scholarly journals DOES STATE CONTROL AFFECT MANAGERIAL INCENTIVES? EVIDENCE FROM CHINA'S PUBLICLY LISTED FIRMS

2009 ◽  
Vol 10 (4) ◽  
pp. 291-311 ◽  
Author(s):  
Chen Lin ◽  
Dongwei Su
Keyword(s):  
Firm Performance ◽  
Managerial Incentives ◽  
Ceo Turnover ◽  
State Ownership ◽  
Managerial Compensation ◽  
State Control ◽  
Listed Firms ◽  
Internal Governance Mechanisms ◽  
Using Data ◽  
And Control

Using data for 1203 publicly listed firms in China during 1999–2002, this paper empirically investigates whether and to what extent state control affects managerial incentives, including managerial compensation and CEO turnover. The paper finds that CEO turnover is negatively related to both current and lagged firm performance as measured by ROA and RPE (Relative Performance Evaluation) for non‐state‐controlled firms, while insensitive to performance measures for state‐controlled firms. In addition, CEO compensation is positively related to firm performance, but state ownership and control weaken this positive relation. Moreover, state control reduces the effectiveness of internal governance mechanisms such as the board of directors and supervisory committee. Overall, empirical results in the paper indicate that state ownership and control weaken managerial incentives and internal monitoring among publicly listed firms in China.

scholarly journals An examination of linkages between corporate social responsibility and firm performance: Evidence from Moroccan listed firms

2021 ◽  
pp. 636-646
Author(s):  
Souhaila Kammoun ◽  
Youssra Ben Romdhane ◽  
Sahar Loukil ◽  
Abdelmajid Ibenrissoul
Keyword(s):  
Corporate Social Responsibility ◽  
Firm Performance ◽  
Social Responsibility ◽  
Positive Association ◽  
Social Enterprises ◽  
Listed Firms ◽  
Managerial Implications ◽  
Using Data ◽  
Set Up ◽  
Corporate Social

This article analyzes the complexity of the linkages between corporate social responsibility (CSR) and firm performance in Morocco and to decompose this complexity through a bidirectional sense of causality. Using data surveyed from 74 Moroccan listed firms, we conduct an econometric modeling to measure this relationship bilaterally and to investigate the underlying factors behind this association. The empirical study proves the existence of a positive association between CSR and firm performance in both directions in the Moroccan context and suggests that the more social enterprises are, the more they achieve better financial results. The mutual linkage between social and financial aspects allows us to draw some managerial implications and set up further research directions.

scholarly journals Pyramid groups and firm performance: empirical evidence from Canadian corporations

2010 ◽  
Vol 7 (3) ◽  
pp. 105-123 ◽  
Author(s):  
Gloria Y. Tian
Keyword(s):  
Firm Performance ◽  
Empirical Evidence ◽  
Negative Impact ◽  
Ownership Concentration ◽  
Legal Environment ◽  
Controlling Shareholders ◽  
Value Maximization ◽  
Using Data ◽  
Control Enhancing Mechanisms ◽  
And Control

Using data of Canadian corporations in 1994 and 2003, this study analyzes whether controlling shareholders of corporate pyramid groups, with substantial divergences in ownership and control, negatively or positively impact firm performance. We find some evidence that the combination of ownership concentration and pyramidal structure would lead to inferior firm performance and valuation, but little evidence concerning tunneling within groups. We argue the robust legal environment in Canada that encourages shareholder value maximization could mitigate the negative impact of control enhancing mechanisms on minority public investors.

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 Complex state ownership, competition, and firm performance – Russian evidence

2019 ◽  
Vol 15 (2) ◽  
pp. 189-221
Author(s):  
Eva Liljeblom ◽  
Benjamin Maury ◽  
Alexander Hörhammer
Keyword(s):  
State Ownership ◽  
State Control ◽  
Government Control ◽  
Content Type ◽  
Listed Firms ◽  
Market Index ◽  
Performance Effects ◽  
Golden Shares ◽  
Sales Employees ◽  
The Impact

Purpose State ownership has been common especially in industries with restricted competition. In Russia, state-controlled firms represent around 41 percent of the market value of all listed firms (Deloitte, 2015). Yet, there is a significant gap in the literature regarding the effects of various forms of government control in listed firms. The purpose of this paper is to fill this gap by exploring the impact of the complexity of state ownership and competition on the performance of Russian listed firms. Design/methodology/approach The sample consists of data for 72 firms (360 firm-years) in the Russian MOEX broad market index during 2011–2015. The complexity of state ownership is captured by studying forms of state control including majority/minority, direct/indirect, federal/regional, mixed structures and golden shares. Findings The authors find significant differences in performance relating to different forms of state ownership. State control is negatively related to firm valuation and the sales/employees ratio. Performance is weakest when state ownership takes the form minority, regional or direct ownership. State control through golden shares typically outperforms other state-controlled firms. The authors find indications of employment prioritization beyond the economical optimum. In addition, the relation between state ownership and profitability becomes positive in sectors where state firms appear to enjoy lower competition. Originality/value While the effects of state ownership have been studied on many markets, there is a lack of studies on the effects of different forms, or the complexity, of state ownership beyond direct and indirect ownership. The authors contribute to the literature on the performance effects of state ownership by studying a multitude of forms of governmental ownership as well as the role of competition in Russia. Especially the profitability of state-controlled firms is significantly affected by industry characteristics. Implications of the results are discussed both from firm and policy maker perspectives.

scholarly journals Managerial compensation and firm performance: Evidence from corporate spinoffs

2012 ◽  
Vol 9 (3) ◽  
pp. 69-78
Author(s):  
Qian Li ◽  
Ebru Reis
Keyword(s):  
Firm Performance ◽  
Performance Improvement ◽  
Operating Performance ◽  
Managerial Incentives ◽  
Managerial Compensation ◽  
Incentive Structure ◽  
Managerial Incentive ◽  
Agency Relationship ◽  
Corporate Spinoffs ◽  
Unique Dataset

In this paper, we study changes in the incentive structure of the CEOs in both parent and spun-off companies, and the effect of managerial incentives on operating performance due to an improved agency relationship between shareholders and managers of both firms after the spinoff. We construct a unique dataset that covers corporate spinoffs between 1992 and 2004. We find a certain level of increase in pay-performance sensitivity of the CEOs of spun-off firms as compared to the CEOs of parent firms. We find that pay-performance sensitivities of both parent and spun-off firms’ CEOs are positively related to the operating performance improvement after the spinoff. Overall, our study provides evidence that improved managerial incentive is a source of gains in spinoffs.

Dynamic study of corporate governance structure and firm performance in China

2019 ◽  
Vol 13 (2) ◽  
pp. 299-317 ◽  
Author(s):  
Lin Shao
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Generalized Method Of Moments ◽  
Supervisory Board ◽  
Governance Structure ◽  
State Ownership ◽  
Content Type ◽  
Listed Firms ◽  
The Impact ◽  
The Relationship

Purpose The paper aims to provide a comprehensive investigation of the relationship between corporate governance (CG) structure and firm performance in Chinese listed firms from 2001 to 2015. The authors’ motivation derives from the fact that the CG system in China is different from those in the US, the UK, Germany, Japan and other countries. Design/methodology/approach A large unbalanced sample, covering more than 22,700 observations in Chinese listed firms, was used to explore, by means of a system-generalized method-of-moments (GMM) estimator, the relationship between CG structure and firm performance to remove potential sources of endogeneity. Findings Results show that Chinese CG structure is endogenously determined by the CG mechanisms investigated: there is no relationship between board size (including independent directors) and firm performance; CEO duality has a significantly negative effect on firm performance; concentration of ownership has a significantly positive influence on firm performance; managerial ownership is negatively correlated with firm performance; state ownership has a significantly positive effect on firm performance; and a supervisory board is positively correlated with firm performance. Practical implications The findings provide policymakers and firm managers with useful empirical guidance concerning CG in China. Originality/value Few integrative studies have examined the impact of CG structure on firm performance in China. This study adds new empirical evidence that the relation between CG structure and performance in China is endogenous and dynamic when controlling for unobserved heterogeneity, simultaneity, and dynamic endogeneity.

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 Firm Performance, Corporate Governance Mechanisms and CEO Turnover: Evidence from Nigeria

2020 ◽  
Vol 6 (1) ◽  
pp. 66
Author(s):  
Yahya Uthman Abdullahi ◽  
Magajiya Tanko
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Stock Exchange ◽  
Governance Structure ◽  
Foreign Ownership ◽  
Ceo Turnover ◽  
Corporate Boards ◽  
Governance Mechanisms ◽  
Female Directors ◽  
Internal Governance Mechanisms

This paper examines the influence of firm performance and internal governance mechanisms on CEO turnover decision. The sample of the study is all Nigerian non-financial firms listed on the Nigerian Stock Exchange (NSE) from year 2011 to 2015 consisting of 72 cases of CEO turnover. Using logistic regression analysis, this study provides evidences that poor accounting-based performance (ROA) and low engagement of female directors in corporate boards do increase the probability of CEO turnover. Furthermore, firms dominated with foreign ownership and those with independent board nominating committee are swifter in removing their CEOs. However, this study fails to support the argument that firms with large board size and those that are dominated by managerial ownership, help to enhance the monitoring practices, which ought to sanction underperformed CEOs with dismissal. Consequently, this study recommends that the Nigerian government should enact a legislation on gender quota to ensure that more female directors are appointed to the boards and as well encourage more foreign ownership in the Nigerian corporate landscape by attracting foreign investment into the economy via favourable policies. This paper contributes to the literature concerning CEO succession in developing markets with poor corporate governance structure such as Nigeria.

scholarly journals State Ownership and Firm Performance: Evidence From the Chinese Listed Firms

2011 ◽  
Vol 2 (2) ◽  
pp. 72-90 ◽  
Author(s):  
Trien Le ◽  
Amon Chizema
Keyword(s):  
Firm Performance ◽  
Firm Value ◽  
Transitional Economies ◽  
State Ownership ◽  
Institutional Arrangements ◽  
Policy Makers ◽  
Negatively Associated ◽  
Listed Firms ◽  
Low Levels

Based on a sample of Chinese listed firms, this paper seeks to understand the role of state ownership on firm performance (accounting-based returns) and firm value (market-based indicators). Results show that state ownership is positively associated with firm performance. In addition, state ownership has a moderating effect on the association between firm performance and firm value. At low levels of state ownership, firm performance is negatively associated with firm value. However, at high levels of state ownership, the association becomes positive. Drawing on signaling theory, the study helps to understand the role of state ownership in the association between firm performance and firm value, an area that has received minimum attention in research.Specifically, state ownership may be a strategic asset for Chinese listed firms boosting accounting returns but perceived differently by the market.Given the current levels of state ownership in many transitional economies, this study sheds light for policy makers on the effects of high or low levels of state ownership on firm performance and value. Moreover, the study may assist would-be investors who may contemplate investing in privatized SOEs, in China or other countries with similar institutional arrangements.

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.

Sign in / Sign up

Export Citation Format

Share Document