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Alternative enterprises – organizations that operate as a business while still also being driven by a social purpose – are sometimes owned by workers or other stakeholders, rather than shareholders. What role does ownership play in enabling alternative enterprises to prioritize substantively rational organizational values, like environmental sustainability and social equity, over instrumentally rational ones, like profit maximization? We situate this question at the intersection of research on: (1) stakeholder governance and mission drift in both hybrid and collectivist-democratic organizations; and (2) varieties of ownership of enterprise. Though these literatures suggest that ownership affects the ability of alternative enterprises to maintain their social missions, the precise nature of this relationship remains under-theorized. Using the case of a global, social, and environmental values-based banking network, we suggest that alternative ownership is likely a necessary, but not sufficient, condition to combat mission drift in enterprises that have a legal owner. A supermajority of this network’s banks deploy alternative ownership structures; those operating with these structures are disproportionately associated with social movements, which imprint their values onto the banks. We show how alternative ownership acts through specific mechanisms to sustain enterprises’ missions, and we also trace how many of these mechanisms are endogenous to alternative ownership models. Finally, we find that ownership models vary in how well they enable the expression and maintenance of these social values. A ladder of mission-sustaining ownership models exists, whereby the dominance of substantive, non-instrumental values over operations and investment becomes increasingly robust as one moves up the rungs from mission-driven investor ownership to special shareholder and member-ownership models.

Purpose – In the recent financial crisis, the risk-taking behavior of banks led to severe financial and economic instability. Many reasons have been attributed to the cause of the financial crisis. This paper attempts to investigate the effect of government ownership, market structure, and regulations on risk-taking behavior in a sample of banks listed on the stock exchanges of the six Gulf Cooperative Council (GCC) markets during the period from 1998 until 2010.

Methodology – The paper utilizes the fixed effect regression model to measure the impact of government ownership indicator, and market structure on risk while controlling for bank-specific characteristics and macroeconomic indicators in the GCC region.

Findings – We find consistent evidence that private-owned banks are more risky than government-owned banks. The results also show a positive and significant relationship between market concentration and risk. Islamic banks show more stability than conventional banks, while government regulations are insignificantly related to risk.

Originality and value – This research is essential to understand the probability of government ownership entities facing losses associated with distress due to both direct and indirect insurance guarantees provided by the government agencies in case of crisis. The results of the study are crucial for understanding the implications of bank ownership and market structure and its relation to risk for the stability of the financial system in the GCC market.

This paper studies the impact of ownership structure on performance in European banking both prior and during the recent crisis. We use a panel of European banks during the period 1996–2011 and utilize random effects estimations in order to identify differences in bank performance (profitability, loan quality, and cost efficiency) due to differences in ownership structure. Both stakeholder and shareholder banks have distinct advantages, shareholder banks showing better profitability before the crisis but stakeholder banks having higher loan quality before and during the crisis. Differences in profitability and loan quality between stakeholder and shareholder banks before the crisis are especially pronounced in countries that experienced a banking crisis after 2007. There is strong a heterogeneity in performance between different stakeholder ownership groups. With the exception of private savings banks, profitability and loan quality of stakeholder banks has improved relative to that of general shareholder banks during the crisis years. The paper contributes to the previous literature by comparing pre-crisis and crisis performance and includes more refined ownership classifications. The results indicate that the survival of the stakeholder model is due to its competitive advantages. Our findings provide support for those arguing that the diversity of organizational structures is worth preserving. Ownership pluralism should become a policy objective in the banking industry.

The 1997 financial crisis in Asia has entailed significant changes and governance reforms in the Korean banking industry. This study investigates the impact of corporate governance on the risk and return of Korean banks during the 10 years that followed the financial crisis era. In particular, we investigate the ownership structure of banks, the extent of involvement of foreign institutions and investors in ownership and board membership of Korean banks, and the heterogeneity of board structure on bank performance. Our findings indicate that foreign ownership, the extent of external board involvement, and the presence of foreign directors on the board are associated with significantly higher bank returns. Although foreign ownership and the number of outside board directors are associated with lower risk, the involvement of foreign board members is positively associated with risk. The results are fairly robust to a battery of tests and control variables, and offer the first detailed empirical documentation of the Korean banking governance reform and its achievements since 1997.

This chapter contrasts the effects of main bank–firm ties on the performance of firms in the changing economic environment of the Japanese financial system. The dual stake of the main bank as stockholder and creditor has a positive effect on stock returns in the growth period, but a negative effect in the contraction period. The empirical results suggest that the current problems in the Japanese economy can be traced back to the failure of corporate governance that cast dark clouds on the Japanese economy after the bursting of the economy in 1990.

The processes of liberalisation, globalisation and integration have brought new dynamics into banking markets. In an increasingly competitive environment, banks have been forced to refocus their strategies and examine their performance, because their survival in the 21st century will depend on efficiency (Denizer & Tarimcilar, 2001). In recent years, therefore, bank efficiency has received wide attention, and researchers have developed an extensive array of sophisticated methods and tools to estimate efficiency.

We find a significant curvilinear relation between Japanese firm value and the percentage of equity held by foreign investors. Firm value rises until foreign ownership reaches approximately 40%, and then it begins to decline. It appears that large foreign institutional investors invest in well-performing firms and serve as effective monitors. Our results remain robust even after controlling for other corporate governance variables, such as equity ownership by main banks and board membership by foreign investors. It seems that most of the increase in firm value and the performance improvement are due to rising levels of equity ownership in non-keiretsu (independent) firms by foreign investors. We also show that an increase in foreign ownership is correlated with a rise in R&D expenditures, suggesting that foreign institutional investors contribute to the long-term viability and competitiveness of Japanese firms.

To show that differences in the extent to which firms engage in unrelated diversification can be attributed to differences in ownership structure.

We draw on longitudinal data and use a panel analysis specification to test our hypotheses.

We find that unrelated diversification destroys value; pressure-sensitive Anglo-American owners in a firm’s equity reduce unrelated diversification, whereas pressure-resistant domestic owners increase unrelated diversification; the greater the firm’s free cash flow, the greater the negative effect of pressure-sensitive Anglo-American owners on unrelated diversification.

We contribute to corporate governance and strategy research by bringing in owners’ institutional origin as a shaper of owner preferences in particular with regards to unrelated diversification. Future research may expand our investigation to more than one home institutional context, and theorize on institutional origin effects beyond the dichotomy between Anglo-American and non-Anglo-American (not oriented toward shareholder value maximization) owners.

Policy makers, financial analysts, owners, and managers may want to reflect about the implications of ownership structure, as well as promoting or joining corporations with particular ownership configurations.

A shareholder value-destroying strategy, such as unrelated diversification has adverse consequences for society at large, in terms of opportunity costs, that is, resources could be allocated to value-creating activities instead. Promoting an ownership configuration that creates value should contribute to social welfare.

Owners may not be exclusively driven by shareholder value maximization, but can be influenced by normative beliefs (biases) stemming from the institutional context they originate from.

Corporate governance is regarded as a major issue during the post-financial crisis period in Asia. These countries have implemented corporate governance reforms to enhance the protection of shareholders and stakeholders interests. Such reforms have affected the conduct of business of all corporations in the region as it allows for greater monitoring especially by the shareholders. Unlike earlier studies which focused on non-financial firms, this study analyzes the corporate governance of listed banking firms in nine Asian emerging markets. Corporate governance mechanisms that serve to monitor the banking firms can be classified into Ownership Monitoring Mechanism, Internal Control Monitoring Mechanism, Regulatory Monitoring Mechanism, and Disclosure Monitoring Mechanism. This paper suggests that there are differences in the monitoring mechanisms of banking firms and non-bank firms.

Over the past decade internationalisation by banks from emerging market economies has accelerated. The purpose of this study is to examine the role of government and home country institutions in the international expansion process of Chinese commercial banks (CCBs).

By employing qualitative research method, data was collected via interviews from 30 senior managers based on a sample of 10 CCBs involved in international expansion over the 2001–2013 period.

The study finds that the Chinese government and home institutions play an important role in motivating CCBs’ internationalisation. Evidence from this research illustrates the effect institutional factors have in emerging economy firms’ internationalisation.

The managerial implication of these findings is that CCBs could take great advantage of government policy by developing proper internationalisation strategies and capabilities that would enhance CCBs’ competitiveness in global market. On the institutional front, removal of the institutional constraints imposed on Chinese banking industry is required. Using market-oriented management and regulatory rules rather than imposing administrative restrictions could therefore accelerate CCBs’ adaption and integration in the international market and enhance their competitive power.