Ownership structure, stock volatility and analyst independence

2014 ◽  
Vol 4 (2) ◽  
pp. 187-208 ◽  
Author(s):  
Xiaobao Song ◽  
Wenjia Zheng
Keyword(s):  
Cash Flow ◽  
Negative Correlation ◽  
Institutional Investors ◽  
Stock Return ◽  
Significant Negative Correlation ◽  
Control Rights ◽  
Analyst Following ◽  
Content Type ◽  
Cash Flow Rights ◽  
The Relationship

Purpose – The purpose of this paper is to examine securities analyst independence in China's capital market and the effect on analyst independence of institutional investors’ shareholding and separation between control rights and cash flow rights of ultimate controller. Design/methodology/approach – Using data of China's listed companies from 2006 to 2012, the authors empirically tested the relationship between analyst following and volatility of stock return. And based on the test, the authors investigated the role played by institutional investors’ ownership and separation between control rights and cash flow rights of ultimate controller. Findings – According to the empirical results, there is a significant negative correlation between analyst following and volatility of stock return. Also, shareholding of institutional investors and the separation between control rights and cash flow rights of ultimate controllers will have an impact on the relationship between analyst following and volatility of stock return. When institutional investors hold higher proportion or the separation between control rights and cash flow rights of ultimate controllers keeps at a high level, the negative correlation between analyst following and volatility of stock return will weaken. Originality/value – First, based on the theory of market intermediation, the paper examined analyst independence by investigating and analyzing the relationship between analyst following and volatility of stock return. Second, it analyzed the factors affecting analyst independence by integrating enterprise characteristic variable and market characteristic variable on the basis of introducing two variables – shareholding of institutional investors and the separation between control rights and cash flow rights of ultimate controllers.

Relationship between earnings management, CEO compensation, and stock return on Tehran Stock Exchange

2019 ◽  
Vol 23 (1) ◽  
pp. 1-22
Author(s):  
Mahdi Moardi ◽  
Mahdi Salehi ◽  
Simin Poursasan ◽  
Homa Molavi
Keyword(s):  
Earnings Management ◽  
Cash Flow ◽  
Significant Relationship ◽  
Stock Return ◽  
Stock Exchange ◽  
Discretionary Accruals ◽  
Content Type ◽  
Future Cash Flow ◽  
Accruals Quality ◽  
The Relationship

Purpose The purpose of this paper is to investigate the relationship between earnings management and chief executive officers’ (CEOs) compensation. Owing to the fact that earnings management does not have only opportunistic effects, but signaling effects, this study focuses on accruals quality to examine earnings management incentives. Thus, accruals quality is described against future cash flow. The empirical evidences suggest that a positive relationship between discretionary accruals and future cash flow provides predictive elements for earnings management, whereas a negative relationship between discretionary accruals and future cash implies to opportunistic elements for earnings management. Should there is no significant relationship between discretionary accruals and future cash flow, there will be no earnings management, and such a result suggests that incentives and managers’ performance in these firms differ. Design/methodology/approach The statistical population of this research consists of all listed companies on the Tehran Stock Exchange during 2009–2016. Panel data method is applied in order to estimate the research model. Findings Findings of the study show that there is no significant relationship between discretionary accruals and future cash flow in pharmaceutical and food industries, thus they have neither predictive nor opportunist earnings management, while the results evidence a negative significant relationship between discretionary accruals and future cash flow in machineries, automobile, mineral and chemical industries. Furthermore, it can be alleged that there is no significant difference between CEOs’ compensation in firms with opportunistic earnings management (OEM) and other types of earnings management. It shows that firms do not have appropriate plans for CEOs’ compensation. Moreover, the relationship between earnings management and stock return has been investigated in this study. We document that stock return is influenced by accruals quality and its components. In other words, stock return significantly differs in firms with OEM and firms without any kind of earnings management. Research limitations/implications The authors’ findings provide contributions; for managers, it is noticeable that stock markets have sufficient comprehension about financial statements and the undertaken procedures on them, resulting in a higher return base on fair information. For investors and regulators, using the findings, may have deeper understanding to distinguish between industries that are recognized as opportunistic and non-opportunistic, which, in turn, results in better decision and regulation. Originality/value Previous studies have been mostly investigated OEM, while the current study examines both signaling and opportunistic aspects of earnings management.

Ownership structure and firm performance: evidence from the subprime crisis period

2018 ◽  
Vol 18 (2) ◽  
pp. 206-219 ◽  
Author(s):  
Mamduh M. Hanafi ◽  
Bowo Setiyono ◽  
I Putu Sugiartha Sanjaya
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Cash Flow ◽  
Ownership Structure ◽  
Learning Process ◽  
Ownership Concentration ◽  
Subprime Crisis ◽  
Control Rights ◽  
Content Type ◽  
Cash Flow Rights

Purpose This paper aims to compare the effect of ownership on firm performances in the 1997 and 2008 financial crises. More specifically, it investigates the effect of cash flow rights, control rights and cash flow rights leverage on firm performance. Two conditions motivated the study. First, the 2008 financial crisis happened quickly, so it was endogenous for firms. This setting is ideal to deal with endogeneity problems in a study that involves ownership and performance. Second, during the 2000s, awareness and implementation of corporate governance increased significantly. The authors believe that the markets learn these changes and incorporate them into prices, as suggested by an efficient market hypothesis. Design/methodology/approach The paper investigates and compares the effect of ownership structure on firm performance in the 2008 subprime crisis period to that in the 1997 financial crisis. Both crises happen unexpectedly, so the authors can expect that the crises are exogenous to firms. The authors use cash flow rights, control rights and cash flow right leverage for the ownership structure dimension. They also study time-series data to investigate the effect of ownership on a firm’s value. Findings The study finds that cash flow right and cash flow right leverage did not affect stock performance during the subprime crisis of 2008. It also finds that cash flow right leverage and cash flow right affected stock performance during the financial crisis of 1997. The study attributes this finding to the learning process and improvement of corporate governance during the period of the 2000s. Using time-series data, it finds that cash flow rights positively affect firm performance, suggesting an alignment effect. Ownership concentration improves firm performance. When the study split its sample, it found that the effect ownership on firms’ value is stronger for large firms. Research limitations/implications The study’s main limitation is that it does not test directly the learning process hypothesis. The study contributes to the current literature by presenting more recent evidence on the effect of ownership structure on firm performance in a developing country. The authors argue that markets learn the improvement of corporate governance and incorporate this development into prices. Extending this research to other markets will provide confirmation whether the learning process is an international phenomenon. Practical implications The awareness and implementation of corporate governance should be maintained at least at this level. The positive relationship between ownership concentration and firm performance suggests that concentrated ownership performs monitoring more effectively. Investors should pay attention to ownership concentration. Social implications The finding that prices already reflect corporate governance may suggest that market is monitoring this issue. This seems to be a good finding. Markets can be expected to discipline companies in the implementation of corporate governance. The awareness and implementation of corporate governance should be maintained at least at the current level. Originality/value The study contributes to the current literature by presenting additional evidence on the effect of ownership (using cash flow rights, control rights and cash flow right leverage) on firms’ performance in a more recent period and in a developing country. This period is characterized by a significant increase in awareness and the implementation of good corporate governance.

Controlling shareholders and financial constraints around the world

2018 ◽  
Vol 44 (1) ◽  
pp. 92-108 ◽  
Author(s):  
Jin Ho Park ◽  
Kwangwoo Park ◽  
Ronald Andrew Ratti
Keyword(s):  
Cash Flow ◽  
Financial Constraints ◽  
Generalized Method Of Moments ◽  
Legal Environment ◽  
Minority Shareholders ◽  
Control Rights ◽  
Content Type ◽  
Controlling Shareholders ◽  
Cash Flow Rights ◽  
The Given

Purpose The purpose of this paper is to examine the effect of controlling shareholders’ ownership of firms on the firms’ financial constraints in 22 economies for the 1982-2009 period. Design/methodology/approach The authors employ a generalized method of moments-based instrumental variables estimator to estimate empirical models. Findings It found that the overinvestment propensity of controlling shareholders becomes less severe with an increase in cash-flow rights. It further indicates that a higher deviation between the control rights and cash-flow rights of controlling shareholders lower their overinvestment propensity, thereby lowering the firm’s financial constraints. Originality/value The results suggest that a higher protective legal environment for minority shareholders blocks the entrenchment of controlling shareholders and thus benefitting the firm with slackened financing constraints in the given legal origin.

Do institutional investors stabilize stock returns? Evidence from emerging IPO markets

2020 ◽  
Vol 32 (4) ◽  
pp. 585-600
Author(s):  
Konpanas Dumrongwong
Keyword(s):  
Initial Public Offerings ◽  
Institutional Investors ◽  
Stock Return ◽  
Emerging Market ◽  
Institutional Ownership ◽  
Growth Potential ◽  
Return Volatility ◽  
Content Type ◽  
Stock Return Volatility ◽  
The Relationship

Purpose The purpose of this paper is to investigate how institutional ownership is related to the stock return volatility of initial public offerings (IPOs) in an emerging market and to examine the relationship between institutional ownership and underpricing. Design/methodology/approach This paper investigates these relationships using White’s (1980) regression and 2 × 3 portfolios sorted by firm size and institutional holdings. The regression method examines the relationships across firms with different characteristics such as size, stock price, growth potential, firm age and type of investors. The data were chosen for this sample to cover the new equity issuances listed on the Thailand Stock Exchange for the period 2001–2019. Findings The empirical results suggest that institutional ownership is negatively associated with initial stock return volatility. This highlights the importance of institutional investors in maintaining stability in emerging stock markets. Additionally, it was found that institutional holding and underpricing are negatively correlated. The results are robust after controlling for potential heteroskedasticity and differences in firm characteristics. Originality/value To the best knowledge of the author, this paper is the first to study the relationship between institutional investors and volatility in Thai IPOs, and hence provides a deeper understanding of how investors influence the price formation and volatility of stock prices in emerging markets. Furthermore, besides academics, the results presented in this paper could be useful for market regulators and policymakers in designing future market regulations to efficiently stabilize equity markets.

Separation of cash flow rights and control rights and debt among Malaysian family firms

2015 ◽  
Vol 5 (2) ◽  
pp. 184-201 ◽  
Author(s):  
Norhidayah Abdullah ◽  
Wee Ching Pok
Keyword(s):  
Cash Flow ◽  
Family Firms ◽  
Equal Proportion ◽  
Control Rights ◽  
Content Type ◽  
Shareholder Protection ◽  
Cash Flow Rights ◽  
Minority Interests ◽  
And Control ◽  
Debt Policy

Purpose – The purpose of this paper is to examine the relationship of separation of cash flow rights (CFR) and control rights (CR) and debt policy of Malaysian listed family firms. Design/methodology/approach – The sample of this study consists of 256 observations from companies listed in the Main Board of Bursa Malaysia for the period between year 2005 and 2009. The multivariate ordinary least square regressions have been conducted in order to examine the relationships between separation of CFR and CR and debt. Findings – The study reveals that the separation of CFR and CR does not lead to the increase of debt policy among Malaysian listed family-owned firms. Thus, the results suggest there is no expropriation of minority interests in Malaysian family-owned firms. The plausible reason is that Malaysia has better investor or shareholder protection laws compared to other emerging markets such as Indonesia, Thailand and Philippines. Research limitations/implications – The first limitation is the underestimation of CFR and CR because the affiliated business of unlisted firms and foreign companies are excluded. The second limitation is the presence of 100 percent ownership in firms controlled by family-owned firms or in firms that are controlled by another firms which are under the controlled of family-owned firms, or both, will lead to equal proportion of CFR and CR. Thus, the degree of separation of CFR and CR of such firms are indeterminable. Originality/value – This paper investigates the expropriation of minority interests by Malaysian family-owned firms on which has not been explored.

scholarly journals MOTIF KECURANGAN, ADANYA KESEMPATAN DAN MANIPULASI LABA

2016 ◽  
Vol 4 (2) ◽  
pp. 133
Author(s):  
Shintya Dewi Adi Putri
Keyword(s):  
Cash Flow ◽  
Negative Correlation ◽  
Stock Exchange ◽  
Significant Negative Correlation ◽  
Free Cash Flow ◽  
Earnings Manipulation ◽  
Quality Audit ◽  
Dividend Payments ◽  
The Relationship ◽  
Research Analysis

This research examines the relationship between fraud motives (leverage and dividends) and earnings manipulation; and the relationship between opportunities (quality audit and free cash flow) and earnings manipulation. This research used a sample of 24 companies listed on the Indonesia Stock Exchange in 2011-2013. The results of this research analysis is that there is a significant negative correlation between dividend payments and earningsmanipulation. This research also proved that free cash flow has a positive correlation with earnings manipulation.

Ultimate ownership, institutionality, and capital structure

2013 ◽  
Vol 7 (4) ◽  
pp. 557-571 ◽  
Author(s):  
Kun Su ◽  
Rui Wan ◽  
Bin Li
Keyword(s):  
Capital Structure ◽  
Cash Flow ◽  
Institutional Development ◽  
Debt Financing ◽  
Unified Framework ◽  
Control Rights ◽  
Content Type ◽  
Ultimate Ownership ◽  
Cash Flow Rights ◽  
Ultimate Owners

Purpose – The purpose of this paper is to illustrate and examine the effects of ultimate ownership, institutionality and their interactions on capital structure in a unified framework, based on evidence from China. Design/methodology/approach – Using six years of panel data of Chinese non-financial listed firms between 2004 and 2009, this paper estimates with correlation analysis and multiple regression analysis. Findings – This paper finds that debt financing facilitates the ultimate owner's expropriation behavior. The separation of control rights and cash flow rights is positively related to capital structure, while cash flow rights negatively affect it. Compared with private ultimate owners, state ultimate owners have less incentive to reap the benefits of expropriation, implying that the separation of control rights and cash flow rights has a smaller effect on the capital structure of state-owned firms. The improvement of institutionality can restrain ultimate owners' expropriation behavior, and regional institutional development is negatively related to capital structure. The separation of control rights and cash flow rights has a smaller positive effect on capital structure in regions with better-developed institutionality. Originality/value – This paper incorporates ultimate ownership and institutionality into a unified analytical framework of capital structure. It not only enriches related studies on capital structure, but also helps us understand the institutional roots of irrational capital structure behaviors in China. This paper also provides further evidence on ultimate owners' expropriation of minority shareholders through debt financing.

Does the preference of family board seats allocation influence corporate investment efficiency?

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Chun Su ◽  
Xing Liu ◽  
Huan Shao
Keyword(s):  
Cash Flow ◽  
Family Firms ◽  
Corporate Investment ◽  
Altruistic Behavior ◽  
Investment Efficiency ◽  
Control Rights ◽  
Content Type ◽  
Law System ◽  
And Control ◽  
The Relationship

Purpose This paper aims to investigate the influence of over-allocation and under-allocation of family board seats on the corporate investment efficiency. Design/methodology/approach Based on the perspective of altruistic behavior, this paper theoretically analyzes the relationship between the preference of family board seats allocation and corporate investment efficiency, and designs the research. On this basis, we use STATA14.0 as an analysis tool to empirically test the relationship between the preference of family family board seats allocation and corporate investment efficiency, and consider the impact of different governance scenarios. Findings This study finds that firms with a higher over-allocation degree of family board seats invest more efficiently, evidenced by significantly suppressed over-investment rather than mitigated under-investment. However, we do not find evidence that the higher degree of under-allocation of family board seats contribute to lower corporate investment efficiency. Additionally, this study finds that the positive relationship between the over-allocation degree of family board seats and corporate investment efficiency is more pronounced for firms with higher separation of cash flow rights and control rights, and weaker regional law system environment. Our mechanism discussion shows that the higher over-allocation level of family board seats contributes to the mitigation of agency costs for family firms by reducing the tendency for non-family boards to vote “against board proposals” and the appropriation behavior of the controlling family, and eventually improving corporate investment efficiency. Originality/value This paper examines the relationship between the preference of family board seats allocation and corporate investment efficiency from the perspective of altruistic behavior. Unlike previous studies, this paper distinguishes the governance effects arising from over-allocation and under-allocation of family board seats. Additionally, different governance scenarios are incorporated into the decision-making mechanism of the board of family firms, and the influences of the divergence of cash-flow and control rights and a weaker regional law system on the governance effect of the preference of family board seat allocation are analyzed.

387 The moderating effect of emotion regulation strategies in the relationship between insomnia severity and bedtime procrastination

SLEEP ◽  
2021 ◽  
Vol 44 (Supplement_2) ◽  
pp. A153-A154
Author(s):  
Huisu Jeon ◽  
Sonhye Jeoung ◽  
Goeun Kim ◽  
Hyeyoung An ◽  
Hyojin Nam ◽  
...  
Keyword(s):  
Negative Correlation ◽  
Emotional Regulation ◽  
Significant Negative Correlation ◽  
Moderating Effect ◽  
Active Regulation ◽  
Support Seeking ◽  
Regulation Strategies ◽  
Bedtime Procrastination ◽  
The Relationship ◽  
Insomnia Severity

Abstract Introduction Bedtime Procrastination (BP) is defined as the behavior of going to bed later than intended, despite the absence of external factors. Bedtime procrastination is also prevalent among insomnia patients, and is associated with various sleep problems. Recent studies suggest emotional regulation as a mechanism of the procrastination behavior that is the conceptual foundation of bedtime procrastination. Emotional regulation difficulties are also associated with insomnia, but there is still a lack of research on the relationship between insomnia, emotional regulation strategies and bedtime procrastination. Thus, the study assumed that severity of insomnia would affect bedtime procrastination, and examined the moderating effect of the emotional regulation strategies in this relationship. Methods This study was conducted in 376 adults (mean age 23.73 ±2.14 years, 84.6% females). Participants were asked to answer Bedtime procrastination scale (BPS), an emotional regulation strategy checklist, and the Insomnia severity scale (ISI). Results As a result, a significant positive correlation was found between insomnia severity and bedtime procrastination (r=.286, p<.01), and avoidant/distractive regulation style (r=.101, p<.05). active regulation style (r=-.172, p<.01) and support seeking regulation style (r=-.102, p<.01) showed a significant negative correlation with the severity of insomnia. Bedtime procrastination behavior showed significant negative correlation only with active regulation style (r=-.151, p<.01). Support seeking regulation style moderated the relationship between insomnia and bedtime procrastination behavior (B=.0165, 95%, CI=.0014, .0316). The interaction effect between insomnia and support seeking regulation style was also significant (∆R^2=.0112, p<.05), indicating that the effect of insomnia on bedtime procrastination depends on the level of use of the support seeking regulation style. Conclusion These findings suggest that the level of support seeking regulation style is meaningful in terms of how insomnia affects bedtime procrastination. Support (if any) This work was supported by the Ministry of Education of the Republic of Korea and the National Research Foundation of Korea(NRF-2018S1A5A8026807)

Emotional labor strategies mediate the relationship between psychological empowerment and burnout of frontline hotel employees

2021 ◽  
Vol 49 (4) ◽  
pp. 1-10
Author(s):  
Min Li ◽  
Ziyu Zhao ◽  
Lijuan Cui
Keyword(s):  
Negative Correlation ◽  
Emotional Labor ◽  
Psychological Empowerment ◽  
Job Demands ◽  
Significant Negative Correlation ◽  
Job Burnout ◽  
Automatic Regulation ◽  
Conservation Of Resources ◽  
Hotel Employees ◽  
The Relationship

We examined the relationships among psychological empowerment, emotional labor strategies, and job burnout of frontline hotel employees with reference to conservation of resources theory and the job demands–resources model. A sample of 414 employees from a Chinese chain hotel was recruited to take part in this study. There was a significant negative correlation between psychological empowerment and job burnout for these frontline hotel employees. Furthermore, the emotional labor strategies of deep acting and automatic regulation played partial mediating roles in the relationship between psychological empowerment and job burnout, which has implications for the development of intervention mechanisms and work practices for addressing burnout.

Sign in / Sign up

Export Citation Format

Share Document