scholarly journals Corporate governance and implications for minority shareholders in Turkey

2003 ◽  
Vol 1 (1) ◽  
pp. 72-86 ◽  
Author(s):  
B. Burcin Yurtoglu
Keyword(s):  
Minority Shareholders ◽  
Holding Companies ◽  
Control Structures ◽  
Listed Firms ◽  
Financial Firms ◽  
Using Data ◽  
Dual Class Shares ◽  
Cash Flow Rights ◽  
Dual Class ◽  
And Control

This paper reports on the ownership and control structures of publicly listed firms in Turkey using data from 2001. While holding companies and non-financial firms are the most frequent owners at the direct level, families ultimately own more than 80 percent of all publicly listed firms in Turkey. Pyramids and dual class shares are common devices that families use to separate their cash-flow rights from control rights. We also show that such deviations result in significantly lower market to book ratios suggesting large agency costs because of the conflict of interests between controlling families and minority shareholders

scholarly journals Ownership Patterns and Control of Top 100 Turkish Listed Companies

2017 ◽  
Vol 9 (1) ◽  
pp. 192
Author(s):  
Aree Saeed Mustafa ◽  
Ayoib Che-Ahmad ◽  
Sitraselvi a/p Chandren
Keyword(s):  
Ownership Structure ◽  
Future Research ◽  
Minority Shareholders ◽  
Listed Firms ◽  
Common Control ◽  
Study Results ◽  
Pyramidal Ownership ◽  
Dual Class Shares ◽  
Dual Class ◽  
And Control

This study aims to highlight the importance of protecting investors’ rights, and particularly those of minority shareholders. This study addresses the predominant control-ownership structure of the top 100 firms listed in Bursa Istanbul (BI) using the data for 2015. It shows the most common control-ownership structure within business groups, in which shareholders exercise control over a group of firms and maintain a small stake of firms’ equities. Turkish firms are categorised with highly concentrated ownership and families’ being the dominant shareholders owning more than 80% of all publically listed firms in BI. The study results indicate that the divergence between cash rights and control rights (wedge)in the top 100 Turkish firms is mainly achieved through pyramidal-ownership structure, dual class shares, and cross-ownership at about 41%, 40% and 11%, respectively, while approximately 8% of firms do not use wedge. Hence, wedge exacerbates Type II Agency Problems. This paper calls for future research to study the environment of wedge for Turkish firms listed in BI.

Dual-Class Shares and Audit Pricing: Evidence from the Canadian Markets

2008 ◽  
Vol 27 (2) ◽  
pp. 199-216 ◽  
Author(s):  
Samer Khalil ◽  
Michel L. Magnan ◽  
Jeffrey R. Cohen
Keyword(s):  
Cash Flow ◽  
Positive Association ◽  
Audit Fees ◽  
Control Rights ◽  
Audit Pricing ◽  
Audit Risk ◽  
Dual Class Shares ◽  
Cash Flow Rights ◽  
Dual Class ◽  
And Control

SUMMARY: This paper investigates whether audit fees vary with the wedge between cash flow rights and control rights arising from the presence of dual-class share structures. Dual-class shares exist in firms having two or more classes of shares with disproportionate voting rights. They affect audit fees through their effect on the supply for audit services. External auditors conduct wider (narrower) scope audits depending on whether dual-class shares increase (decrease) audit risk and/or auditor business risk. Wider (narrower) scope audits are more (less) costly for the auditors and for their clients. This paper documents a positive association between audit fees and the wedge between cash flow rights and control rights in a sample of Canadian firms during 2004. It extends current research by investigating whether dominant shareholdings affect audit pricing, and by examining audit pricing in Canada over a time period that witnessed significant changes in corporate governance.

Founding Family Ownership and the Selection of Industry Specialist Auditors

2014 ◽  
Vol 28 (2) ◽  
pp. 261-276 ◽  
Author(s):  
Fei Kang
Keyword(s):  
Financial Reporting ◽  
Family Firms ◽  
Structure And Agency ◽  
Founding Family ◽  
Using Data ◽  
Dual Class Shares ◽  
Dual Class ◽  
Selection Of ◽  
Industry Specialist

SYNOPSIS This study examines how family firms' unique ownership structure and agency problems affect their selection of industry-specialist auditors. Using data from Standard & Poor's (S&P) 1500 firms, the results show that family firms are more likely to appoint industry-specialist auditors than non-family firms, which suggests that family firms have strong incentives to signal the quality of financial reporting. Additional analysis indicates that due to the potential entrenchment problems, family firms with family member CEOs or with dual-class shares have even a higher tendency to hire industry-specialist auditors to signal their disclosure quality.

Minority Shareholder Protections and the Private Benefits of Control for Swedish Mergers

2004 ◽  
Vol 39 (1) ◽  
pp. 167-191 ◽  
Author(s):  
Martin Holmén ◽  
John D. Knopf
Keyword(s):  
Tax Compliance ◽  
Limited Evidence ◽  
Private Benefits ◽  
Private Benefits Of Control ◽  
Shareholder Protection ◽  
Degree Of Separation ◽  
Using Data ◽  
Dual Class Shares ◽  
Dual Class ◽  
High Degree

AbstractSweden has a high degree of separation of ownership from control through pyramids, dual-class shares, and cross-holdings. This increases the potential for private benefits of control. However, Sweden's extralegal institutions—tax compliance and newspaper circulation—are consistent with greater shareholder protection. Using data on Swedish mergers we find limited evidence of shareholder expropriation. Apparently, Sweden's extralegal institutions offset the drawback of weak corporate governance.

scholarly journals On the relationship between ownership-control structure and debt financing: new evidence from France

2007 ◽  
Vol 5 (1) ◽  
pp. 139-154 ◽  
Author(s):  
Sabri Boubaker
Keyword(s):  
Debt Financing ◽  
Minority Shareholders ◽  
Control Rights ◽  
Controlling Shareholder ◽  
External Finance ◽  
Cash Flow Rights ◽  
Ownership Rights ◽  
And Control ◽  
New Evidence ◽  
The Relationship

The paper deals with external debt financing in controlling minority structures (CMSs), a very pervasive corporate organizational structure in France outside CAC 40 firms. Since large controlling shareholders in such firms maintain grip on control while owning only a small fraction of ownership rights, we are in a situation where their interests depart from that of the minority shareholders. Using a sample of 377 French firms, we show that firms featuring a substantial likelihood of expropriation (higher discrepancy between cash flow rights and control rights or group-affiliated), present lower leverage ratios than others due to debt supply restrictions. Contrariwise, the presence of second large controlling shareholder is perceived by external finance suppliers as a pledge against expropriation. Therefore, such firms exhibit high debt levels.

scholarly journals Ownership Concentration, Corporate Governance and Firm Performance: Evidence from Pakistan

2008 ◽  
Vol 47 (4II) ◽  
pp. 643-659 ◽  
Author(s):  
Attiya Y. Javid ◽  
Robina Iqbal
Keyword(s):  
Corporate Governance ◽  
Ownership Structure ◽  
Agency Problem ◽  
Governance Structure ◽  
Minority Shareholders ◽  
Corporate Governance Structure ◽  
Economic Landscape ◽  
Cash Flow Rights ◽  
Pyramid Structures ◽  
Dual Class

The nature of relation between the ownership structure and corporate governance structure has been the core issue in the corporate governance literature. From a firms’ perspective, ownership structure determines the firms’ profitability, enjoyed by different stake-holders. In particular, ownership structure is an incentive device for reducing the agency costs associated with the separation of ownership and management, which can be used to protect property rights of the firm [Barbosa and Louri (2002)]. With the development of corporate governance, many corporations owned by disperse shareholders and are controlled by hire manager. As a results incorporated firms whose owners are dispersed and each of them owns a small fraction of total outstanding shares, tend to under-perform as indicated by Berle and Means (1932). Latter this theoretical relationship between a firm’s ownership structure and its performance is empirically examined by Jensen and Meckling (1976) and Shlefier and Vishny (1986). In most of developing markets including Pakistan, the closely held firms (family or state-controlled firms or firms held by corporations and by financial institutions) dominate the economic landscape. The main agency problem is not the managershareholder conflict but rather the risk of expropriation by the dominant or controlling shareholder at the expense of minority shareholders. The agency problem in these markets is that control is often obtained through complex pyramid structures,1 interlock directorship,2 cross shareholdings,3 voting pacts and/or dual class voting shares that allow the ultimate owner to maintain (voting) control while owning a small fraction of ownership (cash flow rights).

scholarly journals Pyramid ownership structure and tax avoidance among Canadian firms

2019 ◽  
Vol 33 (1) ◽  
pp. 16-33 ◽  
Author(s):  
Justin Mindzak ◽  
Tao Zeng
Keyword(s):  
Ownership Structure ◽  
Empirical Work ◽  
Tax Avoidance ◽  
Content Type ◽  
Listed Firms ◽  
Corporate Ownership Structure ◽  
Cash Flow Rights ◽  
And Control ◽  
The Impact ◽  
The Relationship

Purpose This paper aims to examine the relationship between pyramid ownership structure and tax avoidance. Design/methodology/approach This paper is an empirical work using a sample of Canadian listed firms. Findings Relying on several proxies for tax avoidance, the authors find that firms affiliated with pyramidal structures generally engage in more tax avoidance activities than non-affiliated firms; firms affiliated with more complex pyramids engage in more tax avoidance practices and firms located at the lower tiers of the pyramids avoid more taxes; and some pyramid-affiliated firms with larger deviation between controlling shareholders’ cash flow rights and control rights engage in more tax avoidance practices. Social implications A broader understanding of the relationship between pyramidal structure and tax avoidance can be pursued by including firms in other countries, where the pyramid groups (pyramid structure) are prevalent, but institutional environments differ from that of Canada. Originality/value This study highlights the importance of pyramid ownership in shaping tax avoidance activities among Canadian-listed firms. Canada provides an ideal setting for studying the impact of ownership structure, as it contains a diverse corporate ownership structure ranging from widely held freestanding firms to pyramidal business groups.

Agency Costs of Controlling Shareholders' Share Collateral with Taiwan Evidence

2007 ◽  
Vol 10 (02) ◽  
pp. 173-191 ◽  
Author(s):  
Anlin Chen ◽  
Lanfeng Kao ◽  
Yi-Kai Chen
Keyword(s):  
Corporate Governance ◽  
Agency Costs ◽  
Legal Regulation ◽  
Governance Mechanism ◽  
Minority Shareholders ◽  
Control Rights ◽  
Controlling Shareholders ◽  
Corporate Governance Mechanism ◽  
Cash Flow Rights ◽  
And Control

Controlling shareholders' share collateral is a new source of the deviation of cash flow rights and control rights leading to minority shareholder expropriation. However, controlling shareholders' share collateral is not forbidden and has not received particular restriction leading to its popularity in the capital markets. Neglecting the potential agency costs resulting from controlling shareholders' share collateral would hurt the interests of creditors and minority shareholders. We need legal regulation on controlling shareholders' share collateral to reinforce corporate governance mechanism to protect the interests of creditors and minority shareholders.

scholarly journals Separation of control rights and cash-flow rights in emerging economies: theory and Mexican evidence

2007 ◽  
Vol 5 (1) ◽  
pp. 38-57
Author(s):  
Richard Fairchild ◽  
Alma Garro Paulin
Keyword(s):  
Cash Flow ◽  
Developing Economies ◽  
Developed Countries ◽  
Theoretic Model ◽  
Control Rights ◽  
Listed Firms ◽  
Extreme Risk ◽  
Game Theoretic ◽  
Cash Flow Rights ◽  
And Control

Researchers have identified that corporate ownership structures appear to be quite different in developed and developing economies. For instance, Castañeda Ramos (1999) provides evidence of considerable separation of cash-flow rights and control rights accruing to inside and outside equityholders in publicly listed firms in Mexico. Insiders use mechanisms such as dual voting rights, majority rules and pyramids to maximise their control rights while holding minimal cash-flow rights. In contrast, there is a much closer alignment of cash-flow rights and control rights in developed countries such as UK or US. The purpose of this paper is to develop a game-theoretic model that explains these features. We argue that factors in emerging markets, such as large private benefits of control, extreme risk, low investor protection, inefficient capital markets, and governments sympathetic to incumbent management at the expense of outside investors, all contribute to insiders’ incentives to create a separation of cash flow and control rights. We present evidence from Mexico that supports our results

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