Ownership Composition Research Articles

Analyst recommendations, acquirer’s valuation, and M&A performance: evidence from China

ABSTRACT This study investigates the effects of premerger analyst recommendations on mergers and acquisitions (M&A) announcement returns. We find that M&A announcement returns decrease with premerger analysts’ favourable recommendations (PAFR). Furthermore, we find that increasing acquirers’ valuations in the preannouncement period is a possible channel that allows PAFR to reduce M&A announcement returns. We explore three alternative explanations including, ‘analyst information role’, ‘analyst pressure’ and ‘informed trading’ explanations for our main nexus, and our findings are still robust. In an additional analysis, we find that this negative relationship is more pronounced among acquirers with (a) high information uncertainty (b), low media criticism, and (c) high investor attention. Moreover, we identify three sources of conflicts of interest in analyst recommendations: M&A relations, controlling shareholder share pledging, and stock ownership composition. Our research enriches the impact of analysts’ recommendations on M&A outcomes and provides new empirical evidence of analysts’ strengthening of overvaluation.

Factors Affecting The Financial Performance of State-Owned Enterprise Companies Listed on the IDX

This study aims to identify variables that affect the performance of banking companies listed on the IDX. The addition of the Ownership Composition variable as an independent variable is a novel part of this research. This research method involves collecting data from 22 banking companies over a five year period (2018–2022), and applying data processing analysis using panel data regression analysis techniques. The research results found that the capital adequacy ratio had an effect on Bank Performance. Likewise with the variables Non-performing loans, Liquidity Ratio, Bank Size, Market power, Gross Domestic Product, Inflation rate, and Ownership Composition which influence the performance of banking companies. The implication for financial managers is to choose the best way to utilize assets to achieve business goals, especially to improve shareholder welfare. This research emphasizes how important company performance is for investors when choosing investment opportunities in banking companies.

Business creation during COVID-19

Abstract Using UK data, we present greater empirical detail on the puzzling firm dynamics that emerged during coronavirus disease 2019 (COVID-19). We show that firm entry increased during the pandemic across several countries, and this contrasts with typical recessions where firm entry declines. Additionally, the rise in firm entry is driven by individual entrepreneurs creating companies for the first time, particularly in online retail. We find evidence that firm creation responded significantly to declines in retail footfall and that firms created during the pandemic are more likely to exit and less likely to post jobs. Overall, this implies that despite surging firm creation during the pandemic, the overall employment effect is limited. Finally, we find that the primary contributor to limited employment creation is the shift in ownership composition of new entrants during COVID.

Analysis of Factors That Influence the Quality of Company Financial Reports

This research aims to examine the influence of company scale, ownership composition, and level of market concentration on the quality of financial reports of manufacturing companies listed on the Indonesia Stock Exchange (BEI). The data used comes from the annual financial reports of 120 companies during the 2015-2017 period. The purposive sampling method was used for sample selection. The results of data analysis show that there is a significant correlation between independent variables and the quality of financial reports. The results of the regression test show that company scale, ownership composition, and level of market concentration significantly influence the quality of financial reports. These findings indicate that companies with large size, consolidative ownership structures, and market dominance tend to produce higher quality financial reports. The implications of this research highlight the importance of good information management in a business context, as well as the need for transparency and accountability in corporate financial reporting.

Does promoters’ holding influence the liquidity risk of banks?

PurposeThis paper aims to evaluate whether promoter holding influences a bank’s liquidity in India’s leading emerging market. Furthermore, it also evaluates the moderating role of risk-weighted assets (RWA) on the relationship between promoter holding and liquidity.Design/methodology/approachThe data consists of 24 banks for the period of 12 years from 2010 to 2021. Static panel data is used to analyze the relationship between the liquidity coverage ratio (LCR) as the dependent variable, the promoter used as an explanatory variable and RWA used as a moderating variable in this study.FindingsThis study concludes that an increase in promoter holding helps to improve the liquidity of Indian banks. Moreover, it also shows that using RWA as a moderating term enhances the relationship between promoter holdings and Indian banks’ liquidity.Research limitations/implicationsThis study evaluated the impact of promoter ownership solely on the LCR, a statistic used to measure the short-term liquidity of banks in the Indian setting. Additional corporate governance factors, such as the makeup of the board of directors, relevant ownership concentration factors and external factors with the potential to affect the liquidity position of banks, could potentially be the subject of future investigations.Practical implicationsThis paper has both managerial and policy-level implications. It shows that it is advantageous for banks’ ownership composition to include more enormous promoter holdings to enhance banks’ liquidity. Policymakers can, thus, formulate policies to encourage banks to have more extensive promoter holdings.Originality/valueThe impact of promoter ownership on bank liquidity has not been evaluated in earlier research projects. Furthermore, the use of RWA as a moderating variable to determine this link has not been fully investigated, particularly in the context of a developing country like India.

The effect of ownership composition on corporate financial performance in the European frontier markets

PurposeThis study investigates the influence of ownership composition on market-based and accounting-based financial performance in the European frontier markets (EFMs), a target region for global investors.Design/methodology/approachOwnership composition is defined as shareholders' concentration and structure (i.e. foreign, domestic, state and free-float), whereas financial performance is measured as Tobin's Q and return on assets. The system generalised method of moments panel data estimation technique is employed on a sample of 241 companies.FindingsFindings reveal that companies from European Union (EU) frontier markets are controlled, on average, by one to five large shareholders. Being a signal of expropriation rationale of majority shareholders regardless of the capital structure, this highly concentrated ownership and decision-making model negatively affects the market-based and accounting-based financial performance of the companies and thereby supports the agency theory in the frontier markets.Research limitations/implicationsThe findings provide empirical evidence for authorities, investors, analysts and corporations regarding the effect of ownership percentage and structure in the Eastern European region, assisting also other frontier and emerging markets in corporate governance and other regulatory decisions.Originality/valueThe ownership–performance relationship varies from developed to emerging markets with conflicting results. This study provides evidence on monitoring and expropriation effects of majority shareholders in the context of different categories of shareholders. In doing so, it combines the analysis of both ownership concentration and structure in the EFMs.

Pengaruh Pengungkapan Corporate Social Responsibility dan Good Corporate Governace Terhadap Nilai Perusahaan

This This study aims to see how the Effect of Corporate Social Responsibility, the mechanism of Good Corporate Governance on the Value of Mining Companies listed on the Indonesia Stock Exchange in 2017-2019. The independent variables used in this study are Corporate Social Responsibility, Managerial Ownership, Institutional Ownership, Independent Board of Commissioners, and Audit Committee. The research sample obtained in this study were 18 companies. Data analysis techniques used are descriptive statistics, classical assumption test and multiple linear regression analysis. The results of the study using multiple linear regression analysis show that Corporate Social Responsibility has a significant effect on Firm Value with a significance value of 0.046 greater than 0.05. Managerial Ownership has a positive and significant effect on Firm Value with a significance value of 0.000 less than 0.05. Institutional Ownership Composition has a significant effect on Firm Value with a significance value of 0.006 greater than 0.05. The Independent Board of Commissioners has a significant negative effect on company value with a significance value of 0.038 greater than 0.05. The Audit Committee has no significant effect on firm value with a significance value of 0.478 greater than 0.05.

Ownership Composition and the Management of Family-Owned Businesses in the South-East, Nigeria

This study examined ownership composition and the management of family-owned businesses in South-East, Nigeria. Descriptive survey method based on primary and secondary sources of data collection was adopted. Data was obtained from primary and secondary sources. Primary data was gathered through questionnaire while the secondary data was gathered from a review of several research publications, annual reports, articles, textbooks, unpublished thesis, journals and internet sources related family businesses. The study population consisted of 43,868 family-owned businesses. The sample size is 554 determined using Cochran (1963) statistical formula. Analyses were carried out using simple descriptive statistics organized and presented in tables, frequency and simple percentages. At the inferential level of statistical analyses, the hypothesis was subjected to double-test using Pearson Product Moment Correlation Coefficient and Simple Linear Regression. To establish whether an outcome is statistically significant, the researcher set up a 5% significance level while a 95% confidence level was applied and tested at 5% (p-value ≤ 0.05) alpha level. All analyses were carried out in SPSS 20.0. The study found that the nature of ownership composition on the management in family-owned businesses has a significant relationship with a coefficient of 0.957 which is statistically significant with t = 4.723. The study concludes that the nature of ownership composition significantly affects the management of family-owned businesses in the South-East, Nigeria. The study recommends a separation of ownership and management so that experienced and professionals can be injected to manage the businesses to success.

Ownership of Management as a Moderating of Impact Profitability to Firm Value

The rsearch to test the moderation of management ownership to impact profitability to firm value. Data used is secondary data. Population is manufacturing companies whose shares are on IDX during 2016-2020. The advantage of sampling with data pooling is that by obtaining a larger number of samples, it is hoped that it will increase the strength of the test. The sampling technique in this study used purposive sampling: Manufacturing companies with ownership composition shares, which are owned by management in the firm with a total of more than 1% of the total outstanding shares. Firm value is influenced by profitability, if profitability increases, it will have an impact to increasing firm value. Management ownership is proven not to moderate the impact of profitability to firm value, that impact profitability on firm value is not significantly strengthened by the interaction of management ownership variables so that management ownership is not a moderating in interaction profitability to firm value. Firm value will increase, influence of profitability to firm value can lead to positive sentiment for investors, investors managers should continue to work hard, so the firm value can increase.

Role of imported raw materials in the performance of inward foreign direct investments in Ethiopia

PurposeDrawing on the resource dependence theory (RDT), this paper investigates ownership composition, export intensity, and industry class as moderating factors to investigate the role of imported raw materials in performance of inward foreign direct investment (IFDI) in Ethiopia.Design/methodology/approachThe hypotheses were tested using secondary data obtained from the 2016 Central Statistical Agency (CSA) on Large- and Medium-Scale Manufacturing and Electricity Industries Survey. The data included basic quantitative information on the country's manufacturing industry. The data items for the 2016 manufacturing and electricity industries surveyed are the numbers of proprietors or establishments involved in various sectors. The report did not record small firms that employed fewer than 10 people and did not use power-driven machinery. Two-Stage least squares (2SLS) regression analysis was performed to test the proposed hypotheses.FindingsThe results of this study indicate that three moderators (ownership composition, export intensity, and industry classification) interact with the hypothetical relationships between imported raw materials and performance. These findings enrich the knowledge of IFDI firms' operations in Ethiopia and in other least-developed countries (LDCs). The findings could provide information for IFDI firms that are looking to invest in LDCs.Research limitations/implicationsLike all social science research, this study has some limitations. First, the research was conducted with the data found in the Report on Large- and Medium-Scale Manufacturing and Electricity Industries Survey In 2016. This was the first year of the second five-year Growth and Transformation Plan (GTP II), a national development plan for the 2016–2020 period. Continual research on IFDI in Ethiopia in the following years will be needed to get a full picture of the effects of the determinants on IFDIs.Practical implicationsTo IFDI investors, the result of this thesis demonstrates several alternatives to overcoming hurdles in manufacturing operation. The results find that J.V. firms make better use of imported raw materials than W.O. subsidiaries in order to achieve better performance. Concerning the choice between focusing on export or domestic markets, the study suggests that domestic market—oriented companies require less imported raw materials to achieve better performance. Concerning the comparative advantage on different industries, this study found the performance of firms in Industry 12 depended on imported raw materials. These findings highlight the challenges and opportunities for potential foreign investors. Ownership composition, market factors, and industry factors should be well considered in making investment decisions.Originality/valueThis is one of few studies on IFDI in Ethiopia, the most populous LDC. Ownership composition, export intensity, and industry class are used as moderating variables to investigate the difference between imported raw materials and the level of expatriate deployment to IFDI performance. For IFDI investors, the results of this study demonstrate several alternatives to overcoming hurdles in manufacturing operation.

The Impact of Corporate Governance on Firm’s Financial Distress: A Case Study of The UK-based firms

Purpose: The study aims to assess the potential impacts that the different attributes of corporate governance like the ownership structure and composition of the board on the probability of the listed firms in the UK falling into financial distress. Approach/Methodology/Design: A quantitative methodology with a positivist paradigm and deductive reasoning were employed to collect data from 100 UK-based listed incorporation using FAME-A and BoardEx databases. Moreover, a longitudinal approach was used to collect data from 2014-2019 and sort it into a panel dataset, which was then analyzed using different statistical analysis approaches including pool ordinary least square regression analysis, Pearson’s correlation, and descriptive statistics by using STATA statistical analysis tool. Findings: The findings indicate that certain components of the composition of the board have a substantial effect on a company’s probability to fall into financial distress; for instance, the board size, the board size, board independence, and the independence of the audit committee have a significant negative implication on the selected companies’ probability to fall into financial distress. Similarly, some ownership structure components like institutional ownership and shareholder’s ownership have significant negative implications on the firm’s likelihood of financial distress, while audit committee size and the extent of ownership held by the management show an insignificant implication on the selected companies’ probability to fall into financial distress. Originality/value: The study also highlighted certain limitations and provided recommendations to future researchers to overcome these limitations in the future and reach more informed findings.

Challenges to Formality from Formal Firms Behaving Informally: Evidence from Central America

This research explores the competitive environment for urban formal sector firms competing against peer formal sector firms behaving informally in Central America. Explored is the upper bound of the formal-informal continuum in a regional economic environment of persistent and widespread economic informality where formal firms may employ informal tactics to gain competitive advantage versus their formal competitors. The 2010 World Bank Enterprise Surveys form the basis for empirical analyses. The results suggest formal firms utilizing informal practices is widespread and is influenced by firm maturity, firm location, industry sector, firm legal status, firm organization, ownership composition, regulatory environment, international quality certification, web presence, entry into global markets, and firm size.

Analisis Pengaruh Komposisi Kepemilikan Terhadap Manajemen Laba Pada Perusahaan Yang Terdaftar Di Bursa Efek Indonesia

This study aims to analyze the effect of ownership composition on earnings management in companies listed on the Indonesia Stock Exchange. This study method is quantitative research that emphasizes testing of variables through data in the form of numbers and analyzing data with statistical procedures. The population used in this study is the listed company from Indonesia Stock Exchange between 2016 – 2020 and for data testing tools using the SPSS 25 and Eviews 10. Ownership composition is represented by family ownership, institutional ownership, blockholder ownership, debt, firm size, return on equity and sales growth. The results of this study showed that debt is significantly positive on earnings management, sales growth is significant negative on earnings management. Meanwhile, family ownership, institutional ownership, blockholder ownership, firm size and return on equity show no significant results. All independent variables can explain the dependent variable by 31.45% based on the coefficient of determination test.

Relocating from neoliberal way to democracy drive: Addressing identity in/as place

Courses Communicating Identity, Intercultural Communication, Organizational Communication. Objectives The goals of this unit are to stimulate communal, group-oriented thinking and to prompt civic engagement. By the end of the unit, students will be able to (1) articulate connections between class status, home ownership, and neighborhood composition and (2) develop an argument for greater inclusivity.

Ownership composition and intellectual capital disclosure: Indonesia as a case study

This study explores whether ownership structure (comprising ownership concentration, foreign, managerial, and institutional ownership) affects intellectual capital disclosure (ICD) in Southeast Asia’s largest stock market and Indonesia’s emerging economy. The sample includes 323 public firms listed on the Indonesia Stock Exchange (IDX) from seven industries between 2008 and 2017, or 2,634 firm-year observations. Data were analyzed using the ordinary least squares (OLS) regression with robust standard errors. The results show that ICD is positively related to ownership concentration. A negative and substantial relationship was found for both foreign and managerial ownerships, while the institutional ownership variable had a negative and insignificant impact. Overall, the results show robust conclusions regarding the impact of the ownership structure on ICD. The findings of this investigation could be taken into account by capital market authorities such as the Indonesia Stock Exchange (IDX) to raise awareness of intellectual capital and improve ICD practices. Acknowledgment The researchers are grateful for the valuable responses from two unnamed reviewers and discussion respondents at Mulawarman University. We also thank the Indonesia Stock Exchanges (IDX) and The Indonesia Capital Market Institute for providing the annual report.

Individual investor ownership and the news coverage premium

If widely-circulated news providers cater to the information demands of individual investors, stocks with high individual ownership should receive more news coverage, theoretically resulting in lower volatility and a lower cost of capital. In this paper, I explore this hypothesis by utilizing the extensive news sources available in Bloomberg Terminals to construct a monthly panel dataset of S&P 500 firms between 2012 and 2019. I verify that companies with a higher percentage of individual investor ownership receive more news coverage, and that this effect is strongest among larger firms. In order to quantify the importance of this mechanism for stock prices, I estimate a panel VAR model and conduct a counterfactual analysis where the news coverage response to exogenous shifts in ownership composition is effectively “shut off”. The counterfactual analysis implies that an increase in news coverage triggered by a one standard deviation rise in individual ownership reduces annual stock volatility by 0.51% and annual returns by 0.135%, suggesting that the individual investor-news coverage channel partially offsets the more well-documented informational advantages of institutional ownership.

The Influence of Regulation and Financial Performance on the Disclosure of Corporate Social Responsibility and Corporate Reputation Moderated By the Ownership Structure

A study by Ernst and Young (2010) found that 84% of public companies believe that CSR is an activity that has a positive impact on the companies. However, only 11% of those companies disclose their CSR in their annual reports. The motivation underlying CSR disclosure in the voluntary situation is performance impression, whereas on the mandatory situation it is due to legitimacy pressure (Meng et al., 2014). CSR activities should be part of companies' activities and operations, which are well planned and have an impact on the companies' budget. The result of researches about the relation of CSR and financial performance are mixed (Huang and Watson, 2015). There is a classic endogeneity problem, whether firms are successful because they are socially responsible or whether CSR is merely something that successful firms do. Diyanty (2014) mentions that the ownership composition structure in Indonesian companies is dominated by family-owned (more than 50%) structure. The influence and impact of CSR is indirectly intended to increase corporate reputation, and in turn, the owners' reputation (Boivie et al., 2016). CSR activities are utilized to develop a reputation and competitive advantage for the company and the owners in the long run. This article reports on a study examining the effect of Corporate Social Responsibility (CSR) regulation and corporate financial performance, measured by corporate liquidity, profitability, leverage and firm's value, on the disclosure level of CSR of public companies in Indonesia. The impact of disclosure was analyzed from the corporate reputation based on the alternative measurement of reputation. Ownership structure consisting of family ownership and foreign ownership were taken as the moderating variables on the correlation between financial performance and the disclosure of CSR. Keywords: Corporate Social Responsibility, Regulation, Financial Performance, Corporate Reputation.

Insolvency and Bankruptcy Code 2016: revisiting with market reality

PurposeThis paper aims to revisit the Indian experience on corporate bankruptcy law to answer “why Indian corporate insolvency law structured differently from a manager-driven (pre-Insolvency Code) to manager-displacing model (post-Insolvency Code)?”Design/methodology/approachThis paper is qualitative in nature. The paper analyses the prevailing theoretical wisdom in corporate insolvency law in India and examines the practices of Indian bankruptcy regime.FindingsThe authors argued, considering the corporate ownership composition, the Insolvency and Bankruptcy Code 2016 will not accomplish the intended objective (i.e. the “creditor primacy”). The findings refute with the evolutionary theory, i.e. debt and equity both will tend towards dispersion in outsider system of governance.Originality/valueThis paper put forward the imprint that Indian corporate insolvency regime is manager-displacing under Law on Books and manager-driven under Law on Practice.

The Effect of Corporate Governance Characteristics on Publication of Financial Statements on the Indonesia Stock Exchange

This study aims to analyze corporate governance towards the publication of financial statements on the Indonesia Stock Exchange. The end of the financial year until the date of publication of the financial statements as a period of reporting time lag. Ownership composition, characteristics of directors and commissioners, and audit committee as a proxy for corporate governance. Proportional strata method for selecting a sample of 775 annual reports, for the period 2013-2014 from nine industry groups. Multiple regression analysis techniques, using control variables of size, performance, auditor quality, and type of industry. The results showed that ownership, board meetings, and audit committee meetings, as well as the number of commissioners and audit committees, had a significant effect on the issuance of issuers' audit reports. While the independence of directors and commissioners does not affect.spacing.

Ownership diversity and the risk-taking channel of monetary policy transmission

Abstract This paper joins a rapidly growing body of literature that aims to uncover the link between monetary policy and bank risk taking. We investigate the hypothesis that the ownership composition of the banking system moderates monetary policy transmission via the risk-taking channel. Borrowing measures used in ecology to quantify diversity of species within an ecosystem and first applied to the field of finance by Michie, J. and Oughton, C. 2013. ‘Measuring Diversity in Financial Services Markets: A Diversity Index’, Centre for Financial and Management Studies Discussion Papers no. 113, this paper shows that the impact of exogenous monetary policy shocks on banks’ probability of default is reduced in countries with greater ownership diversity. We also find that—ceteris paribus—shareholder- and stakeholder-oriented banks located in more ownership-diverse systems tend to have a lower appetite for risk than their counterparts operating in less diverse markets. These results are robust across several econometric specifications and emphasise the stabilising role played by ownership diversity in modern financial systems. At the same time, our evidence suggests that a more interdisciplinary approach, firmly grounded in the applied, empirical research methodology, can provide novel and useful insights into the implications of monetary policy for financial and economic outcomes.