The Effect of Controlling Shareholders’ Ownership Structure on Firms’ Credit Rating

2016 ◽  
Vol 29 (6) ◽  
pp. 2499
Author(s):  
Hae-Young Ryu ◽  
A-Young Lee ◽  
Soo-Joon Chae
Keyword(s):  
Ownership Structure ◽  
Credit Rating ◽  
Controlling Shareholders

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.

scholarly journals The effect of ownership structure on leverage with credit rating as a moderating variable

2020 ◽  
Vol 3 (2) ◽  
pp. 80-87
Author(s):  
Harjum Muharam ◽  
Galuh Kusuma Putri
Keyword(s):  
Ownership Structure ◽  
Sampling Method ◽  
Credit Rating ◽  
Stock Exchange ◽  
Least Square ◽  
Managerial Ownership ◽  
Government Ownership ◽  
Ordinary Least Square ◽  
Negative Effect ◽  
The Relationship

This paper aims to examine the effect of ownership structure on leverage with credit rating as a moderating variable. The ownership structure used in this study is government ownership and managerial ownership. Leverage is measured using a debt to assets ratio (DAR). Credit rating uses ratings issued by PEFINDO.The sample used in this study was companies rated by PEFINDO and listed on the Indonesia Stock Exchange in 2015-2017. The number of samples used were 53 companies determined using a purposive sampling method. The analysis using Ordinary Least Square (OLS) regression analysis indicated that government ownership does not affect leverage, and the credit rating does not moderate the relationship between government ownership and leverage. Managerial ownership has a negative effect on leverage, and the credit rating moderates the relationship between managerial ownership and leverage

scholarly journals EKSISTENSI PEMBENTUKAN LEMBAGA PEMERINGKAT USAHA MIKRO KECIL MENENGAH DI INDONESIA

2015 ◽  
Vol 44 (4) ◽  
pp. 462
Author(s):  
Darminto Hartono
Keyword(s):  
Gross Domestic Product ◽  
Ownership Structure ◽  
Credit Rating ◽  
Small And Medium Enterprises ◽  
Domestic Product ◽  
Credit Rating Agencies ◽  
Rating Agencies ◽  
Medium Enterprises

This study aims to find the institutional existence and ownership structure of credit rating agencies of Micro, Small, and Medium Enterprises (MSMEs) in Indonesia. Institutional and Ownership Structure of Credit Rating Agencies MSMEs in Indonesia is conducted through the ministry of cooperatives and SMEs, the ministry of communications and information, the tourism ministry, agency securities in Indonesia, Bank Indonesia, the national banking associations, and ministries of state-owned enterprises (SOEs). Micro, Small and Medium Enterprises (MSMEs) have an important role in the economy in Indonesia. MSMEs have a proportion of 99.99% of the total businesses in Indonesia or as many as 59.313 million of MSMEs units also prove to have contrubuted for 19.86% of the total Gross Domestic Product of Indonesia

scholarly journals Controlling shareholders and corporate valuation in Brazil

2006 ◽  
Vol 3 (2) ◽  
pp. 137-141
Author(s):  
Ricardo P. C. Leal ◽  
Andre Carvalhal da Silva
Keyword(s):  
Cash Flow ◽  
Ownership Structure ◽  
Firm Valuation ◽  
Controlling Shareholder ◽  
Controlling Shareholders ◽  
Corporate Valuation ◽  
Large Shareholders ◽  
And Performance ◽  
Cash Flow Rights

This paper investigates the relation between the ownership structure, valuation and performance of Brazilian companies. The results show that large shareholders keep control while holding only a small fraction of cash flow rights. The evidence also indicates that non-voting shares and pyramiding are the main devices set to entrench the large controlling shareholder. There is some evidence that firm valuation and performance are negatively related to voting concentration, and that foreign-owned firms perform the best while government-owned firms perform the worst.

scholarly journals The Effect of Managerial Share Pledges on the Cost of Debt

2021 ◽  
Vol 50 (6) ◽  
pp. 617-650
Author(s):  
Soonhong Park ◽  
Hyeon Sook Kim ◽  
Byungkwon Lim
Keyword(s):  
Ownership Structure ◽  
Risk Taking ◽  
Risk Premium ◽  
Firm Value ◽  
Positive Relationship ◽  
Cost Of Debt ◽  
Controlling Shareholders ◽  
Managerial Risk ◽  
The Cost ◽  
The Relationship

We examines whether share pledges by controlling shareholders influence a firm’s cost of debt. We also investigate whether the relationship between share pledges and the cost of debt stems from the managerial risk-taking incentives or pursuing the private benefits of controlling shareholders. We make three major findings. First, we find the cost of debt is higher in firms with share pledges than in firms without share pledges. Furthermore, we identify a positive relationship between the cost of debt and the level of share pledges. Second, we find that there is no increased corporate financial leverage or investment activities in firms with share pledges. Finally, our empirical evidence demonstrates that the positive relationship between share pledges and cost of debt is more pronounced for lower foreign institutional investor stakes or higher controlling shareholders ownership. Overall, the results indicate that share pledges by controlling shareholders negatively affect the cost of debt. However, the effect of share pledges on the cost of debt is differently influenced by a firm’s ownership structure. Our findings suggest that share pledges induce stockholder-bondholder conflict, and the bondholder requires more risk premium due to the decrease of firm value.

scholarly journals Controlling shareholders, performance and risk taking of Tunisian listed firms

2009 ◽  
Vol 7 (1) ◽  
pp. 222-231
Author(s):  
Taher Hamza
Keyword(s):  
Corporate Governance ◽  
Internal Control ◽  
Ownership Structure ◽  
Risk Taking ◽  
Descriptive Analysis ◽  
Controlling Shareholders ◽  
Listed Firms ◽  
Size Number ◽  
Significant Difference ◽  
The Impact

We investigate the effects of ownership structure, as an internal control mechanism of agency problem, on corporate governance. We focused specially on the impact of the size, number and type of blockholders on the performance and the risk-taking of the Tunisian listed companies during the period 2001-2004. The descriptive analysis highlights, absence of ownership-control discrepancy, high ownership concentration, low management stock-ownership and the presence of two or three large blockholders with significant difference of the block share size between the first and the other controlling shareholders. The main result of our study indicates that the presence of controlling shareholders affect performance and risk-taking and play an important role in corporate governance. However, we assume that the control contest of the leading shareholder is not conclusive but indicate a form of coalition and agreement effect to share private benefits.

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.

scholarly journals Does corporate ownership affect credit risk?: An investment grade vs non-investment grade firm analysis – evidence from South Korea

2016 ◽  
Vol 13 (4) ◽  
pp. 38-49
Author(s):  
Dafydd Mali ◽  
Hyoungjoo Lim
Keyword(s):  
Default Risk ◽  
Credit Rating ◽  
Credit Ratings ◽  
Foreign Ownership ◽  
Credit Rating Agencies ◽  
Corporate Ownership ◽  
Controlling Shareholders ◽  
Rating Agencies ◽  
Corporate Ownership Structure ◽  
Investment Grade

A credit rating indicates a firm’s risk of financial default. Using 1) controlling shareholders’ ownership and 2) foreign investors’ ownership as proxies for corporate governance, we investigate whether corporate ownership structure influences a credit rating agencies’ perception of risk. Using a sample of 1,213 KRX firm-year observations, and a t+1 approach, we find that firms with higher foreign ownership have higher credit ratings compared to those with lower foreign ownership. Moreover, we find that higher percentage of shareholder ownership does not affect credit ratings for our initial sample; however, after dividing our sample into investment/non-investment grade samples, we find a positive/negative relation for investment/non-investment firms. The results suggest credit rating agencies perceive the relation between corporate ownership and default risk differently for investment/non-investment grade firms

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