scholarly journals Reasons for and implications of the presence of institutional investors in the ownership structure of Brazilian companies

2016 ◽  
Vol 13 (4) ◽  
pp. 598-608 ◽  
Author(s):  
Lélis Pedro de Andrade ◽  
Aureliano Angel Bressan ◽  
Robert Aldo Iquiapaza ◽  
Wesley Mendes-Da-Silva
Keyword(s):  
Agency Theory ◽  
Chief Executive Officer ◽  
Ownership Structure ◽  
Institutional Investors ◽  
Chief Executive ◽  
Agency Conflicts ◽  
Minority Shareholders ◽  
Controlling Shareholders ◽  
Agency Conflict ◽  
Equity Funding

Using 3,057 observations from 2000 to 2012, we found the risk of expropriation of minority shareholders by controlling shareholders is positively associated with participation of institutional investors in equity funding. There is no evidence that these investors increase the likelihood of substituting the chief executive officer or increase the company’s value or its financial performance. However, the presence of institutional investors is associated with higher company debt. This study suggests that institutional investors assume a function not fully explained by agency theory, such as enabling greater access to debt markets, but accentuate the agency conflict between controlling and minority shareholders. The main results show that the presence of institutional investors mitigates agency conflicts between shareholders and creditors, but increases the risk of expropriation of minority shareholders.

scholarly journals Enterprise Risk Management In Private Firms: Does Ownership Structure Matter?

2016 ◽  
Vol 32 (2) ◽  
pp. 671 ◽  
Author(s):  
Elisabetta Mafrolla ◽  
Felice Matozza ◽  
Eugenio D'Amico
Keyword(s):  
Risk Management ◽  
Agency Theory ◽  
Ownership Structure ◽  
Enterprise Risk Management ◽  
Private Firms ◽  
Agency Conflicts ◽  
Minority Shareholders ◽  
Enterprise Risk ◽  
The Government ◽  
Private Corporations

Private firms adopt Enterprise Risk Management (ERM) practices voluntarily. Using results of a survey that involved 78 respondents, we investigate the adoption of ERM practices in Italian private corporations and question whether ERM adoption is affected by the ownership structure of the firm. We find that agency conflicts between controlling and minority shareholders, which arise when ownership dispersion decreases, affect ERM adoption, and that when proprietorship is more dispersed, the firm places more focus on ERM projects. Additionally, we document the different roles of different types of owners. More specifically, in line with the patronage agency theory, the government-controlled enterprises undergo more intense ERM, whereas, in line with behavioral agency theory, individual and family-controlled firms pay less attention to ERM adoption.

scholarly journals Board governance, ownership structure and financing decisions in emerging market

2016 ◽  
Vol 13 (3) ◽  
pp. 355-365 ◽  
Author(s):  
Md Safiullah
Keyword(s):  
Corporate Governance ◽  
Board Of Directors ◽  
Ownership Structure ◽  
Emerging Market ◽  
Board Governance ◽  
Agency Conflicts ◽  
Minority Shareholders ◽  
Listed Firms ◽  
Financing Decisions ◽  
Agency Conflict

This paper aims to contribute to the corporate governance literature by examining the effects of board governance and ownership structure on financing decisions in an emerging country context. Using hand collected corporate governance data from a panel sample of 110 publically-listed firms in Bangladesh over 2009-2012, this study finds that the corporate debt ratio is not related to standard board of directors mechanisms.The results indicate that board of directors play little role in resolving conflicts in an environment with the presence of strong principal-principal agency conflict. The study also finds no evidence of institutional investors’ activism in a manner that is consistent with the goals of other outside stockholders due to the weak regulatory and market discipline. This empirical evidence from the principal-principal agency conflicts (conflict of interest between majority shareholders and minority shareholders) offers insights to policy makers in emerging countries interested to protect minority shareholders’ rights and to ensure effective corporate governance of capital structure decisions.

scholarly journals Investor Protection and Agency Theory in Corporate Governance in Pakistan

2021 ◽  
Vol 3 (1) ◽  
pp. 12-21
Author(s):  
Imtiaz Ahmed Khan ◽  
Altaf Hussain Abro ◽  
Farooque Ahmed Leghari
Keyword(s):  
Corporate Governance ◽  
Agency Theory ◽  
Agency Cost ◽  
Corporate Structure ◽  
Minority Shareholders ◽  
Private Benefits ◽  
Controlling Shareholders ◽  
Global Trend ◽  
The Cost ◽  
Very High

The paper discusses the minority shareholders’ protection under the quantumof agency cost in corporate governance in Pakistan. The agency theory statesthat in most of the cases, the controlling shareholders and the topmanagement are normally involved in expropriating the funds of the company.This phenomenon increases the agency cost. The agency cost is directlyproportional to the cost of functioning of the company. In other words, theagency cost is inversely proportional to the profit of the company. Accordingto the agency theory, if the agency cost is decreased, the profit for investorincreases. The Pakistani corporate sector is dominated by the businessfamilies, the state and an opportunity to get the private benefits at the cost ofother stakeholders. There are the different mechanisms as discussed andapplied around the world to minimize the agency cost so as to make companyfinancially strong and better profit for the investors. In Pakistan, the agencycost is very high. Hence, there is a need to revamp the corporate governancemechanism to reduce the agency cost in order to provide a better protection tominority shareholders in a particular in the context of the global trend keepingin the view of the nature of corporate structure in Pakistan.

Controlling Shareholders: Issues and Challenges for Shareholders’ Empowerment in Directors’ Remuneration in Corporate Malaysia

2014 ◽  
Vol 9 (1) ◽  
Author(s):  
Shanthy Rachagan ◽  
Aiman Nariman Mohd Sulaiman
Keyword(s):  
Emerging Economies ◽  
Ownership Structure ◽  
Self Regulation ◽  
Developed Countries ◽  
Interesting Case ◽  
Minority Shareholders ◽  
Controlling Shareholders ◽  
Legal Rules ◽  
Current Reform

AbstractCurrent reform concerning directors’ remuneration relies on improving legal rules and self-regulation to minimise expropriation of minority shareholders. These have prominently focussed on empowering shareholders. Nonetheless, it is unclear as to the extent these reform proposals are compatible within the concentrated shareholding structure. Some of the reforms taking place in developed countries are suited for dispersed shareholding structure and thus transplanting them to emerging economies with concentrated shareholders may be ineffective. Malaysia poses an interesting case study, especially to countries with similar ownership structure as the concentrated shareholding structure raises different agency problems. The issue of protection of minority shareholder rights and the prevention of abuse of the controlling power by paying excessive remuneration to the executives is therefore a subject of due consideration in Malaysia and countries with similar shareholding structures. This article recommends that Malaysia and other emerging countries look into encouraging limited shareholder empowerment in tandem with laws.

Dividend Policy with Controlling Shareholders

2015 ◽  
Vol 16 (1) ◽  
Author(s):  
Maribel Sáez ◽  
María Gutiérrez
Keyword(s):  
Empirical Evidence ◽  
Dividend Policy ◽  
Empirical Literature ◽  
Minority Shareholders ◽  
Dividend Payout ◽  
Controlling Shareholders ◽  
Legal Rules ◽  
Ownership Structures ◽  
Agency Conflict ◽  
Concentrated Ownership

AbstractThis Article investigates the determinants of dividend policy in firms with concentrated ownership structures. A review of the empirical literature shows that dividend payout ratios are lower in firms with controlling shareholders. We explain this finding as a consequence of the legal rules governing cash distributions, which leave the dividend decision in the hands of the firm insiders, and the lack of monitoring mechanisms for checking the power of controlling shareholders. The analysis of the empirical evidence on dividend policy points to the existence of an unresolved agency conflict between controlling shareholders and outside investors. We conclude that controlling shareholders are currently using the dividend policy to expropriate minority shareholders.

scholarly journals Ownership structure and corporate governance code: The case of family business enterprises in Germany

2009 ◽  
Vol 6 (4) ◽  
pp. 382-390 ◽  
Author(s):  
Marion Weissenberger-Eibl ◽  
Patrick Spieth
Keyword(s):  
Corporate Governance ◽  
Family Business ◽  
Ownership Structure ◽  
Family Businesses ◽  
Minority Shareholders ◽  
Controlling Shareholders ◽  
Corporate Governance Code ◽  
Business Enterprises ◽  
And Control

Ownership of corporations in Germany is today highly concentrated in the hands of families and other companies. Theses ‘insider’ systems often result in core conflict tends to be between controlling shareholders and sometimes between strong stakeholders and weak minority shareholders. The aim of this paper is to research the characteristics of ownership and control in family business and point out the role of Family Business Governance in securing an appropriate control of the owning families. The authors give suggestions how to implement the German Governance Code recommendations in family businesses.

Corporate Governance in China: A Survey*

2020 ◽  
Vol 24 (4) ◽  
pp. 733-772 ◽  
Author(s):  
Fuxiu Jiang ◽  
Kenneth A Kim
Keyword(s):  
Corporate Governance ◽  
Agency Problems ◽  
Future Research ◽  
Minority Shareholders ◽  
Controlling Shareholder ◽  
Controlling Shareholders ◽  
Agency Conflict ◽  
Concentrated Ownership ◽  
The Usa ◽  
Corporate Social

Abstract This article surveys corporate governance in China, as described in a growing literature published in top journals. Unlike the classical vertical agency problems in Western countries, the dominant agency problem in China is the horizontal agency conflict between controlling and minority shareholders arising from concentrated ownership structure; thus one cannot automatically apply what is known about the USA to China. As these features are also prevalent in many other countries, insights from this survey can also be applied to countries far beyond China. We start by describing controlling shareholder and agency problems in China, and then discuss how law and institutions are particularly important for China, where controlling shareholders have great power. As state-owned enterprises have their own features, we separately discuss their corporate governance. We also briefly discuss corporate social responsibility in China. Finally, we provide an agenda for future research.

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