Similar Ownership Structure Research Articles

Ownership Concentration and Audit Actions

This study presents current evidence on the impact of different corporate ownership types on audit quality in Oman and potentially in other developing countries with similar institutional environments, such as GCC countries. While previous research has primarily focused on overall ownership concentration, this study aims to examine the role of specific shareholder identities and their influence on the demand for audit quality. This research sheds light on the relationship between ownership identities and audit quality of Omani financial companies listed on the Muscat Stock Exchange from 2014 to 2020. This study employs additional analysis to mitigate potential confounding factors and ensure robust results. Additionally, a GMM test establishes the robustness of our findings, alleviating potential endogeneity concerns. The findings highlight the positive impact and significance of bank, government, and foreign ownership in promoting high audit quality. In contrast, ownership by financial institutions (non-banks) and block holder concentrations negatively and significantly impact audit quality. In addition, this study found that family members on boards play positive moderating roles in the relationship between ownership concentration and audit quality. In addition to contributing to the existing literature, this study provides valuable insights for regulatory bodies to consider the role of ownership types in their decision-making processes. Our findings also assist investors in making informed choices and offer a better understanding of how ownership structures influence audit quality for other stakeholders. The implications of this research extend beyond Oman and can be relevant to countries with similar ownership structures and regulatory frameworks.

How geographic diversification affects corporate social responsibility? The moderating effects of ownership and environmental regulation.

As a popular strategy for firms to spread risk and reduce cost, geographic diversification might lead to more pressure from multidimensional stakeholders such as government, customer, and environment, which would inevitably affect the corporate social responsibility (CSR). With the data of Chinese A-share listed firms from 2011 to 2017, our empirical results verify that there is a significantly positive correlation between CSR and geographic diversification within China. Moreover, this correlation varies with corporate ownership and environmental regulation. The state-owned firms and those under lower environmental regulation will encounter significantly higher influence from the geographic diversification strategy. Our research has significant managerial implication for CSR in not only China, but also other countries with similar ownership structure and strongly unbalanced institutional environment.

Transparency in Commodity-Rich Countries: Is State Ownership to Blame?

Since the late 1990s, transparency has emerged as a major governance pillar helping resource-rich countries improve their performance and escape the resource curse. Within this debate, a few scholars have pointed to the correlation between ownership structure and transparency, and have argued that under state ownership, transparency should not be expected, as government officials refrain from strengthening institutions to retain their discretionary power.
 This study attempts to challenge scholarly existing knowledge by comparing transparency performances in two resource-rich countries with similar ownership structures, Norway and Russia. To this end, it analyses data from the Revenue Governance Index (2017). Overall, such a correlation is not confirmed. While in some cases, state ownership can in fact generate greater opacity, the example of Norway confirms that retaining control can also enhance transparency. As a result, it is suggested to look attentively at the features of state ownership, and in particular, at countries’ institutional quality.

Regional dynamics of ownership structure and their impact on firm performance and firm valuation

PurposeThe purpose of this paper is to analyse the impact of ownership structure on firm valuation and performance across different geographical regions within mainland China.Design/methodology/approachThe authors classify China in six geographical regions and use cross-sectional data of companies with A-shares listed on domestic stock exchanges in China for the year-end 2015. Using data from CSMAR and Wind database, they use multivariate regression technique and analytically compare the consistency of relationship between operational variables of ownership structure with corporate performance and evaluation.FindingsThe authors find that institutional ownership and state ownership negatively affect market valuation throughout various geographical regions of China. Further, in East, Northwest, South Central and Southwestern parts of China, managerial ownership and concentration of shareholding among top ten shareholders positively influence return on equity (ROE). Interestingly, institutional shareholding negatively affects return on assets (ROA), while institutional ownership has a neutral effect on profitability margin in Northeast China. Although in northern part of China, this relationship is slightly positive. In East China region, state ownership and ownership concentration are directly proportional to profitability margin.Practical implicationsAs some of the findings exhibit weak state of market efficiency in some regions, the study may also be useful in identifying arbitrage opportunities across different regions. Moreover, this study suggests that regions with the same business environment and conditions anywhere around the globe invite same or similar ownership structure for better firm performance and valuation.Originality/valueThe study provides unique understanding of relationship between ownership structure, market valuation and firm performance in various parts of China and will be an addition to the relevant literature. Given a change in company’s ownership structure and considering its region of incorporation, this study will help investment analysts in assessing performance and market valuation of the firm. It will also assist several classes of investors, financial institutions and international businesses in making their investment decisions.

Decision-Specific Experience and Imitative Behaviour in Foreign Ownership Structure Decisions: Evidence from Large Chinese Firms

Drawing on institutional theory, this article examines the importance of decision-specific experience and imitative behaviour of Chinese multinational corporations’ (MNCs) foreign ownership structure decisions. From a sample of 189 outward foreign direct investment (FDI) decisions, the authors find strong evidence to support the hypothesis that Chinese firms tend to choose ownership structures based on prior experience with similar ownership structures. Moreover, Chinese firms tend to follow the ownership structure patterns established by earlier Chinese entrants. This article also investigates the moderating effects of cultural distance and host country-specific experience.

When do firms take their domestic M&A ownership patterns overseas?

Extending the literature in path dependence we study the role that prior domestic M&A experience plays in the firms first cross-border M&A. Using 333 listed Chinese firms we use organizational learning to explain what firm and market characteristics may impact the path dependencies related to the chosen ownership level for the newly acquired firm. We find that domestic M&A performance, management stability, international experience, target-to-target similarity, and culture impact the likelihood of the firm having a similar ownership structure from its domestic M&A activities to its first cross-border M&A. Implications for path dependency and managers are discussed.

Controlling Shareholders: Issues and Challenges for Shareholders’ Empowerment in Directors’ Remuneration in Corporate Malaysia

AbstractCurrent reform concerning directors’ remuneration relies on improving legal rules and self-regulation to minimise expropriation of minority shareholders. These have prominently focussed on empowering shareholders. Nonetheless, it is unclear as to the extent these reform proposals are compatible within the concentrated shareholding structure. Some of the reforms taking place in developed countries are suited for dispersed shareholding structure and thus transplanting them to emerging economies with concentrated shareholders may be ineffective. Malaysia poses an interesting case study, especially to countries with similar ownership structure as the concentrated shareholding structure raises different agency problems. The issue of protection of minority shareholder rights and the prevention of abuse of the controlling power by paying excessive remuneration to the executives is therefore a subject of due consideration in Malaysia and countries with similar shareholding structures. This article recommends that Malaysia and other emerging countries look into encouraging limited shareholder empowerment in tandem with laws.

Controlling Shareholders: Issues and Challenges for Shareholders’ Empowerment in Directors’ Remuneration in Corporate Malaysia

AbstractCurrent reform concerning directors’ remuneration relies on improving legal rules and self-regulation to minimise expropriation of minority shareholders. These have prominently focussed on empowering shareholders. Nonetheless, it is unclear as to the extent these reform proposals are compatible within the concentrated shareholding structure. Some of the reforms taking place in developed countries are suited for dispersed shareholding structure and thus transplanting them to emerging economies with concentrated shareholders may be ineffective. Malaysia poses an interesting case study, especially to countries with similar ownership structure as the concentrated shareholding structure raises different agency problems. The issue of protection of minority shareholder rights and the prevention of abuse of the controlling power by paying excessive remuneration to the executives is therefore a subject of due consideration in Malaysia and countries with similar shareholding structures. This article recommends that Malaysia and other emerging countries look into encouraging limited shareholder empowerment in tandem with laws.

An Ohlson valuation framework for valuing corporate governance: The case of Taiwan

We examine the relation between a firm's market value, financial performance, and corporate governance as a cointegrated system in the Ohlson (1995) valuation framework. Using a comprehensive set of 29 governance measures in 4 categories for Taiwanese firms, we find that governance related to ownership structure and divergence between cash flow rights and control rights are important for a firm's market valuation. In particular, information about shareholdings of board directors and supervisors, shareholdings of controlling family, and voting rights are influential for firm value. Controlling for book value and residual incomes in the model, these governance measures track much of the remaining firm valuation that is unrelated to a firm's financial performance. Our findings provide some insight into the intrinsic value of corporate governance and the types of corporate governance mechanisms that are especially important for firms with similar ownership structure and controls.

An accounting-based valuation approach to valuing corporate governance in Taiwan

We estimate the proportion of firm value that is related to governance mechanisms in a cointegrated system based on the Feltham and Ohlson (1995) accounting-based valuation model. Using a comprehensive set of 32 governance measures in five categories for Taiwan firms, we find that governance measures related to ownership structure and the divergence between cash flow rights and control rights capture variations in stock prices over time. Controlling for book value, net operating assets, and abnormal operating earnings which account for up to 59% of firms’ equity value over time, the governance measures in addition track at least 39% of the equity value of these firms. We further identify that the shareholdings of board directors and supervisors, shareholdings of the controlling family, the critical control level of a firm, and the voting rights of the largest shareholder for ultimate control are sufficient governance measures to track changes in firm value. Our results shed some light on the extent of the equity value that can be generated by a firm’s governance practices and the types of corporate governance mechanisms that are especially important for firms with similar ownership structure and controls.

Decision Specific Experience in Foreign Ownership and Establishment Strategies: Evidence from Japanese Firms

In this paper, we examine the importance of decision specific experience for a multinational firm's foreign ownership structure and establishment mode decisions. A unique procedure to measure the decision specific experience construct is developed. Based on data for the period 1969–1991, we find strong empirical evidence from experiences of Japanese firms to support the hypotheses that firms tend to select ownership structures and establishment modes based on their experiences with similar ownership structures and establishment modes in the past.