Nonlinearity Between Ownership Concentration and Firm Value

2016 ◽  
pp. 523-534
Author(s):  
Hamizah Hassan ◽  
Salwana Hassan ◽  
Norzitah Abdul Karim ◽  
Norhana Salamuddin
Keyword(s):  
Firm Value ◽  
Ownership Concentration

scholarly journals Corporate Governance Mechanisms, Ownership and Firm Value: Evidence from Listed Chinese Firms

2020 ◽  
Vol 8 (2) ◽  
pp. 20 ◽  
Author(s):  
Yusheng Kong ◽  
Takuriramunashe Famba ◽  
Grace Chituku-Dzimiro ◽  
Huaping Sun ◽  
Ophias Kurauone
Keyword(s):  
Corporate Governance ◽  
Firm Value ◽  
Ownership Concentration ◽  
Institutional Setting ◽  
Tobin’S Q ◽  
Governance Mechanism ◽  
Corporate Ownership ◽  
Firm Level ◽  
Tobin's Q ◽  
Negative Effect

This study analyzes corporate ownership as a corporate governance mechanism and its role in creating firm value. Previous research shows that there is no convergence on the firm-value corporate ownership relationship. Most research in this area takes a cross national approach ignoring the uniqueness of each institutional setting particularly those of emerging nations. Using a unique firm level dataset, we investigate how corporate control nature and ownership concentration affect the value of Chinese listed firms. First, non-state owned control is associated with a higher Tobin’s Q while a negative premium is found for state owned. Using the hybrid and the correlated random effects model we confirm a U-shaped non-linear relationship between ownership concentration and Tobin’s Q, implying that firm value first decreases and then increases as block holders own more shares. Further investigation reveals that the negative effect of ownership concentration is weaker when a firm equity nature is non-state owned enterprises (non-SOEs) compared to state-owned enterprises (SOEs). While ownership concentration appears to be an efficient mechanism for corporate governance its effect is weaker for SOEs compared to non-SOEs. The results support privatization of SOEs, sound reforms such as the split share structure reform as crucial for the development of China’s stock market.

scholarly journals Family firms, banks and firm value: Evidence from Malaysia

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Chee Yoong Liew ◽  
S. Susela Devi
Keyword(s):  
Panel Data ◽  
Capital Market ◽  
Firm Value ◽  
Family Firms ◽  
Moderating Effect ◽  
Ownership Concentration ◽  
Content Type ◽  
Domestic Banks ◽  
High Level ◽  
Very High

PurposeThis paper examines the relationship between the number of domestic banks that the firm engages with and firm value and how this relationship is moderated by ownership concentration at low and very high level on a sample of Malaysian family and non-family firms.Design/methodology/approachFor hypotheses testing, panel data analysis using the fixed effects model (FEM) is used because the FEM can address any endogeneity problems effectively (Chi, 2005). The panel data regression is conducted on both family firms and non-family firms.FindingsWe find that there is a significant negative relationship between the number of domestic banks engaged by family firms, operating in industries where these firms do not have absolute monopoly, and firm value. However, there is no evidence that this significant negative firm value effect is stronger in family firms compared to non-family firms. Furthermore, the significant positive moderating effect of ownership concentration on this relationship within family firms in such industries is evident only at low level of ownership concentration. Interestingly, at very high level of ownership concentration, this significant positive moderating effect becomes negative. There is no evidence that these significant moderating effects are stronger in family firms compared to non-family firms.Research limitations/implicationsThis research has focused only on family and non-family firms.Practical implicationsAn implication of this research is that there is a need for the capital market regulators to introduce appropriate policies to deter family firms from having a close relationship with domestic banks as well as monitor the number of domestic banks engaged by such firms. There may be policy implications for consideration by the Central Bank of Malaysia as well.Originality/valueThis research provides some insights to both academia and industry regarding the consequences of domestic banking relationship and different levels of concentrated ownership in family firms in an emerging market. These insights can help improve the corporate governance as well as ownership structure of Malaysian public-listed family firms which dominate the capital market. Our findings refute the argument by Peng and Jiang (2010) by demonstrating that corporate reputational effects may be a substitute for institutional deficiencies.

scholarly journals Pyramidal Ownership and Company Value: Evidence from Polish Listed Companies

2021 ◽  
Vol 15 (4) ◽  
pp. 479-498
Author(s):  
Maria Aluchna ◽  
Tomasz Kuszewski
Keyword(s):  
Firm Value ◽  
Stock Exchange ◽  
Listed Companies ◽  
Ownership Concentration ◽  
Company Value ◽  
Warsaw Stock Exchange ◽  
Pyramidal Ownership ◽  
Dual Class Shares ◽  
Dual Class ◽  
Majority Shareholder

This paper examines the effects of pyramidal ownership. Using the sample of 162 non-financial companies listed on the Warsaw Stock Exchange during the period 2010-2014, we verify the relation between the adoption of a pyramidal structure and company value. Specifically, we show that the link between pyramidal ownership and company value is more complex than previously thought addressing the aspect of ownership concentration and dual class shares. Our results indicate that the use of pyramids is associated with a higher value measured by Tobin’s Q, supporting the efficient monitoring hypothesis. Contrary to our expectations the combination of pyramidal ownership and dual class shares is correlated with lower Q. Finally, while the adoption of a pyramid by a majority shareholder does not impact firm value, the combination of a pyramid, ownership concentration and dual class shares is associated with higher Q. This finding suggests that the blockholder ownership outweighs the possible cost of excessive disproportionate ownership and that pyramids and dual class shares have different effects on company value.

scholarly journals Ownership Structure and Firm Value of Quoted Consumers Goods Firms in Nigeria

2020 ◽  
Vol 3 (2) ◽  
pp. 214-228
Author(s):  
Godwin Emmanuel Oyedokun ◽  
Shehu Isah ◽  
Niyi Solomon Awotomilusi
Keyword(s):  
Ownership Structure ◽  
Consumer Goods ◽  
Firm Value ◽  
Stock Exchange ◽  
Sampling Technique ◽  
Institutional Ownership ◽  
Foreign Ownership ◽  
Ownership Concentration ◽  
Annual Reports ◽  
Managerial Ownership

This study examined the ownership structure's effect on the firms' value of quoted manufacturing firms (consumer goods) in Nigeria for 2010-2018. The total numbers of quoted consumer goods firms in the Nigeria stock exchange as of 31st December 2018 were twenty-one (21). A judgmental sampling technique was used to sample nineteen (19) consumer goods firms for the study. The study sought to examine whether ownership structure proxy by managerial Ownership, Institutional Ownership, foreign Ownership, and ownership concentration affect firms' values of quoted consumer goods in Nigeria. Data were collected from secondary sources through the annual reports and accounts of sampled consumer goods firms in Nigeria. The study adopted a panel regression technique as a tool of analysis. The result showed a negative effect of managerial ownership on firm value. While institutional Ownership, foreign Ownership, and Ownership concentration all positively affect the firm value of consumer goods firms in Nigeria. Therefore, the study recommends that the numbers of shares held by management should be reduced to increase the firm value of the listed consumer goods companies in Nigeria. 

Concentrated Promoters’ Ownership and Firm Value: Re-examining the Monitoring and Expropriation Hypothesis

Paradigm ◽  
2019 ◽  
Vol 23 (1) ◽  
pp. 70-82 ◽  
Author(s):  
Krishna Dayal Pandey ◽  
Tarak Nath Sahu
Keyword(s):  
Panel Data ◽  
Firm Value ◽  
Stock Exchange ◽  
Panel Data Analysis ◽  
Manufacturing Firms ◽  
Ownership Concentration ◽  
Active Monitoring ◽  
Effect Regression ◽  
Positive Effect ◽  
Corporate Finance And Governance

The study attempts to provide some fresh evidences, on the way in which ownership concentration by promoters influences firm value by re-examining two popularly known hypotheses, namely, monitoring and expropriation attached with the concept of ownership concentration. It uses a set of strongly balanced panel data consisting 91 manufacturing firms listed on Bombay Stock Exchange of India from 2009 to 2016 and employs fixed effect regression model under panel data analysis. The study documents a positive effect of concentrated promoters’ ownership on the value of Indian manufacturing firms and endorses the monitoring role played by large owners. It also accepts the possibility of co-existence of both monitoring and expropriation effects, with the former having a dominating influence, as the overall impact of large promoters is a trade-off between the benefits of active monitoring and cost of expropriation. The study is expected to have important implications in strategy making in the domain of corporate finance and governance and to act as a piece of reliable empirical evidence for the academicians and business analysts of this domain.

International Business Activity and Firm Value: The Impact of Ownership and Capital Structure

2003 ◽  
Vol 4 (1) ◽  
pp. 85-104
Author(s):  
Steen Thomsen
Keyword(s):  
Capital Structure ◽  
International Business ◽  
Value Creation ◽  
Firm Value ◽  
Ownership Concentration ◽  
Estimation Methods ◽  
Business Activity ◽  
Negative Effect ◽  
Competing Hypotheses ◽  
The Impact

Theoretically, the effect of international business activity on firm value depends on ownership and capital structure. Companies may over-invest in international business activity because of agency problems or under-invest, if they are capital-rationed. This paper examines how these competing hypotheses fit a sample of 237 very large European and US companies over the period 1991-1997. The results indicate that internationalization may sometimes destroy value from a shareholder viewpoint and that financial leverage may have a negative effect on value creation by internationalization whereas the effects of ownership concentration on value gains from internationalization were found to depend on system effects. However, the magnitude of the effects is small, and the results were found to be sensitive to estimation methods.

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