Monitoring or tunneling by large shareholders: evidence from China private listed companies

2015 ◽  
Vol 5 (2) ◽  
pp. 187-211 ◽  
Author(s):  
Xiaobao Song
Keyword(s):  
Corporate Governance ◽  
Listed Companies ◽  
Ownership Concentration ◽  
Company Performance ◽  
State Dependency ◽  
Content Type ◽  
General Managers ◽  
Large Shareholders ◽  
The Difference ◽  
The Relationship

Purpose – The purpose of this paper is to analyze the relationship between ownership concentration and company performance in China private listed companies. Design/methodology/approach – By taking into account of the difference of managerial positions of large shareholders in listed companies (whether they assume the posts as presidents or general managers), and based on the two agency theories, the paper analyzes the state dependency of the relationship between ownership concentration and the company performance of listed companies with the samples of China private listed companies from 2003 to 2011. Findings – The paper finds that if the large shareholders assume no posts in the listed companies, there is an inverted U shape relation between shareholding ratio of the largest shareholders and the company performance. This result indicates the inadequate or excessive monitoring to the companies by the large shareholders according to different shareholding ratios. If large shareholders assume posts in the listed companies, there is a U shape relation between shareholding ratio of the largest shareholders and the company performance. This result indicates the tunneling and propping to the small shareholders by the large shareholders according to different shareholding ratios. Research limitations/implications – This paper has not taken the influence of earnings management of the listed companies. Practical implications – For strengthening the protection of investors, proper distinction shall be made among shareholders of different conditions, and difference of roles large shareholders play in the company under different conditions shall be understood correctly, so as to formulate and perfect market rules for corporate governance, rather than just restraining the power (rights) of large shareholders. The study in this paper is for helping understand the different roles large shareholders play under different corporate governance conditions. Originality/value – First, different from the research paradigm of relationship between ownership concentration and company performance in existing literature, the paper discriminates the study background with the post-assuming conditions of large shareholders in listed companies and believes that relationship between ownership concentration and company performance shall be presented differently under different post-assuming conditions. Second, by using monitoring theory and tunneling and propping theory to explain the behaviors of large shareholders under different post-assuming conditions respectively, a new theory explanation view is provided for explaining the relation between ownership concentration and company performance.

Corporate governance and risk reporting: Indian evidence

2017 ◽  
Vol 32 (4/5) ◽  
pp. 378-405 ◽  
Author(s):  
Ridhima Saggar ◽  
Balwinder Singh
Keyword(s):  
Corporate Governance ◽  
Listed Companies ◽  
Risk Information ◽  
Ownership Concentration ◽  
Regulatory Regime ◽  
Risk Disclosure ◽  
Firm Level ◽  
Content Type ◽  
Board Characteristics ◽  
The Relationship

Purpose This study aims to measure the extent of voluntary risk disclosure and examine the relationship between corporate governance firm level quality in the form of board characteristics and ownership concentration’s impact on risk disclosure in the annual reports of Indian listed companies. Design/methodology/approach The method adopted in this study is automated content analysis, which is applied to a sample of 100 listed Indian non-financial companies to find out the extent of risk disclosure. Further, multiple linear regressions have been applied to find out the relationship between corporate governance firm level quality in the form of board characteristics, ownership concentration and risk disclosure. Findings The findings reveal that the total number of positive risk keywords surpasses negative risk keywords disclosure. The corporate governance mainsprings, namely, board size and gender diversity have a positively significant effect on risk disclosure, whereas ownership concentration in the hands of the largest shareholder insignificantly affects risk disclosure, but identity of the largest shareholder having ownership concentration negatively affects disclosure of risk information in the case of Indian promoter body corporate, foreign promoter body corporate and non-institutions in comparison to family ownership. Research limitations/implications This study relied on a set of 39 risk keywords for measuring the extent of risk disclosure. Further, it uses a sample of 100 companies to examine the effect of corporate governance on risk disclosure at one point of time. However, a longitudinal study can help in understanding risk disclosure adopted by Indian listed companies in a better manner. Practical implications The findings have implications for regulatory bodies such as the Securities and Exchange Board of India, which needs to strengthen corporate governance norms with respect to board characteristics and keep a check on ownership concentration for improving risk disclosure by companies. Originality/value To best of the authors’ knowledge, this study is a preliminary attempt linking two research lines in India, that is, corporate risk disclosure and corporate governance quality in the form of board characteristics and ownership concentration. The study identifies corporate governance firm level qualities which lead to divulgation of risk information by the companies pointing towards strengthening of regulatory regime in the country for improved corporate governance regulations adopted by listed companies.

Ownership concentration, ownership composition and the performance of the Kuwaiti listed non-financial firms

2015 ◽  
Vol 25 (1) ◽  
pp. 108-132 ◽  
Author(s):  
Mejbel Al-Saidi ◽  
Bader Al-Shammari
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Arab Countries ◽  
Ownership Concentration ◽  
Content Type ◽  
Financial Firms ◽  
Large Shareholders ◽  
Ownership Composition ◽  
The Relationship

Purpose – This paper aims to investigate the relationship between ownership structure (ownership concentration and ownership composition) and firm performance in Kuwaiti non-financial firms. To this end, it examines the relationship between firm performance and ownership concentration to determine whether the impact of this relationship is conditional on the nature of the large shareholders. Design/methodology/approach – First, the relationship between ownership concentration and firm performance was tested using ordinary least squares regressions on 618 observations (103 listed firms) from 2005 to 2010; next, the ownership compositions were classified as institutional, government and individuals (families) and their impact on firm performance examined. Findings – The overall concentration ownership by large shareholders showed no impact on firm performance. However, when the type of shareholders was introduced, only the government and individuals (families) ownership categories influenced firm performance. Therefore, certain types of shareholders are better at monitoring, and not all concentration by large shareholders is beneficial to Kuwaiti firms. Research limitations/implications – This study examined only one important aspect of the corporate governance mechanisms, namely, ownership concentration. Thus, further study may include other mechanisms such as board variables, role of debt and shareholders rights in examining the firm performance. This study is limited to the Kuwaiti environment, and thus, next step can be very useful in case of comparing ownership concentration in the Gulf Cooperation Council (Kuwait, Bahrain, Qatar, Oman, United Arab Emirates and Saudi Arabia) or across different Arab countries. Practical implications – The results of this study have important implications for the regulators in Kuwait in their efforts to increase the efficiency of the rapidly developing capital markets and in protecting investors and keeping confidence in the economy. They may mandate a corporate governance code to protect minority shareholders. Investors may use the findings to understand Kuwaiti companies. Such findings may assist them to diversify their investment portfolios. Originality/value – This paper extends literature review by investigating the role of large shareholders in the context of a developing country that is characterized by high level of ownership concentration and weak legal protection for investors as well as the absence of code that organized the corporate governance practices.

Independent directors, ownership concentration and firm performance in listed companies

2017 ◽  
Vol 29 (2) ◽  
pp. 204-226 ◽  
Author(s):  
Thi Tuyet Mai Nguyen ◽  
Elaine Evans ◽  
Meiting Lu
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Listed Companies ◽  
Ordinary Least Squares ◽  
Ownership Concentration ◽  
Independent Directors ◽  
Content Type ◽  
Controlling Shareholders ◽  
The Impact ◽  
The Relationship

Purpose The purpose of this paper is to investigate the impact of independent directors on firm performance in Vietnam and identify how different types of ownership structure and the presence of controlling shareholders influence the relationship. Design/methodology/approach For a sample of 217 non-financial Vietnam-listed companies during the period from 2010 to 2014, this study uses the ordinary least squares regressions to estimate the relationship between independent directors and firm performance. Two econometric techniques – the fixed effects estimation and the difference in difference estimation – are used to control for endogeneity. The results are also robust to the lag variable of independent directors. Findings The results reveal that independent directors have an overall negative effect on firm operating performance. This finding may be because of information asymmetry, expertise disadvantage and the dominance of ownership concentration that prevent independent directors from fulfilling their monitoring function in governance. The negative relationship between independent directors and firm performance is stronger in firms where the State is a controlling shareholder. Research limitations/implications Findings suggest that changes relating to independent directors, as a response to the new corporate governance code in 2012, do not have a positive effect on the relationship between corporate governance and firm performance. Further reform is required to improve internal control mechanisms and corporate governance systems in Vietnam. Originality/value This is the first study to provide a robust evidence on the relationship between independent directors and firm performance in Vietnam as well as to explore the impact of the type of controlling shareholders on the relationship.

Relationship between corporate governance and audit switching: Iranian evidence

2017 ◽  
Vol 59 (5) ◽  
pp. 673-686
Author(s):  
Mahdi Salehi ◽  
Ali Asgar Alinya
Keyword(s):  
Corporate Governance ◽  
Design Methodology ◽  
Stock Exchange ◽  
Listed Companies ◽  
Panel Analysis ◽  
Cross Sectional ◽  
Content Type ◽  
Effective Factors ◽  
Dependent Variables ◽  
The Relationship

Purpose This paper aims to investigate the relationship between corporate governance and auditors switching of listed companies on the Tehran Stock Exchange. Design/methodology/approach To achieve the objectives of this study, 12 hypotheses developed which and tests the relationship between corporate governance and selecting and switching auditors in Iran during 2008-20014 by selecting 116 listed companies on the Tehran Stock Exchange. To test the hypotheses, the cross-sectional time-series nature of research variables data, panel analysis is used. Also, to investigate the relationship between independent and dependent variables in each year, the logistic regression is used. Findings The results of the study indicate that there is a weak relationship between corporate governance auditors switching. Therefore, it could be concluded that there are some other effective factors on which selecting and switching auditors in studied companies are more dependent. Originality/value The current study is almost the first study which has been conducted in Iran, so the results of the study may be beneficial to the Iranian conditions as well as other developing countries.

Corporate governance and firm performance in Malaysia

2017 ◽  
Vol 17 (5) ◽  
pp. 896-912 ◽  
Author(s):  
Padmanabha Ramachandra Bhatt ◽  
R. Rathish Bhatt
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Design Methodology ◽  
Institutional Environment ◽  
Listed Companies ◽  
Resource Dependency ◽  
Government Agencies ◽  
Content Type ◽  
Corporate Governance Code ◽  
The Relationship

Purpose The purpose of this paper is to study the effect of Malaysian Code on Corporate Governance (MCCG, 2007 and 2012) on the performance of the listed companies in Malaysia. The agency theory and resource dependency theories indicate that the firms with strong corporate governance outperform firms with weaker governance. This paper explores this relationship in a developing country like Malaysia having different institutional environment compared to western countries. Design/methodology/approach The study used a sample of 113 listed companies in Malaysia. The study incorporates the endogenous relationship between corporate governance, firm performance and leverage. Findings The study analyzes how the corporate governance framework affected firm performance in Malaysia with the help of self-developed corporate governance index (MCGI). The authors’ findings show that the performance of the firm is positively and significantly related with corporate governance measured by MCGI. Secondly, corporate governance of sample firms shows marked improvements after implementation of MCCG 2012 as compared to MCCG 2007. Originality/value The findings of this paper support the agency and the resource dependency theories. The study contributes to the understanding of the relationship between the corporate governance and firm performance in emerging economy and builds a case for enforcement of strong corporate governance code by government agencies.

Ownership governance, institutional pressures and circular economy accounting information disclosure

2014 ◽  
Vol 8 (3) ◽  
pp. 487-501 ◽  
Author(s):  
PuCha Wang ◽  
Fei Che ◽  
ShanShan Fan ◽  
Chen Gu
Keyword(s):  
Corporate Governance ◽  
Institutional Theory ◽  
Circular Economy ◽  
Information Disclosure ◽  
Accounting Information ◽  
Listed Companies ◽  
Institutional Pressures ◽  
Disclosure Quality ◽  
Content Type ◽  
The Relationship

Purpose – This paper aims to explore the determinants of circular economy accounting information disclosure quality, and also to make empirical analysis on the relationship between circular economy accounting information disclosure quality and corporate ownership governance and institutional pressures according to institutional theory and corporate governance theory. Finally, this paper provides some corresponding suggestions for heightening circular economy accounting information disclosure quality. Design/methodology/approach – This paper constructs enterprise circular economy accounting information disclosure model with Chinese characteristics. First, it takes disclosure index method to measure enterprise circular economy accounting information disclosure quality, followed by the hypotheses of this study. Then, this study employs a statistical analysis technique to empirically study the relationship between enterprise circular economy accounting information disclosure quality and ownership governance and institutional pressures, to study the ways to heighten enterprise circular economy accounting information disclosure quality in Chinese background. Findings – Ownership governance and institutional pressures mainly determine quality of circular economy accounting information disclosure. This paper draws the following conclusions: Chinese listed companies have heightened their circular economy accounting information disclosure quality due to ownership concentration, shareholding of institutional investors, mandatory disclosure, capital structure and assets size. However, the circular economy accounting information disclosure quality has low correlation with the profitability and the location of listed companies. Originality/value – Both in China and the West, few scholars or experts adopt empirical research to study the determinants of circular economy accounting information disclosure quality in an institutional theory and corporate governance theory perspective based on China’s supervisory system background. This paper makes a thorough analysis of the factors that affect listed companies’ circular economy accounting information disclosure quality, and provides some corresponding suggestions relevant for heightening circular economy accounting information disclosure quality.

Negative media coverage, law environment and tunneling of controlling shareholder

2015 ◽  
Vol 5 (1) ◽  
pp. 3-18 ◽  
Author(s):  
Yong Ye ◽  
Lei Huang ◽  
Ming Li
Keyword(s):  
Media Coverage ◽  
Active Role ◽  
Listed Companies ◽  
Company Performance ◽  
Controlling Shareholder ◽  
Content Type ◽  
Controlling Shareholders ◽  
Effects Of Media ◽  
First Time ◽  
The Relationship

Purpose – The purpose of this paper is to analyze the relationship among negative media coverage, law environment and tunneling of controlling shareholders. Design/methodology/approach – Under the Chinese especial institutional background, this paper empirically test the relationship among negative media coverage, law environment and tunneling of controlling shareholders with the sample of 2009-2011 Chinese listed companies. Findings – The empirical results demonstrate that negative media coverage can reduce tunneling of controlling shareholder, and compared with state-owned listed companies, negative media coverage have a greater effect on tunneling in non-state-owned listed companies; and negative media coverage have a greater effect on tunneling in areas with better law environment. Further study shows that the reduction of controlling shareholder’s behavior of tunneling can improve company performance, and the improvement is more significant in non-state-owned listed companies and areas with better law environment. The research results indicate that media coverage play a very active role on restraining stakeholder’s behavior and perfecting corporate governing. Originality/value – First, this paper will study of tunneling from the perspective of media coverage for the first time. Second, this paper further analyzes how the decrease of tunneling improves corporate performance following the research of how media coverage influence tunneling. Third, this study enrich literatures about the effects of media coverage on corporate governance in Chinese capital market.

scholarly journals The effect of industry nuances on the relationship between corporate governance and financial performance: Evidence from South African listed companies

2018 ◽  
Vol 21 (1) ◽  
Author(s):  
Jonty Tshipa ◽  
Leon M. Brummer ◽  
Hendrik Wolmarans ◽  
Elda Du Toit
Keyword(s):  
Corporate Governance ◽  
Financial Performance ◽  
South African ◽  
Resource Dependence ◽  
Stock Exchange ◽  
Listed Companies ◽  
Company Performance ◽  
Johannesburg Stock Exchange ◽  
Good Corporate Governance ◽  
The Relationship

Background: Premised on agency, resource dependence and stewardship theories, the study investigates empirically the existence of industry nuances in the relationship between corporate governance and financial performance of companies listed in the Johannesburg Stock Exchange. Aims: The main objective of the study is to understand the relationship between internal corporate governance and company performance from the perspective of three distinct economic periods, as well as industry nuances, cognisant of endogeneity issues. Setting: South Africa, as an emerging African market, offers an interesting research context in which the corporate governance and financial performance nexus can be examined empirically. Method: A sample of 90 companies from the five largest South African industries, covering a 13-year period from 2002 to 2014 (1170 firm-year observations) was examined with three estimation approaches. Results: Two key trends emerged from this study. First, the relationship between corporate governance and company performance differed from industry to industry. Second, the association between corporate governance and company performance also changes during steady and non-steady periods, which is an indication that the nexus is driven by the state of the global economy and the type of the industry. Conclusion: Evidence from the study suggests that companies should be allowed to optimise rather than maximise their corporate governance options. This finding questioned the approach of the recently published King IV Code of Good Corporate Governance, which requires Johannesburg Stock Exchange-listed companies to ‘apply and explain’ as opposed to ‘apply or explain’ as pronounced by King III Code of Good Corporate Governance.

scholarly journals Governance and ownership in Malaysia: their impacts on corporate performance

2020 ◽  
Vol 5 (2) ◽  
pp. 285-298
Author(s):  
Nazli Anum Mohd Ghazali
Keyword(s):  
Corporate Governance ◽  
Corporate Performance ◽  
Listed Companies ◽  
Developed Countries ◽  
Annual Reports ◽  
Future Research ◽  
Company Performance ◽  
Government Ownership ◽  
Board Size ◽  
Content Type

PurposeThe aim of this paper is to examine the relative influence of regulatory enhancements relating to corporate governance and attributes of business traits on performance of Malaysian listed companies.Design/methodology/approachRegression analysis was performed on all 742 non-financial main board companies listed on Bursa Malaysia using data from 2013 annual reports.FindingsThe results show that the number of board meetings held during the year, role separation and board size have a significant impact on corporate performance. By contrast, independent directors, government ownership and director ownership do not influence corporate performance.Research limitations/implicationsThe study investigated non-financial companies for the financial year 2013. Hence, the results may not apply to financial companies and other years. Future research can perhaps include all types of listed companies and carry out a longitudinal study to gain more comprehensive results and understanding on the relationship between corporate governance and corporate performance. Additionally, future research could also consider employing a different methodology to further unveil factors influencing corporate performance.Practical implicationsThe above findings provide new evidence of the effectiveness of the Malaysian Code on Corporate Governance in improving company performance. The significance of board meetings, role separation and board size shows the importance of internal governance in shaping company processes and hence performance.Originality/valueThe result suggests that although the Malaysian Code on Corporate Governance follows the corporate governance code of developed countries, the applicability of the recommendations to a developing country is evidenced. Companies in Malaysia are predominantly government-owned or closely held, but it appears that role separation matters even in these types of companies in achieving better performance.

scholarly journals ESG disclosure and firm performance before and after IR

2020 ◽  
Vol 28 (3) ◽  
pp. 429-444 ◽  
Author(s):  
Khaldoon Albitar ◽  
Khaled Hussainey ◽  
Nasir Kolade ◽  
Ali Meftah Gerged
Keyword(s):  
Corporate Governance ◽  
Financial Performance ◽  
Gender Diversity ◽  
Ownership Concentration ◽  
Content Type ◽  
Moderation Effect ◽  
Corporate Governance Mechanisms ◽  
Before And After ◽  
The Uk ◽  
The Relationship

Purpose This paper aims to investigate the effect of environmental, social and governance disclosure (ESGD) on firm performance (FP) before and after the introduction of integrated reporting (IR) further to exploring a potential moderation effect of corporate governance mechanisms on this relationship. Design/methodology/approach Ordinary least squares and firm-fixed effects models were estimated based on data related to FTSE 350 between 2009 and 2018. The data has been mainly collected from Bloomberg and Capital IQ. This analysis was supplemented with applying a two-stage least squares (2 SLS) model to address any concerns regarding the expected occurrence of endogeneity problems. Findings The results show a positive and significant relationship between ESGD score and FP before and after 2013, among a sample of FTSE 350. Furthermore, the study is suggestive of a moderation effect of corporate governance mechanisms (i.e. ownership concentration, gender diversity and board size) on the ESGD-FP nexus. Additionally, this paper finds that firms voluntarily associated with IR have a tendency to achieve better firm financial performance. Practical implications The findings of the present study have several policy and practitioner implications. For example, managers may engage in ESGD to enhance their firms’ financial performance by the voluntary involvement in IR, which believed to help investors to rationalise their investment decisions. Likewise, the results reiterate the crucial need to integrate more social, environmental and economic regulations to promote sustainability in the UK. The paper also offers a systematic picture for policymakers in the UK as well as future researchers. Social implications The findings of this paper indicate that IR plays a significant role in the relationship between ESGD and FP, where IR firms seemed to be achieving better FP as compared with their non-IR counterparts. This implies that stakeholders may have played a magnificent effort to encourage firms’ voluntary engagement in IR in the UK. Originality/value To the best of the authors’ knowledge, this is the first study to explore the potential moderating effect of ownership concentration, gender diversity and board size on the relationship between ESGD and FP and to examine whether firms’ voluntary involvement in IR can lead to better FP after the introduction of IR in 2013 in the UK.

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