A Company

Ownership concentration (OC) is considered an important corporate governance mechanism because owners with concentrated shareholding influence the operations and management of a company. The ownership structure in developing countries is quite different from that in the developed markets; thus, we provide empirical evidence from an important emerging market like India. This study used panel data models and instrumental variables (IV) techniques using generalised method of moments (GMM) on a large sample of 11,136 firm-year observations to get efficient and reliable results. The endogeneity of OC has not been examined in India before. In this article, OC is measured by Herfindahl’s index as suggested by Demsetz and Lehn (1985) and Leech and Leahy (1991) . Other Indian studies in this area have used promoter shareholding as a proxy of OC. After controlling for endogeneity, we find that OC affects both market and accounting performance of a company, positively. The results suggest that concentrated ownership reduces agency costs as blockholders actively monitor the management of the company, thereby leading to better firm performance.

Sign in / Sign up

Export Citation Format

Share Document