Impact Of Ownership Concentration Research Articles

Impact of ownership concentration on stock returns: a case of developed economies

PurposeThe primary objective of this study is to determine how concentrated ownership affects stock returns by country and scale (by market capitalization), like large, medium, and small-cap firms in selected developed economies of the world.Design/methodology/approachUsing a dataset comprising 12,751 annual observations from 850 listed companies from developed economies from 2004 to 2018, the study employs panel data models and instrumental variable estimation to mitigate endogeneity bias.FindingsThe findings reveal a significant and positive correlation between ownership concentration and expected returns on corporate equities in developed economies. Furthermore, the study categorizes firms into distinct size categories and finds nuanced differences in the relationship between ownership concentration and stock returns across large, medium, and small-cap enterprises. The results of the study reveal that ownership concentration (by country) and scale (Large, medium, and small) have a significant and positive impact on the stock returns of firms in developed economies.Practical implicationsthe practical implications of this study extend to investors, firms, policymakers, regulators, and other stakeholders involved in the financial markets. By considering these implications, stakeholders can make informed decisions to enhance market efficiency, investor protection, and overall market integrity.Originality/valueTo the authors' understanding, this study is the first to examine the impact of concentrated ownership on excessive stock returns across countries and scales, with an explicit focus on large, medium, and small companies in select developed economies worldwide.

The Impact of Ownership Concentration on Corporate Financialization: The Mediating Effect of Financing Constraints

This article selects small and medium-sized listed companies (with stock codes starting with 002) as the research subjects, constructing a panel dataset spanning from 2017 to 2021, resulting in a total of 4324 observations. Through an extensive review and analysis of existing literature and relevant theories, it comprehensively explores the effects of equity concentration on corporate financialization and whether these effects differ in state-owned enterprises. Additionally, it investigates the moderating effects of financing constraints as a variable. After empirical analysis and robustness tests, the following conclusions are drawn: Equity concentration has a significantly negative impact on corporate financialization. Moreover, equity concentration exacerbates financing constraints, which, in turn, suppress corporate financialization. Furthermore, compared to state-owned enterprises, equity concentration has a more pronounced inhibitory effect on corporate financialization in non-state-owned enterprises. In the context of this study, state-owned enterprises in China are those in which ownership or control belongs to the state. The research on the impact of corporate financialization in this article can provide a theoretical basis for government and financial regulatory agencies to formulate financial policies in practical terms.

The impact of ownership concentration and board of directors mechanisms on earnings management practices: an applied study on a sample of private Iraqi banks listed on the Iraqi Stock Exchange.

يهدف البحث إلى قياس اثر آليتي تركز الملكية ومجلس الإدارة على إدارة الأرباح تمثلت عينة البحث ب16 مصرف من المصارف العراقية المدرجة في سوق العراق للأوراق المالية للفترة من ( 2010-2019) وقد توصل البحث إلى أن آليتي تركز الملكية ومجلس الإدارة ذات تأثير في تخفيض ممارسات إدارة الأرباح ,ويوصي البحث بإصدار قواعد او دليل بتطبيق قانون حوكمة الشركات في سوق العراق للأوراق المالية ولا سيما أن البحث اثبتت من ممارسات المصارف العراقية لإدارة الأرباح .

Ownership concentration and accounting information consistency—evidence from Chinese listed companies

PurposeThe authors expand the connotation of the research on the accounting information quality characteristics, provide empirical evidence for the factors of consistency and also help to deepen further their understanding of the economic consequences of ownership concentration and other ownership structures.Design/methodology/approachUsing financial data of Chinese listed companies as samples, coupled with a method to calculate the consistency of the sample enterprises on the corporate level in the 2007–2019 period, the authors studied its impact of ownership concentration on consistency.FindingsThe study finds that after controlling other factors, ownership concentration could significantly reduce accounting information consistency. Further research finds that when the executives' shareholding is higher, the reduction effect of ownership concentration on consistency is weaker. After the robustness test, the conclusion remains basically unchanged.Research limitations/implicationsFirst, maybe there is a limitation of De Franco et al. (2011) method the authors use in China. As some scholars pointed out, the systematic component of returns variation is large in emerging markets (Morck et al., 2000), so it is hard to determine to what extent market stock returns will capture the net effect of earnings. As is mentioned above, there are multiple methods for measuring comparability and consistency, but it is not easy to judge which way is the best. Maybe the authors will have a perfect process in the future. Second, in addition to the factors mentioned in this study's hypotheses, there should be other factors (these include internal factors and external factors) that play moderating role in the impact of ownership concentration on accounting information consistency. The authors have not thoroughly studied the effect of those factors. These limitations all need to be further explored in the future.Originality/valueThe study finds that after controlling other factors, ownership concentration could significantly reduce accounting information consistency, but the reduction will be affected by some other factors related to corporate governance. The new insights from these advances are that the conclusions provide a technical path for management of companies to improve corporate governance efficiency and the quality of accounting information, and also provide more reference and empirical evidence for information users to identify the company's accounting information quality, which contributes to creating a prerequisite for the usefulness of accounting information.

Analiza uticaja karakteristika vlasništva na strukturu kapitala i poslovni uspeh privrednih društava u industriji pića Balkana

The aim of the research is to present the influence of ownership characteristics on the capital structure and business success of companies theoretically and empirically. The research was conducted on a sample of 96 active companies operating within the beverage industry in the Balkan countries in 2019. Empirical research was carried out by using one-factor analysis of variance (ANOVA). The paper presents two models. One is related to the analysis of the effects of foreign ownership to profitability, liquidity, asset and capital structure, while the other model analyses the impact of ownership concentration on the same variables. The results of the models evaluation confirmed the existence of a statistically significant difference only between foreign ownership and liquidity. In this regard, the ownership characteristics are considered not to affect the business success of the sampled companies, but rather, the performance is affected by other internal and external factors.

PENGARUH STRUKTUR KEPEMILIKAN DAN TATA KELOLA PERUSAHAAN TERHADAP PERILAKU PENGAMBILAN RISIKO

Abstract— The goal of this research is to look into the impact of ownership concentration, managerial ownership, and corporate governance on corporate risk-taking using stock return volatility. This study's methodology is a quantitative approach that uses simple linear regression models and panel data. The sample for this study consists of manufacturing sector companies that were listed on the Indonesia Stock Exchange (IDX) between 2016 and 2020. The purposive sampling method obtained 137 companies and 679 data for the sample. As a result, ownership concentration and corporate governance have negative and significant effects on corporate risk-taking, whereas managerial ownership has no significant effect. This study demonstrates that firms take significantly less risk when they have more concentrated ownership and good corporate governance.
 Keywords: Corporate Governance; Ownership; Risk-taking

The influence of firm, industry and concentrated ownership on dynamic capital structure decision in emerging market

PurposeThis study aims to evaluate the impact of firm, industry level determinants and ownership concentration on the dynamic capital structure decision in Indonesia and analyses the governing theories.Design/methodology/approachThis study uses the dynamic panel model of generalized method of moments-System (one-step and two-step) by using a panel data from 2000 to 2014 to examine the relationship between the determinants and leverage. The results are robust to the various definitions of leverage, heterogeneity, autocorrelation, multicollinearity and endogeneity concern.FindingsGrowing firms and firms operating in a highly concentrated industry use high level of debt, taking advantage of the tax shield (trade-off theory). However, if the firms are operating in a highly dynamic environment, they take on less debt as to avoid bankruptcy risk. Firms in Indonesia opt for debt financing perhaps to act as a controlling mechanism to mitigate agency conflicts that may exist between the large controlling shareholders and the minority. Aged and highly profitable firms with high tangible and intangible assets and liquidity level operating in a high dynamic environment follow the pecking order theory.Research limitations/implicationsThis study does not perform each industry regression individually. All the industries are pooled together, as the main focus of this study is to examine the factors affecting leverage of firms in general without giving particular attention to individual industry.Originality/valueThe insights on the impact of ownership concentration and industry characteristics are novel especially on Indonesia, thus fill the gap in the literature.

Ownership and corporate social responsibility: "The power of the female touch"

Using a sample of 26,029 firm-year observations over the period 2002–2017 from 4,479 firms and 44 countries, we examine the relationship between ownership concentration and corporate social responsibility by focusing on the mediating role of board gender diversity and the moderating role of family shareholding. We find that ownership concentration negatively affects corporate social responsibility, and the board gender diversity partially mediates this negative effect. Our results indicate that the mediating effect of board gender diversity leads to a 10.65 percent decrease in the impact of ownership concentration on corporate social responsibility. Furthermore, moderated path analysis indicates that family shareholding weakens the direct effect of ownership concentration on board gender diversity and its indirect effect on corporate social responsibility. In post hoc analysis, we also document that the effect of gender diversity on the board is more prevalent in high gender-egalitarian societies where women are more involved in decision-making. Our study addresses the strategic role of female board members in increasing firms’ respect for corporate social responsibility, especially in family-controlled firms. Thus, our results may provide insights to regulators and policymakers to enhance firms’ corporate social practices by encouraging women’s participation on corporate boards.

The Ownership Concentration − Innovation Nexus: Evidence From SMEs Around The World

ABSTRACT This study investigates whether ownership concentration improves or impedes firm innovation using a sample of small and medium-sized enterprises (SMEs) spanning 95 countries worldwide. We find that higher ownership concentration is associated with a lower likelihood of introducing innovative activities. Further, results reveal that concentrated ownership has detrimental impacts on innovation for firms with a higher degree of asymmetric information and firms led by less experienced managers. We also show that the negative association between ownership concentration and innovation only exists for financially constrained firms (i.e., younger enterprises and SMEs with high financing obstacles) and those with the highly concentrated ownership structure. Lastly, evidence suggests that institutional development alleviates the negative impact of ownership concentration on innovation.

CORPORATE OWNERSHIP STRUCTURE AND FIRM VALUE: EMPIRICAL EVIDENCE OF JSE-LISTED FIRMS, SOUTH AFRICA

This paper examines the relationship between corporate ownership structure and firm value of JSE-listed firms in the phase of the Black Economic Empowerment program in South Africa. Since the end of the apartheid era, corporate governance practices have evolved and the enactment of the BBE Act has altered ownership and control in the South African corporate sector. Using data from 187 firms between 2004 and 2016, we observed that ownership concentration measured by five large shareholders and foreign ownership has a negative impact on firm value proxied with Tobin’s Q and return on assets, while domestic share ownership has a positive relationship with corporate performance. Contrary to the agency theory notion on the role of large shareholders in minimizing losses that arise from the separation of ownership and control and significant foreign investors corporate governance practices in the host countries, the results obtained in this study suggest that local shareholders in the host capital market are important in strengthening corporate governance practices and improve corporate performance. This study contributes to the ownership-firm value relationship literature by offering new evidence on the impact of ownership concentration, foreign ownership, and domestic ownership in an emerging market undergoing transformation through programs addressing its historical inequalities.

Innovation Efficiency of High-Tech SMEs Listed in China: Its Measurement and Antecedents

Innovation efficiency is an important index to measure the innovation performance of high-tech enterprises. Numerous researches have been conducted on innovation efficiency at national, regional, and sectoral levels, while there are comparatively few studies on the innovation efficiency of high-tech small- and medium-sized enterprises (SMEs) from a micro perspective. Therefore, innovation efficiency of 251 high-tech SMEs listed in China from 2012 to 2015 is measured with the super-SBM model in this paper. The results suggest that the overall innovation efficiency is low but shows an upward trend. In addition, the antecedents of innovation efficiency are explored using the panel regression model and the conclusions are as follows: (1) government subsidies, ownership concentration, and market competition deter enterprise innovation efficiency, and the impact of ownership concentration is found to be the most significant; (2) firm size and asset-liability ratio bear positively on enterprise innovation efficiency, with the effect of asset-liability ratio being greater; (3) firm age has significantly positive effects on scale efficiency but not on innovation efficiency and pure technical efficiency.

Shareholders' control rights, family ownership and the firm's leverage decisions

We investigate the association between controlling shareholders' ownership (CS_Own) and firms' leverage decisions in the Singaporean context. We examine whether the impact of ownership concentration on leverage differs across excess and lower control. We report that shareholders with excess control prefer leverage financing for an optimal capital structure and focus on value maximisation rather using leverage as a tool of minority shareholders' expropriation. Our analysis shows that firms capital structure significantly influences by the coalition of shareholders particularly decisions about leverage financing in addition to the firms' specific characteristics and institutional arrangements. Our empirical evidence shows that controlling shareholders with a lower fraction of equity are more concerned about limited holding thus prefer leverage over equity financing to inflate their equity stake to protect them from the potential takeovers and mergers. We report that capital structure decisions in Singapore are linked with the trade-off between the controlling shareholders' target of mitigating firm risk and their non-dilution entrenchment needs. Further, we found an inverted U-shaped association between control ownership and leverage financing. In terms of moderating effect of family-controlled ownership, our findings exhibit that leverage financing is less pronounced for family firms in Singapore due to the under-diversified investment portfolio.

The impact of ownership concentration on payout across Nordic firms

We investigate whether ownership concentration influences payout policy and which effect foreign institutions and government as large shareholders have on payout across firms listed in the Nordic countries. We find that the impact of ownership concentration on payout largely differs among the countries. Higher ownership concentration leads to lower propensity to pay dividends in Finland and to repurchase shares in Norway and Sweden, while higher ownership concentration increases the propensity to dividend payment in Denmark and Norway. We show that ownership concentration has a negative impact on dividend amounts in Sweden and on repurchase amounts in Denmark, Finland and Sweden. We also find that the impact of ownership concentration on propensity to payout and on the payout amount is influenced by foreign institutions and governments as large shareholders. Our findings imply that the impact of ownership concentration on payout is significantly influenced by the context behind ownership concentration.

The impact of ownership concentration on firm sustainability: evidence from Malaysian top 200 public listed firms

Larger companies cannot escape from facing financial distress, which eventually leads to insolvency and unsustainability. In this regard, this study examined the relationship between ownership concentration and firm sustainability of top 200 Malaysian public listed companies for the period between the years 2009 and 2015. The two-stage least squares regression results of this study showed that ownership concentration was significantly and negatively related to firm sustainability. This finding remained the same when different proxies of ownership concentration and firm sustainability were used. Generally, this finding indicated that excessive concentrated ownership may lead to decisions that did not satisfy all key shareholders, and may reduce the level of firm sustainability.

Ownership concentration and board features as determinants of related party transactions - evidence from GCC countries

This study examines the impact of ownership concentration, board features and external audit on related party transactions (RPTs) of listed firms in four Gulf Cooperation Council (GCC) countries, namely Bahrain, KSA, Kuwait and UAE. A sample of 460 firm-year observations was investigated during 2016-2018. Six models of hierarchical multiple regression (HMR) were performed to regress five independent variables (ownership concentration, board size, role duality, board independence, audit quality) on RPTs which include three transactions (key management compensation, due from RP and due to RP). HMR results indicate that ownership concentration, board size and board independence are associated with only one type of RPTs, which is key management compensation by listed firms in GCC countries. However, other types of RPTs are not explained by most of independent variables. Providing practical evidence on listed firms in GCC may provide a new dimension on this part of empirical accounting research and may help in improving governance practices. This research is the first attempt in the Gulf region to investigate the impact of CG mechanisms on RPTs. It makes a unique contribution and enrichment to this area of the accounting research in emerging markets in general and in GCC countries in particular.

Ownership concentration, firm life cycle, and leverage: Evidence from Italian family firms

We examine the impact of ownership concentration, firm life cycle, and family ownership on leverage using a sample of listed Italian firms. The study findings reveal that family businesses in Italy...

Does ownership concentration affect cost of debt? Evidence from an emerging market

PurposeThe purpose of this paper is to explore how ownership concentration affects cost of debt (CoD) in one of the most important emerging markets in the Middle East and North Africa, Morocco.Design/methodology/approachThe study employs panel data analysis using non-financial firms listed on Casablanca Stock Exchange (CSE) between 2004 and 2016. To unveil the hidden facets of the relationship between ownership concentration and CoD, and examine if this relationship changes with market conditions, we conduct a pre–post-crisis analysis.FindingsThe results demonstrate that controlling shareholders promote decent governance as long as they are able to generate appropriate returns. However, this behavior seems to change during the post-crisis period. In their attempts to increase their returns adversely affected by the financial crisis, controlling shareholders switch from guardians of decent governance and firm’s resources to a menace to creditors’ interests.Practical implicationsOur results expose the severity of agency problems in CSE. It is the duty of all market participants including regulators, board of directors, financial analysts, shareholders and creditors to scrutiny and reinforce governance mechanisms to alleviate expropriation by controlling shareholders. Improving country and firm-level governance mechanisms would enhance investors’ protection, attract international investors and boost the economic activity.Originality/valuePrior research is inconclusive about the impact of ownership concentration on CoD. Hence, it is worthwhile to seek new evidence in a new market on the nature of this relationship.

The impact of ownership concentration on firm sustainability: Evidence from Malaysian top 200 public listed firms.

Larger companies cannot escape from facing financial distress, which eventually leads to insolvency and unsustainability. In this regard, this study examined the relationship between ownership concentration and firm sustainability of top 200 Malaysian public listed companies for the period between the years 2009 and 2015. The two-stage least squares regression results of this study showed that ownership concentration was significantly and negatively related to firm sustainability. This finding remained the same when different proxies of ownership concentration and firm sustainability were used. Generally, this finding indicated that excessive concentrated ownership may lead to decisions that did not satisfy all key shareholders, and may reduce the level of firm sustainability.

Board characteristics, state ownership and firm performance: evidence from Vietnam

This paper investigates the association between board characteristics and firm performance and examine whether such relationship is moderated by different levels of ownership concentration among Vietnamese listed firms from 2008 to 2014. A series of fixed effect panel regressions was employed to test the impact of ownership concentration on corporate governance-firm performance relationship. The results indicate that the impact of an effectiveness of corporate governance mechanism on firm performance is influenced by the different levels state ownership. The evidence of this study suggests that corporate governance system that is beneficial for other developed markets may not be a good fit for emerging markets. Corporate governance policies in Vietnam are in the process of being reformed, and the results, thus, will provide insights for regulatory bodies by helping them better understand corporate governance practices.

Ownership feature and firm performance via corporate innovation performance

PurposeThe purpose of this paper is to investigate the simultaneous relationship among ownership concentration, innovation and firm performance of the small- and medium-sized enterprises (SMEs) in Vietnam during the 2011–2015. By employing a Conditional Mixed Process (CMP) model, the findings show that: there is no impact of ownership concentration on innovation, but it has a positive impact on sales growth; innovation positively affects firm performance; and there exists a positively reverse causality from sales growth to innovation.Design/methodology/approachIn this study, the authors propose the adaption of CMP model (Roodman, 2011). The nature of the first stage dependent variable – Innovation – is a binary one while the dependent variable Performance is continuous. Therefore, a model that can adapt the binary nature of the dependent variable and perform the estimation of a system of equations such as CMP model is preferred. The CMP framework is substantially that of seemingly unrelated regression, but with application in a larger scope. This approach is based on a “simulated maximum likelihood method” suggested by Geweke–Hajivassiliou–Keane algorithm.FindingsBy applying CMP method, this study examines the simultaneous relationship among ownership concentration, innovation and firm performance of the SMEs in Vietnam from 2011 to 2015. The findings indicate that: there is no impact of ownership concentration on innovation, but it has a positive impact on sales growth; innovation positively affects firm performance; and there exists a positively reverse causality from sales growth to innovation.Research limitations/implicationsIn spite of the efforts to explore the simultaneous relationship among ownership concentration, innovation and firm performance of the SMEs in Vietnam, the study still has some limitations which are promising further research directions. First, the SME surveys by Central Institute for Economic Management do not have much information about other types of ownership including state-owned and foreign ownership. Therefore, possible further studies with richer data sets may explore the impacts of different types of ownership on firm innovation and performance. Second, other types of innovation such as organizational innovation, marketing innovation can also be investigated in further studies in a richer data set for the case of Vietnam SMEs.Originality/valueThe findings show that: there is no impact of ownership concentration on innovation, but it has a positive impact on sales growth; innovation positively affects firm performance; and there exists a positively reverse causality from sales growth to innovation. The policy implications insist on facilitating SMEs with easier access to capital via loans with preferred interest or trust loans without collateral, training programs for the labor force and SME leaders, and reduction of unnecessary administrative procedure.