Dispersed Ownership Research Articles

Insider ownership and stock price crash risk around the globe

Insider ownership is one of the most important aspects of corporate governance. In this study, we examine how insider ownership affects firms' stock market downside risk, as measured by stock price crash risk, globally. We use a large-scale international sample consisting of observations from 40 countries, and find an inverted U-shaped relationship between insider ownership and stock price crash risk. These results remain unchanged by extensive robustness tests using various settings and specifications. We also identify some factors that moderate the relationship between insider ownership and stock price crash risk: the degree of ownership dispersion at the country level, and country-level investor protection regimes / information environment / financial system structure (bank- or market-based).

Effect of Ownership Structures on Financial Performance of Listed Manufacturing Firms in Kenya

Over the last decade, performance of listed manufacturing firms has been deteriorating with some companies almost collapsing. For instance, Mumias Sugar Company and Eveready have shown dismal financial performance. Prior studies have not addressed the effect of ownership structures on financial performance of manufacturing firms in Kenya. The main objective of the study was to determine the effect of ownership structures on financial performance of listed manufacturing firms in Kenya. Specifically, the study sought: to evaluate the effect of board shareholding on financial performance of listed manufacturing firms in Kenya, to explore the effect of foreign shareholding on financial performance of listed manufacturing firms in Kenya, to investigate the effect of institutional shareholding on financial performance of listed manufacturing firms in Kenya, to determine the effect of individual shareholding on financial performance of listed manufacturing firms in Kenya. This study was pegged on five theories; agency theory, stewardship theory, Stulz’s Integrated Theory, stakeholder’s theory and Resource based theory. This study was undertaken using a descriptive research design. The target population comprised of all seven listed manufacturing firms in Kenya that traded at NSE from 2010 to 2019. The study adopted a census method of data collection. This was made possible using secondary data sheet. Data analysis was undertaken using panel data regression and data analysis results were presented on tables and graphs. The findings revealed that the model linking ownership structures and firm performance was significant. Moreover, the results revealed that foreign shareholding was inconclusive on the effect it has to the financial performance of listed manufacturing firms. Institutional shareholding has negative significant effect on the returns on assets while individual shareholding had a positive and significant effect on firm performance. This study recommended dispersed ownership as it improved financial performance of the manufacturing firms.

Ownership dispersion and performance in cooperative banking

Different methodological approaches and hypotheses relative to the relationship between ownership structure and performances in cooperative banking generate contrasting findings, so motivating this innovative study which is grounded on an estimation approach allowing for the potential endogeneity of the membership base. Based on a sample of 241 Italian small cooperative banks over the 2013–2018 period, we find that bank profitability is positively affected by the membership as in the study conducted by Jones and Kalmi (2015) on Finnish cooperative banking and different from the comparable Austrian empirical research of Gorton and Schmid (1999). Unlike the latter we did not find an increasing exposure to agency costs as ownership dispersion grows and showed that greater membership raises individual bank financial stability, lowering the cost of credit risk

THE DETERMINANTS OF CORPORATE ENVIRONMENTAL DISCLOSURE IN SUBSAHARA AFRICA: AN EMPIRICAL STUDY OF INDUSTRIAL ENTERPRISES FROM CAMEROON

Environmental policies are increasingly being considered by industrial enterprises operating in Cameroon. This concern is materialized via the publication of environmental information (environmental disclosure) usually in stand alone reports (CSR reports) or other reporting media. The goal of this study is to find out the explanatory factors for the dissemination of environmental information in a country which is yet to have a consistent accounting regulatory framework regarding environmental reporting. In order to achieve this objective, a quantitative research strategy was conducted with the aim of finding out the internal and external factors explaining the practice of environmental disclosure by industrial enterprises. The data for this quantitative study which was analysed with the help of the logistic regression was obtained through questionnaires administered to 50 respondents (top management) from a sample size of 50 industrial enterprises. The logistic regression suggests that profitability, industry type, pressure from primary stakeholders (government) and pressure from secondary stakeholders (the media) appeared to be the main determinants susceptible of explaining the practice of environmental disclosure by industrial enterprises in Cameroon, not forgetting dispersed ownership, leverage and firm’s size which also revealed to be explanatory factors of environmental disclosure even though it degree of predictability is moderate as suggested by the logistic analysis.

Legal Determinants of Accountability of Credit Union Members

The financial crisis of 2007-2009 has triggered the development of legal solutions aimed at reducing economic turmoil by, in particular, increasing the responsibility of shareholders of financial institutions for the failure of the latter. The solutions in question include, inter alia, procedures of forced restructuring of financial institutions and establishment of the level of the so-called MREL for them. Counted among these institutions are also credit unions, the legal situation of which entities shows a number of peculiarities. They operate not for profit, have a highly dispersed ownership structure and limited opportunities to raise capital and, above all, members of the credit union as a cooperative society play a dual role in it - both that of shareholders and one of service users (consumers). The Polish lawgiver has made national credit unions subject to the rules of forced restructuring and MREL despite their exclusion from the European law regulations in force in that respect and placed them within as many as two separate legal regimes under which the solutions can potentially be applied. The aim of the paper is to consider whether - taking into account the legal structure of Polish credit unions - the solutions adopted under the aforementioned regimes may actually serve to increase the responsibility of credit union members for the institutions they co-own, and looking in a broader perspective - whether and to what extent they can generally contribute to successful operation of credit unions. In pursuit of the goal, attempts were made to combine dogmatic research (with the employment of the verbal logic method) with an analysis of the functions of the legal norms aimed at achieving the desired economic effects, taking into account the values the credit unions adhere to - on a global scale - as cooperatives run "not for profit, not for charity, but to serve”, as their motto reads. Thanks to the considerations done it was ascertained that burdening Polish credit unions with MREL requirements has been, in fact, an inappropriate solution, inadequate both to the structure of their ownership funds and the goals for which these requirements were established, since the goals include, at the outmost, protection of union members as consumers, and not burdening them - as small shareholders – with the risk of the business conducted by the members to satisfy their own needs.

Analyzing the Relationship Between Family Ownership Dispersion and R&D Investments: The Moderating Role of Market Turbulence

L’objectif principal de cette recherche est d’investiguer la relation entre la dispersion de l’actionnariat familial et les investissements en R&D. S’appuyant sur la perspective du patrimoine socio-émotionnel et l’approche des choix mixtes, cet article suggère que la dispersion de l’actionnariat familial exerce une influence positive sur les dépenses en R&D. Cependant, cette relation positive est atténuée lorsque l’entreprise est confrontée à un marché fortement turbulent. Les analyses empiriques menées sur un échantillon de 284 entreprises familiales belges non cotées corroborent ces prédictions, apportant un éclairage nouveau sur les conséquences de l’hétérogénéité de l’actionnariat familial pour l’innovation.

Is International Divergence from Wide Stock Ownership Dispersion An Optimal Corporate Outcome?

Is International Divergence from Wide Stock Ownership Dispersion An Optimal Corporate Outcome?

Ownership complexity and loan quality: Evidence for listed commercial banks in Vietnam

This paper examines the relationship among aspects of bank ownership complexity, including ownership dispersion and type, and the quality of bank loan portfolio. The data used for analysis is an unbalanced panel consisting of 13 listed commercial banks in Vietnam for the period of 2010 - 2019. The non-performing loan (NPL) ratio is used as an indicator of loan quality. The results showed that ownership dispersion, calculation based on the Herfindahl–Hirschman Index of large shareholding, improves the loan quality. Foreign ownership is also found to have positive impact on the loan quality. However, there is no relationship established between government ownership and loan quality.

Examining models for measuring corporate governance to resolve financial crises

This document deals with corporate governance and its impact on corporate performance and economic performance. This work is first summarized and based on previous work done, for example, to provide a clearer expression of the corporate governance models of shareholders and shareholders. It then addresses some of the key factors that lead to the effectiveness of corporate governance, and examines some of the strengths, weaknesses, and economic consequences associated with different corporate governance systems. In addition to providing information not provided in previous work, it also provides new information on the concentration of ownership and voting rights in a number of OECD countries. This document also provides empirical evidence on the relationship between corporate governance, firm performance, and economic growth. Finally, several policy implications are identified. This document shows how a corporate governance framework can influence the development of stock markets, R&D and innovative, corporate activities and the development of an active SME sector, thereby affecting economic growth. However, there is no single model of corporate governance, and each country has, over time, developed a variety of mechanisms to overcome representation problems arising from separation of ownership and control. This document examines the various mechanisms used in different systems (eg centralized ownership, executive rent schemes, stock market, inter-corporate shareholding, etc.) and examines the available evidence. Whether they have achieved their goal or not. do. For example, one of the benefits of centralized ownership is that it provides more effective oversight of management and helps with representation problems arising from separation of ownership and control. However, some costs reduce liquidity and the likelihood of risk diversification. Although dispersed ownership carries more liquidity, it may not provide the appropriate incentive to encourage the long-term

A Price Theory of Vertical and Lateral Integration Under Productivity Heterogeneity*

We analyze the interplay between product market prices and firm boundary decisions. Enterprises are heterogeneous with respect to productivity and they choose between two ownership structures—while centralized ownership (integration) performs well in coordinating managerial actions, dispersed ownership (non‐integration) is conducive to poor coordination. Ownership structure is monotone, i.e., high‐productivity enterprises integrate while the low‐productivity ones stay separate. Price can be positively or negatively associated with integration, depending on how price changes affect the distribution of surplus within an enterprise. A negative association may result in a backward‐bending industry supply. Our model delivers novel empirical and policy implications.

What drives the dividend decisions in BRICS countries?

Research background: We examine the dividend payout policies across companies listed on the main stock exchanges in Brazil, Russia, India, China, and South Africa (BRICS). Unlike the highly developed capital markets, the literature regarding dividend policy on BRICS? stock exchanges is scarce. 
 Purpose of the article: The purpose of this paper is threefold: verification of the existence of dividend smoothing pattern; selection of the significant drivers that affect both dividend levels and dividend smoothing; examination of differences between dividend policy of cross- and single-listed companies.
 Methods: Based on a dataset of 564 companies that paid dividends for at least 11 consecutive years in the period of 1995?2015, we apply a GMM two-step estimator to assess the speed of dividend adjustment (SOA) coefficient. Further we employ the linear panel regression to indicate the individual and market determinants of the dividend levels and SOAs. In the latter case, we base on time series of the SOAs obtained from the rolling estimation technique. Finally, we conduct separate estimations for cross-listed companies.
 Findings & value added: We confirm a moderate level of dividend smoothing within BRICS countries. Among the firm-level characteristics affecting the SOA the most important are: ownership dispersion, age and size of a firm, retained earnings, leverage, long term debt, asset tangibility, liquidity risk ratio, and issuing the depositary receipts (DR). Two relevant market factors are found: market capitalisation and turnover in relation to GDP. Similar characteristics have a significant impact on dividends? levels in the entire sample, whereas in the subsample of cross-listed companies fewer variables are significant. Our paper is the first comprehensive attempt to investigate the dividend policy and determinants of dividend smoothing among BRICS countries.

Adding Party Building Provisions in Corporate Articles and Enterprise Cost Stickiness: Based on the Interpretation of Party Organization Governance

Adding Party building provisions in corporate articles is conducive to safeguarding the statutory status of Party organizations in the corporate governance structure. And it can help to improve enterprises’ ability of political governance. After implementing this practice, the internal management and decision-making of enterprises might be deeply influenced by Party organizations, and thus the cost control level might be changed. This paper focuses on the impact of this practice on cost stickiness and analyzes its functional mechanism. Cost stickiness refers to the asymmetric cost change in response to sales change, and it reflects the tendency of enterprises to hold on to resources in the downturns. Based on a research sample of A-share listed companies from 2013 to 2018, we apply the difference-in-differences approach to examine the effect of adding Party building provisions in corporate articles on cost stickiness. We manually collect data on listed companies that have implemented this practice. The results show that the stickiness level of enterprise total operating cost is significantly reduced after implementing the practice, and this change is achieved by mitigating the dual agency problems. As the statutory status of Party organizations is established, Party organizations in enterprises have more motivation and ability to participate in the operation and management of enterprises. Thus, managers are subject to greater scrutiny by Party organizations. In this case, managers will constrain their opportunistic behaviors, leading to lower cost stickiness. In addition, Party organizations help to protect the interest of minority shareholders. The increasing difficulty of resource extraction of majority shareholders leads to a reduction in expropriation behaviors such as asset occupation, which in turn lessens enterprise cost stickiness. The participation of Party organizations in corporate governance also means that they guide shareholders and management to make decisions in line with the spirit of the Party by means of cultural publicity and spirit guidance, so as to reduce self-interested behaviors that are contrary to the spirit of the Party, thus alleviating the dual agency problem of enterprises. The findings indicate that Party organization governance contributes to optimizing the resource allocation decision of managers and improving the efficiency of cost management. Further research finds that the relationship between the practice and cost stickiness is moderated by the ownership structure of enterprises, and it is more significant in the case of more dispersed ownership structure, lower ownership constraints, and lower management shareholding. Mediation mechanism tests show that adding Party building provisions in corporate articles can indeed reduce cost stickiness by alleviating the dual agency problems. The innovation of this paper is mainly reflected in two aspects: First, this paper contributes to the literature on the determinants of cost stickiness by documenting a new way of corporate governance. Through combining Party building and cost stickiness, the study examines the impact of political governance on cost stickiness. The findings expand the channel of enterprise cost management. Second, different from the existing research methods, this paper uses the difference-in-differences approach to examine the dynamic changes of cost stickiness before and after the Party building reform. It provides relatively rigorous scientific evidence for the implementation of adding Party building provisions in corporate articles, and provides guidance for Chinese listed companies to properly and effectively embed the Party organization into the corporate governance structure.

Seafarers in fishing: A year into the COVID-19 pandemic

This paper builds on our earlier publication that examined COVID-19, instability and migrant fish workers in Asia during the initial six months of the pandemic. Drawing on interviews with port-based support organizations and various other international organizations, we outline how pre-existing structural marginalizations of seafarers in distant water fishing has made them particularly vulnerable to the negative impacts of pandemic management policies for seafarers. We focus our analysis on obstacles to crew change and reduced access to crucial shore services. The basis of these longer term marginalizations includes the exclusion of fishing from the Maritime Labor Convention, the marginal status of fishing among global organizations concerned with seafarers, the dispersed ownership of fishing vessels compared to concentrated corporate ownership in shipping, lack of unionization, and frequent inaccessibility of consular assistance in fishing ports. We also highlight differences among important fishing ports, showing that repatriation of crew and access to shore services is the outcome of negotiation among a constellation of port-based actors.

From the Throne to the Kingdom: Employee Empowerment in Owner-Managed Firms

I develop a model explaining procedural aspects of employee empowerment in owner-managed companies. Based on 22 interviews with representatives from six owner-managed firms active in the Swiss main- and ancillary construction industry, I find that firm complexity and resource necessity act as a regulator for growth ambitions forcing these firms to empower their employees. I find that employee empowerment in owner-managed firms can be executed through mechanisms of participative leadership, professionalization of collaboration and ownership dispersion. Furthermore, my study sheds light on effects of employee empowerment such as benefits tied to reduced owner-manager dependence or downsides linked to increased agency costs. My model thus presents integrative theorizing of the drivers, mechanisms, and effects of employee empowerment in owner-manager firms.

How does Concentrated Ownership impact on Financial Performance? Asian Emerging Economy Evidences

We aim to clarify the relationship between ownership concentration and firm performance using both accounting measures and value based measures based on Asian emerging economies. It proposes the theoretical assumptions and empirical evidences on how concentrated ownership can influence firm performance among selected Asian emerging economies given their differential characteristics. We have adopted dynamic panel data estimation, Generalized Methods of Moments (GMM), apart from regression analysis in the estimation of the panel data regressions of firm performance in order to take into account the problem of endogeneity caused by the potential effect of ownership on firm performance. The paper offers econometric insights about how concentrated ownership has impact on firm performance. It suggests that a positive association is found between the dispersed ownership of largest shareholders and firm profitability, while highly concentrated ownership negatively influence firm performance across Asian emerging economies. This paper satisfies the specified need to study how concentrated ownership can have influence on firm performance given the scholarly and regulatory importance of the area.

Does intellectual capital and corporate governance have an impact on annual report readability? Evidence from an emerging market

PurposeThis study examines the impact of intellectual capital efficiency and corporate governance mechanisms on the annual report readability of Oman's financial sector companies.Design/methodology/approachThe study uses a sample of 150 firm-year observations of listed financial sector companies in the Muscat Securities Market, Oman, from 2014 to 2018. Flesch Reading ease and Flesch Kinkaid Index are used as proxies for annual report readability. As part of sensitivity analysis, the study also uses the natural logarithm of annual report pages as alternative readability measures. The investigation is conducted using random effects regression analysis and supported with system GMM estimation for robustness.FindingsThe findings of this study demonstrate a decrease in intellectual capital efficiency associated with better readability of annual reports for the financial sector firms. Alternatively, banks report a positive association of intellectual capital efficiency with the Flesch Reading ease score of the annual report. The structural capital and capital employed efficiency are also found to be negatively associated with annual report readability. Corporate governance mechanisms such as dispersed ownership and audit committee size also result in easy-to-read annual reports that support agency theory.Research limitations/implicationsThe research was conducted for financial firms of Oman, and thereby the findings can be generalized to the financial sector of countries with similar settings, such as the Gulf Cooperation Council (GCC) region.Practical implicationsThe policy implications arising from this study suggest a strengthening of the intellectual capital efficiency and corporate governance mechanisms to improve the readability of the firms and thereby increase investor confidence.Originality/valueThis paper's uniqueness is in the model used to investigate the impact of intellectual capital efficiency and corporate governance mechanisms on the annual report readability of an emerging market.

Family Ownership Dispersion and Dividend Payout in Family Firms

Dividends are an important means of paying shareholders. At the same time, dividends can drain resources useful to grow the business. Focusing on privately-owned family firms, we argue that an important and unexplored feature driving dividend payout is the dispersion of equity shares among family members. Due to potential differences in family owners’ priorities, we hypothesize that equity dispersion is positively associated with dividends. This relationship, however, is weaker for firms led by a family member, first-generation firms, and firms in uncertain industry contexts. Our empirical analysis supports these hypotheses.

Agency Cost dan Kebijakan Dividen (Studi pada Perusahaan Manufaktur yang Terdaftar di Bursa Efek Indonesia)

Manufacturing companies in Indonesia are large-scale companies and dominate the Indonesia Stock Exchange. The number of companies listed on the stock exchange is increase every year, which results in more people having the opportunity to own a company. The spread of more investors who own the company makes conflict between owners even higher. The purpose of this study is to determine the effect of agency cost proxied by insider ownership, dispersion of ownership, free cash flow, and collateralizable assets on dividend policies of manufacturing companies in Indonesia. Data in the form of secondary data in the form of financial reports and annual reports for the period 2012-2019. The data used multiple linear regression statistical analysis techniques. The results of this study show that agency cost, which is proxied by dispersion ownership, free cash flow and collateralizable assets, has a positive effect on dividend policy. A firm in its operational activities, carries out agency relationships. Agency problems arise when an agent acts not in accordance with the principal's interests, which causes a conflict of interest between the principal and agent. Agency problems will increase agency cost. The agency problem can be reduced by the dividend payment mechanism, namely by increasing the proportion of dividend payments from company profits for stockholders. In contrast to insider ownership which does not affect dividend decisions because the percentage of company ownership owned by insiders is limited in Indonesia.

Do Financial Investors Mitigate Agency Problems? Evidence from an Emerging Market

Purpose: The paper aims to identify the monitoring effect by financial investors and their potential role to mitigate agency costs resulting from concentrated and dispersed ownership. Design/Methodology/Approach: Using the sample of 440 companies from the Warsaw Stock Exchange listed in 2010-2014, we examine whether financial investors may mitigate the agency problems of dispersed and concentrated ownership. Findings: We observe that ownership by financial investors is positively correlated with company value. Adding to the debate on the monitoring role of financial investors, we note that investments by control-oriented institutions and portfolio-oriented investors are correlated with higher Tobin’s Q. Practical implications: The results indicate the positive effect of the monitoring by financial investors, which can offset some limitations of insufficient investor protection in emerging markets. Originality: The study is based on a unique sample of companies listed on the Warsaw Stock Exchange, distinguishing between control-oriented and portfolio-oriented financial investors.

GCG, CORPORATE CHARACTERISTICS, AND FINANCIAL DISTRESS AS A DETERMINANT OF EXTENSIVE VOLUNTARY DISCLOSURES

The existence of a conflict of interest between the principal and the agent causes information asymmetry. This information asymmetry can be minimized by voluntary disclosure in the annual report. GCG factors, company characteristics, and financial distress are predicted to influence the extensive voluntary disclosure. This study aims to examine the effect of ownership dispersion, financial distress, the board size, CEO duality and age of listings on the extensive voluntary disclosure. Data population are basic and chemical industry companies listed on IDX for the 2015-2018. A purposive sampling was used as method and obtained 160 samples. This study used secondary data from annual reports. Data were analyzed by using the Multiple Linear Regression Analysis method. This study found that Ownership Dispersion and Size of the Board of Commissioners have a significant positive effect on Extensive Voluntary Disclosure. Whereas Financial Distress, CEO Duality, and Age of Listing have no significant effect on Extensive Voluntary Disclosure.