Search results

1 – 10 of over 10000
To view the access options for this content please click here
Article
Publication date: 2 October 2019

Yang Liu, Sanjukta Brahma and Agyenim Boateng

The purpose of this paper is to examine the effects of bank ownership structure and ownership concentration on credit risk.

Abstract

Purpose

The purpose of this paper is to examine the effects of bank ownership structure and ownership concentration on credit risk.

Design/methodology/approach

Using panel data on a sample of 88 Chinese commercial banks, with 826 observations over a period of 2003–2018, this study has applied system generalised method of moments regression to examine the impact of bank ownership structure and ownership concentration on credit risk. This study has used two measures of credit risk, which are non-performing loan ratio (NPLR) and loan loss provision ratio (LLPR).

Findings

The results show that ownership type (both government and private ownership) exerts a positive and significant impact on credit risk. Measuring ownership concentration using Herfindahl–Hirchmann Index, the results indicate that concentration of ownership in the hands of government has a negative and significant effect on credit risk, whereas private ownership concentration positively impacts credit risk. Overall, the findings suggest that concentration of ownership in government hands reduces risk; however, private ownership concentration exacerbates credit risks. The results are invariant to both measures of credit risk, before and after the financial crisis.

Practical implications

The findings provide useful insight to guide policy decisions in Chinese banks’ lending policies and bank ownership.

Originality/value

Using two ex post measures of credit risk, NPLR and LLPR, and one ownership concentration measure, HHI, this study deepens our understanding on the effectiveness of Chinese banks’ corporate governance reforms on managing credit risks.

Details

International Journal of Managerial Finance, vol. 16 no. 2
Type: Research Article
ISSN: 1743-9132

Keywords

To view the access options for this content please click here
Article
Publication date: 2 March 2015

Mejbel Al-Saidi and Bader Al-Shammari

This paper aims to investigate the relationship between ownership structure (ownership concentration and ownership composition) and firm performance in Kuwaiti…

Abstract

Purpose

This paper aims to investigate the relationship between ownership structure (ownership concentration and ownership composition) and firm performance in Kuwaiti non-financial firms. To this end, it examines the relationship between firm performance and ownership concentration to determine whether the impact of this relationship is conditional on the nature of the large shareholders.

Design/methodology/approach

First, the relationship between ownership concentration and firm performance was tested using ordinary least squares regressions on 618 observations (103 listed firms) from 2005 to 2010; next, the ownership compositions were classified as institutional, government and individuals (families) and their impact on firm performance examined.

Findings

The overall concentration ownership by large shareholders showed no impact on firm performance. However, when the type of shareholders was introduced, only the government and individuals (families) ownership categories influenced firm performance. Therefore, certain types of shareholders are better at monitoring, and not all concentration by large shareholders is beneficial to Kuwaiti firms.

Research limitations/implications

This study examined only one important aspect of the corporate governance mechanisms, namely, ownership concentration. Thus, further study may include other mechanisms such as board variables, role of debt and shareholders rights in examining the firm performance. This study is limited to the Kuwaiti environment, and thus, next step can be very useful in case of comparing ownership concentration in the Gulf Cooperation Council (Kuwait, Bahrain, Qatar, Oman, United Arab Emirates and Saudi Arabia) or across different Arab countries.

Practical implications

The results of this study have important implications for the regulators in Kuwait in their efforts to increase the efficiency of the rapidly developing capital markets and in protecting investors and keeping confidence in the economy. They may mandate a corporate governance code to protect minority shareholders. Investors may use the findings to understand Kuwaiti companies. Such findings may assist them to diversify their investment portfolios.

Originality/value

This paper extends literature review by investigating the role of large shareholders in the context of a developing country that is characterized by high level of ownership concentration and weak legal protection for investors as well as the absence of code that organized the corporate governance practices.

Details

International Journal of Commerce and Management, vol. 25 no. 1
Type: Research Article
ISSN: 1056-9219

Keywords

Content available
Article
Publication date: 11 March 2019

Neal Arthur, Huifa Chen and Qingliang Tang

The purpose of this study is to investigate whether a country’s ownership concentration affects the financial reporting quality in a cross-country setting.

Downloads
1480

Abstract

Purpose

The purpose of this study is to investigate whether a country’s ownership concentration affects the financial reporting quality in a cross-country setting.

Design/methodology/approach

This paper uses six accounting and auditing indicators to construct a comprehensive index to measure the country-level financial reporting quality.

Findings

The authors find a non-linear nature of the relationship between the national financial reporting quality and national ownership structure. Specifically, the relation is negative in a relatively spread ownership structure with no controlling shareholders, implying the entrenchment effects dominate. When ownership is highly concentrated, particularly with controlling shareholders whose interest is aligned with that of the firm, the relation turns to positive and alignment effects dominate.

Originality/value

The study is an important extension of prior research examining the financial reporting quality effect of ownership concentration. It enhances the understanding of the role of ownership concentration in determining a country’s financial reporting quality and has potential important policy implications for countries’ reformers and regulators who are concerned with the transparency of financial reporting and the quality of corporate governance.

Details

Journal of Financial Reporting and Accounting, vol. 17 no. 1
Type: Research Article
ISSN: 1985-2517

Keywords

To view the access options for this content please click here
Article
Publication date: 28 June 2013

Abdelmohsen M. Desoky and Gehan A. Mousa

The paper aims to empirically investigate the influence of ownership concentration and identity on firm performance using a sample of 99 of the most active publicly listed…

Downloads
1149

Abstract

Purpose

The paper aims to empirically investigate the influence of ownership concentration and identity on firm performance using a sample of 99 of the most active publicly listed companies on the Egyptian Exchange (EGX).

Design/methodology/approach

Firm performance of the sampled companies was measured by two different accounting measures, namely return on assets “ROA”, return on equity “ROE”, then the ordinary least square (OLS) regression analysis and the two‐stage least square (2SLS) regression analysis were employed.

Findings

OLS and 2SLS regression analyses show that ownership concentration has significant impact on firm performance when measuring by ROE. Regarding ownership identity, OLS regression analyses by both ROA and ROE show that the overall ownership identity has a significant impact on firm performance, as well as particular types of investors such as funds. Further, ownership identity and firm performance (when measured by ROA) had a significant endogeneity problem supporting the use of 2SLS as an effective analysis tool for such investigation.

Research limitations/implications

Findings of such research may not be generalizable to different countries at different stages of development, or with different business environments and cultures. Also, the sampled companies, 99 Egyptian companies, may be a small number which needs to be extended in a future research.

Originality/value

This paper provides an empirical investigation on the association between ownership structure and firm performance in the Egyptian context. It examines the role played by two aspects of ownership structure: the fraction of shares owned by the three largest shareholding interests (ownership concentration) and the fraction of shares owned by different type of shareholders (ownership identity) including seven separate groups of owners.

Details

Journal of Accounting in Emerging Economies, vol. 3 no. 2
Type: Research Article
ISSN: 2042-1168

Keywords

To view the access options for this content please click here
Article
Publication date: 20 April 2015

Omar Farooq

This paper aims to document how does ownership concentration, a proxy for agency conflicts, affect capital structure of firms in emerging markets. Agency relationship…

Downloads
1636

Abstract

Purpose

This paper aims to document how does ownership concentration, a proxy for agency conflicts, affect capital structure of firms in emerging markets. Agency relationship between insiders and outsiders has the potential to influence corporate decision-making which, in turn, impacts firm characteristics such as leverage.

Design/methodology/approach

This paper uses pooled regression analysis to document the effect of ownership concentration on capital structure in the Middle East and North Africa (MENA) region (Morocco, Egypt, Saudi Arabia, United Arab Emirates, Jordan, Kuwait and Bahrain), during the period between 2005 and 2009.

Findings

The authors show that ownership concentration negatively affects capital structure. The results also show that for a given level of ownership concentration, the proportion of debt in capital structure goes up as information asymmetries decrease. Finally, the results show that for a given ownership concentration, it is the growth firms with low information asymmetries that have a higher proportion of debt in capital structure.

Research limitations/implications

The authors argue that information asymmetries associated with ownership concentration minimize the ability of firms to raise debt, thereby resulting in a negative relationship between ownership concentration and capital structure. Furthermore, reluctance on the part of controlling shareholders to accumulate excess leverage to minimize non-diversifiable risk also negatively influences capital structure.

Originality/value

Most of the prior studies on the relationship between ownership concentration and capital structure have been conducted in relatively more developed markets. An important market that has failed to attract attention regarding this issue is the MENA. This paper is an attempt to fill this gap by documenting the relationship between the two in the MENA region.

Details

International Journal of Islamic and Middle Eastern Finance and Management, vol. 8 no. 1
Type: Research Article
ISSN: 1753-8394

Keywords

To view the access options for this content please click here
Article
Publication date: 2 March 2021

Changjun Yi, Yun Zhan, Jipeng Zhang and Xiaoyang Zhao

This study investigates the effect of ownership structure – ownership concentration and firm ownership – on outward foreign direct investment (OFDI) by emerging market…

Abstract

Purpose

This study investigates the effect of ownership structure – ownership concentration and firm ownership – on outward foreign direct investment (OFDI) by emerging market multinational enterprises (EMNEs), and further explores the moderating effects of international experience and migrant networks on this relationship.

Design/methodology/approach

Data of Chinese MNEs listed on Shenzhen and Shanghai stock exchanges between 2005 and 2016 are used. The empirical analysis is based on the negative binomial regression model.

Findings

The empirical results reveal a significant inverted-U relationship between ownership concentration and OFDI by EMNEs. State ownership is found to have a positive effect on OFDI by EMNEs. Both international experience and migrant networks strengthen the inverted-U relationship between ownership concentration and OFDI as well as the positive effect of state ownership on OFDI by EMNEs.

Practical implications

EMNEs need to maintain a moderate ownership concentration when conducting OFDI, and they are supposed to make full use of their own international experience and focus on migrant networks of the host country. Policy-makers in emerging economies need to better create a fair business environment for enterprises.

Originality/value

Combining agency theory and the resource-based view, this study integrates ownership structure, firm-level heterogeneous resources – international experience and country-level heterogeneous resources – migration networks into a framework to study OFDI by EMNEs, which expands the scope of research in international business.

Details

International Journal of Emerging Markets, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1746-8809

Keywords

To view the access options for this content please click here
Article
Publication date: 26 July 2019

Mohammad Omar Farooq, Fouad Meer and Basit Iqbal

An important Islamic imperative is prevention of concentration of wealth among a few so that wealth circulates widely to enhance shared prosperity. In contemporary…

Abstract

Purpose

An important Islamic imperative is prevention of concentration of wealth among a few so that wealth circulates widely to enhance shared prosperity. In contemporary economic discourse, inequality and concentration of wealth have emerged as among key causes of instability and crisis. Unfortunately, although Islamic finance has emerged as a Shari’ah-compliant industry, it does not seem to be connected with the Islamic concern about inequality and concentration of wealth. This paper aims to explore the issues of inequality and concentration of wealth in the context of Islamic finance.

Design/methodology/approach

This paper addresses a number of queries: Are Islamic banks, as the dominant component of the industry, helping to improve inequality and concentration of wealth and thus offer a better framework to deal with instability and crisis? Is the ownership structure of Islamic banks conducive to meeting the Islamic imperative regarding inequality and concentration of wealth? Using secondary data, this research illuminates the pertinent issues in light of the experience of Bahrain as one of the hubs of Islamic banking and finance.

Findings

The paper finds that the ownership pattern of Islamic banks in Bahrain lends credence to the entrenched, not-so-unexpected concentration of wealth.

Research limitations/implications

This study is based on data of one country. Further studies on other countries will help illuminate the relevant patterns and issues.

Practical implications

Inequality and concentration of wealth are among central economic issues in contemporary economic discourse. Because of the significant impact of such inequality and concentration, societies need to be more aware of these impacts and devise ways to address it.

Social implications

Inequality and concentration of wealth have fundamental social implications, as the issues of poverty, deprivation, exploitation, etc. are inseparable from concentration of wealth (accompanied by concentration of power), and widening wealth gap can cause or induce major socio-political upheaval.

Originality/value

Although inequality and concentration of wealth are robust fields of inquiry, this might be the first work addressing the issue of concentration of wealth in the context of Islamic finance in general and Islamic banking in particular.

Details

International Journal of Ethics and Systems, vol. 35 no. 3
Type: Research Article
ISSN: 2514-9369

Keywords

To view the access options for this content please click here
Article
Publication date: 3 August 2015

Carmen Galve-Górriz and Alejandro Hernández-Trasobares

– This paper aims to clarify the relationship between institutional framework, concentration of ownership in family firms and results.

Abstract

Purpose

This paper aims to clarify the relationship between institutional framework, concentration of ownership in family firms and results.

Design/methodology/approach

Data comprises two samples of family firms from eight Latin American countries and Spain in the year 2010. The first sample contains the largest 20 corporations from each country. The second comprises the 20 largest listed family corporations in each country. To test the hypothesis, the study uses ordinary least squares.

Findings

First, firms located in countries with a higher than average quality of the institutional and regulatory frameworks are less concentrated in ownership than firms located in countries with lower than average quality and development of institutional and regulatory framework. Second, the influence of the concentration of the ownership in the performance is more important in countries with higher developed institutional and regulatory frameworks. Finally, first-generation large family firms obtain higher results than large family firms in second generation or beyond.

Research limitations/implications

The study is limited to one year and there are few family firms in Latin American countries. The study only considers some features of ownership, and there is no information about board of directors ' composition.

Practical implications

Institutional framework determines concentration of ownership in family firms and the influence of concentration of ownership in performance.

Originality/value

The study provides new evidence in areas of corporate governance and family firms, analysing a sample of Latin American and Spanish firms, representatives of the civil legal system and a weaker institutional framework. The study uses the corruption perception index like a control variable.

Details

Corporate Governance, vol. 15 no. 4
Type: Research Article
ISSN: 1472-0701

Keywords

To view the access options for this content please click here
Article
Publication date: 13 November 2009

Haiyan Jiang and Ahsan Habib

The purpose of this paper is to investigate the impact of different categories of ownership concentration on corporate voluntary disclosure practices in New Zealand.

Downloads
2486

Abstract

Purpose

The purpose of this paper is to investigate the impact of different categories of ownership concentration on corporate voluntary disclosure practices in New Zealand.

Design/methodology/approach

The study applies panel data regression analysis to a sample of New Zealand listed companies from 2001 to 2005. Two‐stage least squares analysis (2SLS) is conducted. Ownership concentration is categorised into four mutually exclusive ownership structures.

Findings

The paper finds that firm‐year observations characterised by financial institution‐controlled ownership structure tends to make significantly fewer (more) disclosures at high (low) concentration levels supporting expropriation. In contrast, firm‐year observations in the high (low) concentration group with government‐ and management‐controlled ownership structures exhibit considerably higher (lower) voluntary disclosure scores, suggesting a positive monitoring effect at high ownership concentration level.

Research limitations/implications

The results provide evidence for the proposition that the efficiency of large block holders' monitoring varies with the level of ownership concentration.

Practical implications

To promote transparency in capital markets, regulators can encourage or discourage certain types of large shareholding, while monitoring the level of ownership concentration by means of regulation. Investors, especially less sophisticated retail investors, will benefit from the findings that different ownership groups affect disclosure policies differently.

Originality/value

The findings strengthen the importance of differentiating ownership structures into various classes to infer the real impact of differential controlling properties on managerial disclosure decisions. Furthermore, the results reveal that the relationship between ownership concentration and voluntary disclosure practices has a non‐linear pattern.

Details

Accounting Research Journal, vol. 22 no. 3
Type: Research Article
ISSN: 1030-9616

Keywords

To view the access options for this content please click here
Article
Publication date: 8 March 2013

Paul Brockman and Brett C. Olsen

Firms issuing equity securities for capital must recognize that this issuance may alter the ownership concentration of the firm. Through this change in ownership

Downloads
2246

Abstract

Purpose

Firms issuing equity securities for capital must recognize that this issuance may alter the ownership concentration of the firm. Through this change in ownership structure, the market liquidity of the firm's stock may also change, which has implications for the cost of equity capital and firm value. This paper aims to examine a specific security, the common stock purchase warrant, within this context. It also aims to posit that the decision to issue warrants has important implications for the firm's subsequent ownership structure and market liquidity.

Design/methodology/approach

The paper's unique dataset of warrant‐issuing firms tracks the warrants from their issue through to their exercise. Based on the study of SEOs by Kothare, the ownership concentration and market liquidity of the underlying stock prior to and following warrant exercises are measured. The paper examines the causal relations between warrant exercises and ownership changes, and between ownership changes and market liquidity.

Findings

The paper shows that firms experience a statistically and economically significant decrease in ownership concentration following warrant exercises. Examining the liquidity effects of this change in ownership, it shows that market liquidity increases significantly after the exercise of warrants, consistent with the literature. The decrease in concentration following warrant exercises is experienced exclusively by firm insiders. The paper also finds that outsiders increase their holdings in firms with a high concentration of inside holdings and in firms with a low concentration of outside holdings prior to warrant exercises; that is, they use warrant offerings to increase their influence in the firm.

Originality/value

This study is the first to the authors' knowledge that investigates warrants through their entire life span, and the first to examine the effects of warrant exercises on the performance and market liquidity of the firm. The results contribute to securities issuance, ownership, and liquidity literatures.

Details

Managerial Finance, vol. 39 no. 4
Type: Research Article
ISSN: 0307-4358

Keywords

1 – 10 of over 10000