Ownership Structure and Corporate Diversification

2006 ◽  
Vol 8 (1) ◽  
pp. 1-19 ◽  
Author(s):  
Yi Zhang ◽  
Xi Li
Keyword(s):  
Firm Performance ◽  
Local Government ◽  
Ownership Structure ◽  
Central Government ◽  
Agency Problems ◽  
State Ownership ◽  
Corporate Diversification ◽  
Listed Firms ◽  
Firm Diversification ◽  
Diversification Strategies

This paper examines the motivation and impact of corporate diversification in Chinese listed firms. We find that in local government owned-firms there is a non-linear relationship between the level of firm diversification and state ownership. As state ownership increases from zero, the level of diversification decreases. After state ownership reaches a certain level, the level of diversification increases as state ownership increases. There is no evidence that ownership is related to corporate diversification in non-state-owned firms or central government-owned firms. We also document that diversification is negatively related to firm performance in local government-owned firms. However, there is no evidence that diversification is negatively related to the firm performance in non-state-owned firms or central government-owned firms. Our findings suggest that agency problems are responsible for local government owned-firms taking value-reducing diversification strategies.

scholarly journals Ownership structure and firm performance in emerging markets: evidence from Chinese listed firms

2009 ◽  
Vol 6 (3) ◽  
pp. 465-472
Author(s):  
Benjamin Ehikioya ◽  
Yuanjin Qin ◽  
Keifa Xie ◽  
Chen ru Yun
Keyword(s):  
Firm Performance ◽  
Ownership Structure ◽  
Negative Influence ◽  
State Ownership ◽  
Legal Person ◽  
Stock Exchanges ◽  
Holding Companies ◽  
Listed Firms ◽  
Panel Data Regression ◽  
Data Regression

This study investigates how ownership structure impacts on the corporate performance of listed firms in China. The study uses sample data of firms listed in the Shanghai and Shenzhen stock exchanges for the five year fiscal period that ended 2005. The results of the panel data regression analysis suggests firm performance to have positive and significant relation with the proportion of shares held by the institution, through the legal person holding companies. In addition, while state ownership indicates negative influence on performance, individual and foreign investors are found to have positive effect on performance, though at a minimal levels. Interestingly, the effect of ownership structure is stronger in firms experiencing the dominance of legal person share holdings over state shares. Further, firm size and ratio of debt to equity are also observed to have influence on the performance of Chinese listed firms. These findings are of great significant to policymakers, academics, shareholders and other stakeholders.

scholarly journals Corporate Governance Quality, Ownership Structure, Agency Costs and Firm Performance. Evidence from an Emerging Economy

2020 ◽  
Vol 13 (7) ◽  
pp. 154
Author(s):  
Haroon ur Rashid Khan ◽  
Waqas Bin Khidmat ◽  
Osama Al Hares ◽  
Naeem Muhammad ◽  
Kashif Saleem
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Ownership Structure ◽  
Agency Cost ◽  
State Ownership ◽  
Ownership Concentration ◽  
Listed Firms ◽  
Governance Quality ◽  
Corporate Governance Quality ◽  
The Relationship

The purpose of this paper is to investigate the effect of corporate governance quality and ownership structure on the relationship between the agency cost and firm performance. Both the fixed-effects model and a more robust dynamic panel generalized method of moment estimation are applied to Chinese A-listed firms for the years 2008 to 2016. The results show that the agency–performance relationship is positively moderated by (1) corporate governance quality, (2) ownership concentration, and (3) non-state ownership. State ownership has a negative effect on the agency–performance relationship. Various robust tests of an alternative measure of agency cost confirm our main conclusions. The analysis adds to the empirical literature on agency theory by providing useful insights into how corporate governance and ownership concentration can help mitigate agency–performance relationship. It also highlights the impact of ownership type on the relationship between agency cost and firm performance. Our study supports the literature that agency cost and firm performance are negatively related to the Chinese listed firms. The investors should keep in mind the proxies of agency cost while choosing a specific stock. Secondly; the abuse of managerial appropriation is higher in state-held firms as compared to non-state firms. Policymakers can use these results to devise the investor protection rules so that managerial appropriation can be minimized.

scholarly journals Ownership structure and corporate diversification decision: a study of Vietnamese listed firms

2016 ◽  
Vol 13 (3) ◽  
pp. 226-233 ◽  
Author(s):  
Duc Nam Phung ◽  
Thi Bich Nguyet Phan ◽  
Thi Lien Hoa Nguyen ◽  
Thi Phuong Vy Le
Keyword(s):  
Ownership Structure ◽  
Negative Impact ◽  
Positive Impact ◽  
Emerging Market ◽  
Foreign Ownership ◽  
State Ownership ◽  
Corporate Diversification ◽  
Diversification Strategy ◽  
Listed Firms ◽  
The Impact

This research examines the impact of the ownership structure on corporate diversification decision of listed firms in Vietnam over the period of 2007 and 2012. The empirical results from logit model show that while state ownership has positive impact on corporate diversification decisions of the firms, foreign ownership has negative impact on corporate diversification decision of the firms. This implies that government ownership tends to encourage corporate diversification strategy, while foreign ownership may plays monitoring role and discourage corporate diversification strategy in emerging market context.

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 Three Essays on Corporate Governance in China

2021 ◽  
Author(s):  
◽  
Zonghao Chen
Keyword(s):  
Corporate Governance ◽  
Ownership Structure ◽  
State Ownership ◽  
Independent Directors ◽  
Women Directors ◽  
Director Compensation ◽  
Public Firms ◽  
Listed Firms ◽  
Director Characteristics ◽  
Chinese Public

<p>This thesis consists of three empirical papers on corporate governance in Chinese listed firms. The first essay examines the influence of director characteristics and ownership structure on director compensation. Over the period 2005 through 2015, we find that director compensation in Chinese listed firms is influenced by both director characteristics and ownership structure. We measure director compensation by both the propensity to be paid and the level of compensation. For independent directors, we find that director busyness, tenure, and ownership concentration positively influence and state-ownership negatively influences director compensation. For non-independent directors, we find that tenure positively influences and that both state-ownership and related directors negatively influence director compensation. Lastly, our evidence suggests that women directors in China are not underpaid.  The second essay examines the influence of rookie independent directors on board functions and firm performance in Chinese public companies from 2008 to 2014. We find that rookie independent directors attend more board meetings than seasoned independent directors. Independent directors with higher board meeting attendance are more likely to remain in the firm in the following year (lower turnover rate). This influence of board attendance on re-appointment is stronger for rookie independent directors. Further, we find that boards with more rookie independent directors tunnel less to controlling shareholders, suggesting that rookie independent directors are efficient monitors. Lastly, we find that firms with more rookie independent directors are associated with higher accounting returns.  In the third essay, we investigate the influence of board networks on directors’ career outcomes in Chinese public firms from 2005 to 2014. We find that board connections increase compensation for independent directors. We find that board connections are positively associated with director turnover for non-related directors, but negatively associated with director turnover for related directors. Further, we find that board connections lead to additional future directorships. Overall, we find that board connections both directly lead to higher compensation and indirectly through labor mobility and additional board seats.</p>

Effect of Ownership Structure on Firm Performance Evidence From Non-Financial Listed Firms

2021 ◽  
pp. 143-170
Author(s):  
Muhammad Arslan
Keyword(s):  
Firm Performance ◽  
Ownership Structure ◽  
Causal Effect ◽  
Random Effect ◽  
Random Effect Model ◽  
Least Square ◽  
Ownership Concentration ◽  
Variable Model ◽  
Listed Firms ◽  
Dummy Variable

In modern organizations, there is a separation between ownership and control of the firm. On the lenses of agency theory, this study statistically examines the relationship between ownership structure (i.e., ownership concentration and owner identity) and firm performance of non-financial listed firms of Pakistan by taking firm-level control variables of size, age, liquidity, financial leverage, and growth of the firm. Secondary data is collected from annual reports of 65 non-financial listed firms for the year 2008 to 2012. The least-square dummy variable model followed by the random effect model has been employed to statistically determining the impact of ownership structure on firm performance. The results of the least square dummy variable model reveal that the ownership concentration has a significant positive impact on firm performance. The owner identity (such as dispersed, family, institutional, and government ownership) has a significant causal effect on firm performance as indicated from t and p values.

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