scholarly journals Blockholders and Firm Performance: A Malaysian Evidence

2019 ◽  
pp. 18-26
Author(s):  
Imani Mokhtar ◽  
Sharifah Raihan Syed Mohd Zain ◽  
Jarita Duasa ◽  
Azhar Mohamad
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Panel Data ◽  
Performance Measure ◽  
Ownership Concentration ◽  
Independent Directors ◽  
Board Governance ◽  
Listed Firms ◽  
Regulatory Bodies ◽  
Investment Portfolios

This study enhances the corporate governance literature by investigating the influence of blockholders on firm performance. Employing panel data estimations, this study works on a sample of 526 non-financial listed firms in Malaysia from 2006 to 2015. Overall, our findings reveal that firm performance is negatively associated with blockholders presence but positively related to blockholders total ownership concentration. Further examinations reveal that identity of blockholders matters in influencing performance of the firm. We also found that board governance mechanisms particularly independent directors and CEO duality play a significant monitoring role in relation to firm performance. More importantly, our findings are robust to a wide variety of performance measure which includes accounting, market and value based measures. Finally, findings of our study could facilitate the regulatory bodies and firm managers in promoting better and effective corporate governance in Malaysia. Investors may also benefit from our findings in understanding corporate governance of Malaysian firms and thus diversify their investment portfolios.

scholarly journals Blockholders and Firm Performance: A Malaysian Evidence.

2018 ◽  
pp. 885-893
Author(s):  
Imani Mokhtar ◽  
Sharifah Raihan Syed Mohd Zain ◽  
Jarita Duasa ◽  
Azhar Mohamad
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Panel Data ◽  
Performance Measure ◽  
Ownership Concentration ◽  
Independent Directors ◽  
Board Governance ◽  
Listed Firms ◽  
Regulatory Bodies ◽  
Investment Portfolios

This study enhances the corporate governance literature by investigating the influence of blockholders on firm performance. Employing panel data estimations, this study works on a sample of 526 non-financial listed firms in Malaysia from 2006 to 2015. Overall, our findings reveal that firm performance is negatively associated with blockholders presence but positively related to blockholders total ownership concentration. Further examinations reveal that identity of blockholders matters in influencing performance of the firm. We also found that board governance mechanisms particularly independent directors and CEO duality play a significant monitoring role in relation to firm performance. More importantly, our findings are robust to a wide variety of performance measure which includes accounting, market and value based measures. Finally, findings of our study could facilitate the regulatory bodies and firm managers in promoting better and effective corporate governance in Malaysia. Investors may also benefit from our findings in understanding corporate governance of Malaysian firms and thus diversify their investment portfolios.

Board characteristics, ownership concentration and firms’ performance

2019 ◽  
Vol 8 (2) ◽  
pp. 146-165 ◽  
Author(s):  
Abdul Waheed ◽  
Qaisar Ali Malik
Keyword(s):  
Corporate Governance ◽  
Financial Sector ◽  
Resource Dependence Theory ◽  
Ownership Concentration ◽  
Independent Directors ◽  
Data Set ◽  
Content Type ◽  
Listed Firms ◽  
Board Characteristics ◽  
Concentrated Ownership

Purpose The purpose of this paper is to extend the understanding and application of interactive ties creating value through board characteristics, ownership concentration and firms’ performance by using a contingent theoretical-based framework based on the amalgamation of resource dependence theory, stakeholder theory, agency theory, stewardship theory and institutional theory in a country with weak political environment. Design/methodology/approach This study includes a sample of an unbalanced panel of 309 non-financial sector firms listed on Pakistan Stock Exchange (PSX) from 2005 to 2016. In order to address the issue of unobserved heterogeneity, simultaneous and dynamic endogeneity, the current study employed the technique Arellano–Bond dynamic panel data estimation under assumptions of GMM (Arellano–Bond, 1991). Findings The empirical results suggest that the presence of concentrated ownership moderates and helps to overcome the agency problems through different governance mechanisms (such as board size, independent directors and CEO duality). The larger boards are found to be beneficial whereas the higher representation of independent directors in the board is found to be detrimental for Pakistani firms. Research limitations/implications Limitations of the study are, first the current study has analyzed public-listed firms from the non-financial sector, and second the study has only focused on the financial aspect of the performance. The future research could include other proxies of corporate governance and ownership structure such as board diversity and meetings, audit committee and managerial ownership, etc. Practical implications The research also helps Pakistani policy makers in numerous ways. First, the current study confirms the monitoring and expropriation effect of ownership concentration in corporate governance and performance mechanism. Thus, the Security and Exchange Commission of Pakistan (SECP) should make such policies which protect the corporate board against the influence of concentrated ownership so that the interests of the minority shareholders are protected. Second, SECP should ensure that all the listed firms declare a comprehensive profile of their directors (such as academic qualification, age and experience) in their annual reports for the better understanding of the governance−performance mechanism. Originality/value The current study augments the emerging body of literature on corporate governance and firm performance mechanism through the amalgamation and testing of existing theories in an emerging economy like Pakistan by using wider and newer data set.

scholarly journals The Effect of Corporate Governance and Ownership Structure on Financial Performance of Listed Companies in Nepal

2019 ◽  
Vol 12 (1) ◽  
pp. 1-18
Author(s):  
Surya Bahadur G. C. ◽  
Ravindra Prasad Baral
Keyword(s):  
Corporate Governance ◽  
Panel Data ◽  
Least Squares ◽  
Ownership Structure ◽  
Stock Exchange ◽  
Listed Companies ◽  
Ownership Concentration ◽  
Data Set ◽  
Listed Firms ◽  
And Performance

The paper attempts to analyze relationships among corporate governance, ownership structure and firm performance in Nepal. The study comprises of panel data set of 25 firms listed at Nepal Stock Exchange (NEPSE) covering a period of five years from 2012 to 2016. The econometric methodology for the study consists primarily of least squares dummy variable (LSDV) model, fixed and random effects panel data models and two-stage least squares (2SLS) model. The study finds bi-directional relationship between corporate governance and performance. Among corporate governance internal mechanisms; smaller board size, higher proportion of independent directors, reducing ownership concentration, improving standards of transparency and disclosure, and designing appropriate director compensation package are important dimensions that listed firms and regulators in Nepal should focus on. Ownership concentration is found to have positive effect on performance; however, it affects corporate governance negatively. This study raises understanding and provides empirical evidence for endogenous relationship between corporate governance and performance and offers support for principal-principal agency relationship. The results of this study lead to several practical implications for listed firms as well as policymakers of Nepal in promoting sound corporate governance practices and codes. For listed companies, the improvement in compliance with a code of corporate governance or voluntary adoption of best practices can provide a means of achieving improved performance.

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, board of directors and firm performance: evidence from Taiwan

2019 ◽  
Vol 19 (1) ◽  
pp. 189-216 ◽  
Author(s):  
Mao-Feng Kao ◽  
Lynn Hodgkinson ◽  
Aziz Jaafar
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Board Of Directors ◽  
Ownership Structure ◽  
Firm Value ◽  
Listed Companies ◽  
Independent Directors ◽  
Data Set ◽  
Content Type ◽  
Listed Firms

PurposeUsing a data set of listed firms domiciled in Taiwan, this paper aims to empirically assess the effects of ownership structure and board of directors on firm value.Design/methodology/approachUsing a sample of Taiwanese listed firms from 1997 to 2015, this study uses a panel estimation to exploit both the cross-section and time–series nature of the data. Furthermore, two stage least squares (2SLS) regression model is used as robustness test to mitigate the endogeneity issue.FindingsThe main results show that the higher the proportion of independent directors, the smaller the board size, together with a two-tier board system and no chief executive officer duality, the stronger the firm’s performance. With respect to ownership structure, block-holders’ ownership, institutional ownership, foreign ownership and family ownership are all positively related to firm value.Research limitations/implicationsAlthough the Taiwanese corporate governance reform concerning the independent director system which is mandatory only for newly-listed companies is successful, the regulatory authority should require all listed companies to appoint independent directors to further enhance the Taiwanese corporate governance.Originality/valueFirst, unlike most of the previous literature on Western developed countries, this study examines the effects of corporate governance mechanisms on firm performance in a newly industrialised country, Taiwan. Second, while a number of studies used a single indicator of firm performance, this study examines both accounting-based and market-based firm performance. Third, this study addresses the endogeneity issue between corporate governance factors and firm performance by using 2SLS estimation, and details the econometric tests for justifying the appropriateness of using 2SLS estimation.

scholarly journals CORPORATE GOVERNANCE AND FIRM PERFORMANCE: EVIDENCE FROM LISTED FIRMS OF PAKISTAN

2021 ◽  
Vol 12 (1) ◽  
pp. 170-187
Author(s):  
Shuaib Ali ◽  
Guo Fei ◽  
Zhaid Ali ◽  
Farhan Hussain
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Audit Committee ◽  
Stock Exchange ◽  
Agency Problem ◽  
Institutional Ownership ◽  
Least Square ◽  
Ownership Concentration ◽  
Listed Firms ◽  
And Performance

This study aims to find the influence of corporate governance on firm performance for the listed non-financial firms on the Pakistan Stock Exchange (PSX) for the period 2005-15.  The article has measured corporate governance by the large boards with more independent directors, independence of audit committee, ownership concentration, non-existence ofCEOduality, and presence of foreign and institutional investors. To address this endogenous nature of institutional ownership and performance in this study we have used instrumental variables (IV) techniques using a two-stage least square (2SLS) by instrumentalizing institutional ownership with firm size and firm age. The study found that firms with large and independent boards outperform their counterparts. Similarly, the study found that firms having the joint position ofCEOand chairperson performs lower than counterparts. In Pakistan firms with foreign and institutional owners better than others. We found that firms with concentrated owners have a lower level of agency problem and ultimately perform well. Furthermore, we found that firms with a lower level of agency problem type II (measured via ownership concentration contestability) perform better in Pakistan. 

Do Family Control and Macroeconomic Fluctuations Impact Firm Performance?

2021 ◽  
pp. 224-243
Author(s):  
Ines Lisboa ◽  
Nuno Teixeira ◽  
Teresa Costa
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Panel Data ◽  
Family Firms ◽  
Macroeconomic Fluctuations ◽  
Macroeconomic Factors ◽  
Family Control ◽  
Listed Firms ◽  
Performance Differences ◽  
Economic Downturns

This chapter aims to analyze performance differences between family and non-family firms. Additionally, it aims to see if economic downturns and upturns cause impact in this relation. For it, a panel data of Portuguese non-financial-listed firms in Euronext Lisbon during the period from 2010 till 2019 is analyzed. Performance is studied in accounting-based and market-based views. Three types of variables are considered: corporate governance characteristics, macroeconomic factors, and firm's characteristics. Results depend on the performance proxy used. While to ROA no difference is found, Tobins' Q family firms outperform non-family ones, but results are the inverse using ROE, MTBV, and MVA. Moreover, macroeconomic fluctuations are relevant to explain firms' performance, specially to family firms. Therefore, firms must analyze specific characteristics to avoid losing value, especially in crisis periods.

scholarly journals Ownership Structure and Corporate Performance in India

2016 ◽  
Vol 12 (2) ◽  
pp. 111-122
Author(s):  
Sujata Nitin Chincholkar
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Panel Data ◽  
Ownership Structure ◽  
Corporate Performance ◽  
Time Lag ◽  
Performance Measure ◽  
Insider Ownership ◽  
Corporate Governance Code ◽  
Clause 49

The ownership structure of a publicly held Corporation is one of the internal mechanisms of corporate governance. Insider ownership is one of the internal controlling mechanisms that could theoretically reduce agency costs. Earlier researcher has investigated the effects of insider ownership on firm performance. But we have attempted to add few more dimensions to it. Firstly, earlier studies did not attempt to study this relationship after the implementation of revised corporate governance code in 2006 in India and after the changes in the disclosures of insider ownership as per the clause 49 of the listing agreement. Secondly, earlier studies did not take into account the time lag for the studies on Indian markets. We have attempted time lag studies using panel data on the Indian Markets using MBVR ratio as a performance measure. The result shows that corporate performance is significantly influenced by insider ownership. Hence corporate governance issues needs to be dealt with great care. 

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.

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