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Article
Publication date: 10 August 2020

Xiao-xia Wang, Hai-ying Pan and Kun-kun Xue

This study aims to examine the relationship between an ownership structure with multiple large shareholders and corporate social responsibility (CSR) with regard to…

Abstract

Purpose

This study aims to examine the relationship between an ownership structure with multiple large shareholders and corporate social responsibility (CSR) with regard to Chinese-listed companies.

Design/methodology/approach

Multiple regression analysis was used on 4,940 samples of 884 listed companies in China for the period 2009–2017, to empirically test the influence of an ownership structure on enterprises’ fulfillment of social responsibility. Moreover, the propensity score matching–difference in differences and Heckman two-stage approaches were used for the robustness of the regression results.

Findings

The results show that ownership structures with multiple large shareholders can promote social responsibility. The check-and-balance ability of non-controlling large shareholders, corporate information transparency and corporate system environment moderate the relationship between multiple large shareholders and CSR engagement.

Originality/value

This paper complements prior studies on the ownership structure of multiple large shareholders. The findings enrich the literature on corporate governance and CSR. The results also reveal information about the situational factors, helping identify the mechanism through which the ownership structure of multiple large shareholders affects CSR.

Details

Chinese Management Studies, vol. 15 no. 1
Type: Research Article
ISSN: 1750-614X

Keywords

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Book part
Publication date: 30 March 2017

Narjess Boubakri, Jean-Claude Cosset and Dev Mishra

We examine the market valuation of targets with multiple large shareholders (MLS) and single large shareholder (SLS) structures, in an international sample of M&A…

Abstract

We examine the market valuation of targets with multiple large shareholders (MLS) and single large shareholder (SLS) structures, in an international sample of M&A announcement in 19 countries outside North America. We find that the presence and power of MLS in these firms are negatively associated with abnormal returns and first-bid-to-merger-completion returns, suggesting that MLS mitigate agency problems in the target, and hence their acquisition is perceived as “a loss of good governance.” The negative association between MLS targets and returns is stronger in widely held firms suggesting that MLS indeed curb expropriation of minority shareholders. By contrast, when the second largest shareholder in the MLS structure of the target is a family, we find positive cumulative abnormal returns at the merger announcement, suggesting exacerbated agency problems in these firms that should benefit from the “acquisition of good governance.” Our evidence is robust to a battery of tests and to addressing potential endogeneity.

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Article
Publication date: 18 September 2017

Maria Aluchna and Bogumil Kaminski

The purpose of this paper is to investigate the links between company ownership structure and financial performance in the context of the largest Central European stock…

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1498

Abstract

Purpose

The purpose of this paper is to investigate the links between company ownership structure and financial performance in the context of the largest Central European stock market. Using the framework of agency theory, the authors address the question of the expropriation effect by dominant owners and the effect of collusion between shareholders of different types on company performance.

Design/methodology/approach

The authors test hypotheses on the relations between ownership concentration and the involvement of different shareholders (state, CEO, industry and financial investors) vs return on assets (ROA). The authors adopt the panel model controlling for endogeneity and sector of operation and analyze the data from the unique sample of 495 Polish non-financial firms listed on the Warsaw Stock Exchange in years 2005-2014 with a total of 3,203 observations.

Findings

The authors identify a negative correlation between ownership concentration by the majority shareholder and ROA, which corresponds with the expropriation rationale of blockholders. The authors also observe negative effects due to ownership concentration by the second largest shareholder, supporting the notion of collusion. The results show that ownership by industry investors is associated with a higher ROA. Ownership by the CEO, state and financial investors proves to have no statistically significant effect on performance.

Originality/value

The paper further develops the nature of ownership-performance relations in the specific economic context of a post-transition, emerging European stock market, weak external corporate governance mechanisms, insufficient investor protection and significant concentration of share ownership. The results add to the understanding of monitoring vs expropriation effects by large owners and the collusion between different types of shareholders.

Details

Baltic Journal of Management, vol. 12 no. 4
Type: Research Article
ISSN: 1746-5265

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Article
Publication date: 23 November 2021

He Wan, Qiuping Peng and Xi Zhong

Noncontrolling large shareholders can reduce the agency problem of executives and can reduce the expropriation or tunneling behavior of controlling shareholders, thereby…

Abstract

Purpose

Noncontrolling large shareholders can reduce the agency problem of executives and can reduce the expropriation or tunneling behavior of controlling shareholders, thereby promoting corporate innovation. However, too many noncontrolling large shareholders may also lead to excessive supervision, thereby inhibiting innovative activities that contribute to the long-term value of the firm. Research to date, however, has not examined the nonlinear impact of noncontrolling large shareholders on corporate innovation. Based on principal–agent theory and the too-much-of-a-good-thing (TMGT) effect, the authors discuss the inverted U-shaped influence of noncontrolling large shareholders on corporate innovation and the moderating effect of industry competition and corporate product diversification on the above relationship.

Design/methodology/approach

Based on the empirical data of Chinese listed companies from 2003 to 2017, the authors use the bidirectional fixed effects model to conduct empirical testing and robustness testing of the research hypotheses.

Findings

There is an inverted U-shaped relationship between noncontrolling large shareholders and corporate innovation; type I and type II agency costs play a mediating role between noncontrolling large shareholders and corporate innovation. In addition, firm product diversification weakens the inverted U-shaped relationship between noncontrolling large shareholders and corporate innovation, but industry competition has no significant moderating effect on the above relationship.

Practical implications

This research has important implications for policy makers, to better activate corporate innovation vitality, and investors, to better choose investment targets. Specifically, investors and policy makers should be aware that an appropriate increase in larger noncontrolling shareholders can maximize the enthusiasm of firms for innovation and enhance corporate value, but they should also realize that having too many noncontrolling large shareholders may backfire.

Originality/value

This research helps the authors to understand the pros and cons of increasing the number of noncontrolling large shareholders more comprehensively and also helps to understand corporate innovation more comprehensively from a supervisory perspective. In addition, this research also enhances the explanatory and predictive power of the TMGT effect.

Details

European Journal of Innovation Management, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1460-1060

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Article
Publication date: 1 April 2014

Samuel Nana Yaw Simpson

This study aims to examine the structure, attributes, and performance of boards of directors of state-owned enterprises (SOEs) within the broader context of public sector

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2499

Abstract

Purpose

This study aims to examine the structure, attributes, and performance of boards of directors of state-owned enterprises (SOEs) within the broader context of public sector governance. This is informed by the less attention given to the concept among public sector organizations despite efforts to make state enterprises more effective and efficient, especially in developing and middle income countries.

Design/methodology/approach

Data was collected through questionnaires self-administered in 2010 to all 25 SOEs in Accra, Ghana, out of the 29 nationwide. Some key officials were interviewed and documentary evidence analyzed to achieve triangulation of data and results.

Findings

Results show that state-owned enterprises have boards and comply with the minimal governance issues outlined the legal frameworks establishing them. However, they exhibit significant weaknesses in the areas of board performance evaluation, criteria for board appointment, the balance of executive directors and non-executive directors, and other board characteristics, indicating a departure from general practices.

Practical implications

Findings suggest the need for a tailored corporate governance framework or code for state-owned enterprises in developing countries.

Originality/value

Compared to the literature, this study provides insight on boards from the perspective of state enterprises in ensuring good corporate governance, particularly in the context of a middle income country (Ghana).

Details

Corporate Governance, vol. 14 no. 2
Type: Research Article
ISSN: 1472-0701

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Article
Publication date: 7 March 2016

Anjum Amin-Chaudhry

In the past hundred years, the concept of corporate social responsibility (CSR) has seen a remarkable development with various notions of “what is the right thing to do”…

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2669

Abstract

Purpose

In the past hundred years, the concept of corporate social responsibility (CSR) has seen a remarkable development with various notions of “what is the right thing to do” for the corporations in that era. This paper aims to highlight the journey of CSR staring from an “abstract concept” in the early twentieth century to a well-recognised and “expected business practice” in the present.

Design/methodology/approach

This paper presents a meta-analysis of the relevant CSR literature and finds 12 common themes emerging in different periods. This is presented in a chronological order starting from early 1920 to the present day for ease of understanding. The literature chosen is intentionally broad as not to miss a clear view of the times and the themes in CSR discourse.

Findings

The concept of CSR was viewed as a “social obligation” in the earlier literature (1920s-1960s), as the businesses were thought to operate for the well-being of a community and not for the prosperity of the sole owner(s). A little later, in the 1960s and 1970s, only adoption of socially responsible activities and practices, which were voluntary and beyond legal obligation, were deemed CSR. The 1980s saw businesses trying to find a rational and financially quantifiable justification for adopting activities that were socially responsible, thus the emphasis of “corporate social performance”. The 1990s shifted the impetus on “reporting, transparency and accountability” with numerous reporting requirements. The 2000s sought a win-win situation through the development of “creating shared value” as a result of adopting CSR initiatives. The concept of CSR became an “accepted and expected business practice” in the decade of 2000, with various governments, global entities and organisations issuing their own understanding and definitions of CSR.

Originality/value

This research paper provides an account of the evolution in the concept of CSR in the past century which has seen numerous changes in the manner businesses conduct their operations. The identified themes are reflective of the journey of CSR. This is an informative paper which is very topical in today’s climate of stakeholder scrutiny of business’ working.

Details

Social Responsibility Journal, vol. 12 no. 1
Type: Research Article
ISSN: 1747-1117

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Article
Publication date: 23 April 2020

Xin Liu and Youzhi Xue

This paper aims to examine the effect of outside chief executive officer (CEO) succession on firm innovation in Chinese companies and to explore the mechanism behind the…

Abstract

Purpose

This paper aims to examine the effect of outside chief executive officer (CEO) succession on firm innovation in Chinese companies and to explore the mechanism behind the process. By analyzing the motivation of CEO successors of different origins in the context of selection, this paper identifies the factors affecting outside CEO successors’ decision-making on post-succession firm innovation.

Design/methodology/approach

A Poisson regression model is used on a sample of 1,084 firm-year observations taken from Chinese listed companies that endured CEO succession during the period of 2009–2016. Fixed-effect Poisson regression modeling was performed after likelihood ratio and Hausman testing to assess the robustness of the findings.

Findings

The results show that outside CEO successions are significantly and negatively associated with post-succession firm innovation. Moreover, the authors found a negative effect of outside CEO succession on post-succession firm innovation when the predecessor has a long tenure or the successor is older.

Originality/value

.This study contributes to the literature on CEO succession, CEO–board relationships and firm innovation by shedding light on how agency, human capital and career-concerning theories in the CEO selection context apply to corporate governance and strategy. Moreover, by exploring the factors influencing CEO successors’ decision-making in terms of firm innovation in the Chinese social and cultural context, this paper identifies ways to promote firm innovation for Chinese companies from the concept of leadership succession.

Details

Chinese Management Studies, vol. 14 no. 4
Type: Research Article
ISSN: 1750-614X

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Article
Publication date: 29 April 2021

Rim Boussaada

This study aims to investigate how multiple large shareholders individually and interactively influence Middle East and North Africa (MENA) bank stability.

Abstract

Purpose

This study aims to investigate how multiple large shareholders individually and interactively influence Middle East and North Africa (MENA) bank stability.

Design/methodology/approach

The empirical framework is based on a generalized dynamic two-step system and utilizes the method of moments estimation to analyze a panel dataset of 532 bank-year observations over the 2004–2017 period.

Findings

The estimation results show that large shareholders are crucial in explaining the differences in bank stability among MENA banks. Specifically, the first- and second-largest shareholders exacerbate bank instability. However, we found that the third-largest shareholder enhances bank stability. Additionally, the coalition between the two largest shareholders increases the moral hazard problem in MENA banks and significantly decreases stability. Meanwhile, the interaction between the three largest shareholders is associated with a control contestability problem, which impels better bank stability. The results support the dispersion effect of multiple large shareholders in MENA countries.

Originality/value

The role of large shareholders in corporate governance is widely recognized. However, very little is known about the role and the real impact that multiple large shareholders may have on the banking sector. To the best of the authors' knowledge, this work is the first to analyze the relationship between multiple large shareholders and bank stability in the MENA region.

Details

Managerial Finance, vol. 47 no. 9
Type: Research Article
ISSN: 0307-4358

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Article
Publication date: 9 August 2011

Sabri Boubaker and Hind Sami

The purpose of this paper is to add to the understanding of the monitoring role of multiple large shareholders (MLS) by examining their impact on the informativeness of…

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1697

Abstract

Purpose

The purpose of this paper is to add to the understanding of the monitoring role of multiple large shareholders (MLS) by examining their impact on the informativeness of firms' earnings.

Design/methodology/approach

The paper uses regression models that relate earnings to stock returns for a sample of 402 French publicly traded firms covered during 2003‐2007.

Findings

The paper shows that earnings informativeness is significantly positively related to the owner's ultimate cash flow rights. Consistent with the alignment effect, stock ownership aligns management and shareholders interests which reduces managers' incentives to manipulate accounting information. It also finds that earnings informativeness is significantly negatively related to the excess control of the ultimate controlling shareholder. This result supports the entrenchment effect and suggests that controlling shareholders have greater incentives to obscure accounting figures when expropriation is likely. Finally, control contestability of the largest controlling shareholder mitigates information asymmetry problems thereby enhancing earnings informativeness.

Research limitations/implications

The findings stress the importance of MLS in enhancing internal monitoring and mitigating agency costs. Because France is characterized by a weak legal system, highly concentrated ownership structures and excess control, the results provide valuable insights to mitigate extreme agency problems.

Originality/value

The paper adds to the literature on corporate governance and the quality of accounting information by investigating strategic interactions between various blockholders and their impact on earnings informativeness. The study complements prior studies on the monitoring role of MLS by demonstrating that both their presence and control size translate into significantly greater earnings informativeness.

Details

Review of Accounting and Finance, vol. 10 no. 3
Type: Research Article
ISSN: 1475-7702

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Article
Publication date: 16 April 2020

Rim Boussaada and Abdelaziz Hakimi

The aim of this paper is to examine whether multiple large shareholders and their interactions affect bank profitability in the MENA region.

Abstract

Purpose

The aim of this paper is to examine whether multiple large shareholders and their interactions affect bank profitability in the MENA region.

Design/methodology/approach

To achieve this goal, we used a sample of conventional banks in the MENA region observed during the period 2004–2015. We performed the System Generalized Method of Moment as the empirical approach.

Findings

Empirical results indicate that under the dispersion hypothesis, multiple large shareholders (MLS) tend to reduce bank profitability for both return on assets (ROA) and return on equity (ROE). However, under the alignment of interests’ hypothesis, coalition between the first and the second largest shareholder increases bank profitability only for ROA. We also find that an additional large shareholder, beyond the two largest, reduces bank return equity.

Originality/value

To the best of our knowledge, to date, there is no study that investigates the effect of MLS and the bank profitability in the MENA region. Indeed, this study shows the importance of considering ownership composition among large shareholders in banking studies.

Details

International Journal of Managerial Finance, vol. 17 no. 1
Type: Research Article
ISSN: 1743-9132

Keywords

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