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Article
Publication date: 8 May 2023

Shallu Batra, Mohit Saini and Mahender Yadav

This study aims to provide an overview of the development of corporate governance and ownership structure literature and offers a synopsis of the top contributors, influential…

Abstract

Purpose

This study aims to provide an overview of the development of corporate governance and ownership structure literature and offers a synopsis of the top contributors, influential articles, journals and potential research prospects on this subject.

Design/methodology/approach

This study used bibliometric analysis to review the literature. In all, 1,368 articles published between 1992 and 2022 in Scopus-indexed journals were considered.

Findings

This review reveals the top leading authors, institutions, countries and sources in the ownership structure research. Using bibliographic coupling, this study fetches four significant clusters. The theme of the first cluster revolved around cash holding. The second and third groups revealed how distinct characteristics of ownership impact the performance of the firm and disclosure decisions, respectively. The last and fourth cluster deals with risk-taking activities in financial institutions. Furthermore, this study suggests a road map in each cluster for future research.

Originality/value

Ownership structure plays a significant role in corporate governance by affecting manager incentives and determining the extent of monitoring. Previous studies have contributed to this field while focusing on the board of directors. However, no study synthesises the literature on ownership structure within corporate governance, which is the core element of the corporate governance system. Hence, this study gives a comprehensive overview and determines the latest and prominent research in ownership structure within corporate governance through bibliometric analysis.

Article
Publication date: 31 December 2021

Tahar Tayachi, Ahmed Imran Hunjra, Kirsten Jones, Rashid Mehmood and Mamdouh Abdulaziz Saleh Al-Faryan

Ownership structure deals with internal corporate governance mechanism, which plays important role in minimizing conflict of interests between shareholders and management Ownership

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Abstract

Purpose

Ownership structure deals with internal corporate governance mechanism, which plays important role in minimizing conflict of interests between shareholders and management Ownership structure is an important mechanism that influences the value of firm, financing and dividend decisions. This paper aims to examine the impact of the ownership structures, i.e. managerial ownership, institutional ownership on financing and dividend policy.

Design/methodology/approach

The authors use panel data of manufacturing firms from both developed and developing countries, and the generalized method of moments (GMM) is applied to analyze the results. The authors collect the data from DataStream for the period of 2010 to 2019.

Findings

The authors find that managerial ownership and ownership concentration have significant and positive effects on debt financing, but they have significant and negative effects on dividend policy. Institutional ownership shows a positive impact on financing decisions and dividend policy for sample firms.

Originality/value

This study fills the gap by proving the policy implications for both firms and investors, as managers prefer debt financing, but at the same time try to ignore dividend payment. Therefore, investors may not invest in firms with a higher proportion of managerial ownership and may choose to invest more in institutional ownership, which lowers the agency cost.

Details

Journal of Financial Reporting and Accounting, vol. 21 no. 3
Type: Research Article
ISSN: 1985-2517

Keywords

Article
Publication date: 3 April 2017

Cynthia Afriani Utama, Sidharta Utama and Fitriany Amarullah

The purpose of this study is to investigate simultaneous relations between corporate governance (CG) practice and cash flow right, cash flow leverage (the divergence between…

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Abstract

Purpose

The purpose of this study is to investigate simultaneous relations between corporate governance (CG) practice and cash flow right, cash flow leverage (the divergence between control right and cash flow right of controlling shareholders). The two ownership measures reflect alignment and expropriation incentives of controlling shareholders. This study also examines the effect of multiple large shareholders (MLSs) on CG practice.

Design/methodology/approach

The study uses publicly listed companies (PLCs) excluding those from the Indonesian finance sector during 2011-2013 as the samples of the study. Two-stages least squares regression models were used to test the simultaneous relations between CG practice and ownership structure variables. The study develops a CG instrument to measure CG practice based on ASEAN CG Scorecard, that comprehensively covers OECD CG principles and that can be used for panel data.

Findings

CG practice has a positive influence on cash flow right and has a marginally negative impact on cash flow leverage, while cash flow right and cash flow leverage have a marginally negative impact on CG practice. Further, the existence of large MLS complements CG practice, but as the control right of the second largest shareholders becomes closer to the largest shareholder, the complement relation becomes less important. State- or foreign-controlled PLCs practice better CG than other PLCs.

Research limitations/implications

Studies on CG/ownership structure need to treat CG and ownership structure as endogenous variables in their research design. In addition, the level of rule of law in a country should be taken into account when examining the relation between CG and ownership structure. The interrelation among CG, ownership structure, capital structure and firm performance has been studied in the context of dispersed ownership structure and strong rule of law. Thus, future study needs to examine the interrelation among these four concepts in countries with high concentrated ownership and weak rule of law.

Practical implications

To minimize the risk of expropriation, investors in the capital market need to select shares of PLCs that practice CG suitable for the ownership structure of PLCs, have high ownership by the largest shareholder and have no divergence between control and ownership right, and or have MLSs. PLCs may need to choose the level of CG mechanism in the context of their ownership structure and consider the benefits and costs implementing them.

Social implications

The study supports the “one size does not fit all” perspective on CG and, thus, it supports the recently enacted financial service authority (FSA) rule requiring PLCs to follow the “comply or explain” rule on the CG code for PLCs. The FSA needs to enforce the compliance of PLCs with CG rules and encourage PLCs to implement CG in substance, not just in form. To strengthen the positive impact of good CG practice in attracting investments in capital market, the regulator needs to improve investor protection rules and ensure strong rule of law.

Originality/value

The study is the first to examine the simultaneous relation between CG practice and both cash flow right and cash flow leverage of the largest shareholder. It is also the first that investigates the impact of MLS on CG practice. It explores the complement and substitution relation between the two concepts in reducing agency costs. In term of research design, the study develops a CG instrument that is based on OECD CG principles, that can be used for panel data and that uses public information.

Details

Corporate Governance: The International Journal of Business in Society, vol. 17 no. 2
Type: Research Article
ISSN: 1472-0701

Keywords

Article
Publication date: 8 March 2013

Jonchi Shyu

This study seeks to examine how agency problems and internal capital markets in group‐affiliated firms are mutually influenced by the ownership structure, capital structure, and…

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Abstract

Purpose

This study seeks to examine how agency problems and internal capital markets in group‐affiliated firms are mutually influenced by the ownership structure, capital structure, and performance. It also aims to examine the endogeneity in group affiliation.

Design/methodology/approach

Using panel data, this study employs two‐stage least squares regression with the instrumental variable technique to examine the relationship among capital structure, ownership structure, and performance of group‐affiliated firms. Simultaneous equation models are constructed to identify the effects of interdependent decisions.

Findings

The empirical results indicate a U‐shaped relationship between insider ownership and performance. Moreover, the alignment of ownership and control rights determines the relationship between ownership structure and performance for group‐affiliated firms. The capital structure decisions of group‐affiliated firms are independent of firm performance and insider ownership, supporting the view that capital structure decisions of group‐affiliated firms are determined by the overall characteristics of the business group, rather than those of the individual firms.

Practical implications

Business groups can reduce the agency problems that occur in group affiliation by increasing the insider ownership (after a certain tunneling point), debt financing, and dividend payout.

Originality/value

Previous studies have paid little attention to the effects of the agency problem and the internal capital market on group affiliation. Whether endogeneity is a consequence of the common characteristics of group affiliation or a result of the simultaneity existing among ownership structure, capital structure, and performance is also unknown. This paper fills some of these gaps.

Article
Publication date: 2 September 2020

I. Wayan Widnyana, I. Gusti Bagus Wiksuana, Luh Gede Sri Artini and Ida Bagus Panji Sedana

This study aims to analyze and explain the effect of financial architecture (with three dimensions: ownership structure, capital structure and corporate governance) and intangible…

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Abstract

Purpose

This study aims to analyze and explain the effect of financial architecture (with three dimensions: ownership structure, capital structure and corporate governance) and intangible assets on performance financial and corporate value in the Indonesian capital market.

Design/methodology/approach

This research was conducted on nonfinancial sector companies that were registered in the Indonesian capital market, namely Indonesia Stock Exchange (IDX) in 2015. This study used quantitative data and used secondary data sources, meaning that data were obtained, collected and processed from other parties. In this study, the hypothesis testing of the effect of financial architecture (included the dimensions of ownership structure, capital structure and corporate governance) and intangible assets on financial performance and corporate value using path analysis was performed.

Findings

The results of this study have provided findings that follow the research model that has been built (1) This research has been able to provide a theoretical model of the influence of financial architecture (with dimensions of ownership structure, capital structure and corporate governance), intangible assets, board processes on financial performance and company value in the Indonesian capital market. (2) To develop a theoretical model about the effect of corporate governance on financial performance in accordance with the two-tier system adopted by Indonesia. (3) An empirical study of the concept of financial architecture put forward by Myers (1999).

Originality/value

This research update lies in the research variable, which determines one value of the financial architecture variable comprehensively, combines the financial architecture variable and intangible assets to then be tested for its effect on company value and the use of the financial process variable as a board process as an intervening variable.

Details

International Journal of Productivity and Performance Management, vol. 70 no. 7
Type: Research Article
ISSN: 1741-0401

Keywords

Article
Publication date: 17 October 2008

Jiatao Li and J. Richard Harrison

The purpose of this paper is to show that corporate governance structures differ significantly across countries. Using agency theory and institutional theory, it examines how

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Abstract

Purpose

The purpose of this paper is to show that corporate governance structures differ significantly across countries. Using agency theory and institutional theory, it examines how ownership structure and national culture influence the size and leadership structure of the corporate boards of multinational firms based in industrial countries.

Design/methodology/approach

The hypotheses are tested with data on 399 multinational manufacturing firms based in 15 industrial countries. The authors use ownership concentration, bank control, and state ownership to represent ownership structure. They view institutional structural norms as components of national culture and infer the nature of these norms for governance structure from Hofstede's national culture dimensions.

Findings

The findings show that national culture has a dominant influence on corporate governance structure, and its emphasis is recommended in future cross‐national organizational research.

Research limitations/implications

Although the models were successful in explaining MNC board structure, the authors addressed only the effects of ownership structure and national culture. It is expected that these models could be improved by including national political and legal differences and additional national economic variables.

Practical implications

The findings demonstrate that national cultures of the home countries of MNCs have powerful influences on their governance structures.

Originality/value

This paper links national culture with governance structure.

Details

Corporate Governance: The international journal of business in society, vol. 8 no. 5
Type: Research Article
ISSN: 1472-0701

Keywords

Article
Publication date: 4 November 2021

Syed Moudud-Ul-Huq, Tanmay Biswas, Md. Abdul Halim, Miroslav Mateev, Imran Yousaf and Mohammad Zoynul Abedin

This study aims to show the relationship between competition, financial stability and ownership structure of banks in the Middle East and North African (MENA) countries.

Abstract

Purpose

This study aims to show the relationship between competition, financial stability and ownership structure of banks in the Middle East and North African (MENA) countries.

Design/methodology/approach

This study uses the generalized method of moments (GMM) estimators to generate research results. This study uses an unbalanced panel dynamic data set. It covers the period 2011 to 2017 in MENA banks.

Findings

This study implies that there is a significant and positive relationship between market power and the financial stability of banks in MENA countries. It explains a competitive market focus on credit risk, which turns them risky. From the bank’s ownership view, Islamic banks are in a less risky position which means Islamic banks are more stable than other ownership structures. On the other hand, government specialized institute displays their poor financial stability and risky from other ownership structures. Unfortunately, there is no significant impact of ownership structure on competition unless Islamic banks prove that they (Islamic banks) perform better in market power.

Practical implications

The empirical findings of this study suggest that MENA banks should improve the process of managing and monitoring the non-performing loan (loan segment business). It reduces the level of credit risk, which leads to achieving more profit. It also recommends that loan quality should improve immediately in this region for declining financial disruption. Based on the ownership structure, policymakers and stakeholders should adjust their risk and financial stability. Notably, the stakeholders can focus on Islamic banks in this region as this type of ownership structure showing superiority over other ownership structures.

Originality/value

This study is based on the latest data set and produced outcomes by using a GMM estimator. It also uses multiple measures of competition and risk variables to get robust results. Moreover, to the best of the knowledge, this study is the pioneer to examine the competition, risk (financial stability) and ownership structure of banks in the MENA countries.

Details

International Journal of Islamic and Middle Eastern Finance and Management, vol. 15 no. 4
Type: Research Article
ISSN: 1753-8394

Keywords

Article
Publication date: 1 July 2014

Waleed Omri, Audrey Becuwe and Jean-Charles Mathe

The purpose of this paper is to expand understanding of the determinants of adoption innovation in SME context by empirically examining the effect of corporate governance structure

Abstract

Purpose

The purpose of this paper is to expand understanding of the determinants of adoption innovation in SME context by empirically examining the effect of corporate governance structure on manager's innovative behavior. This was done through exploring whether ownership structure affects managers’ innovative behavior and if so, whether the effect is mediated by board composition.

Design/methodology/approach

Using a sample of 197 managers within Tunisian SMEs, hypotheses were tested through structural equation modeling and especially using covariance structure analysis (or LISREL method) with Analysis of Moment Structures (AMOS) 18.0 software and maximum likelihood estimation method.

Findings

The paper found that ownership structure is significantly associated with manager's innovative behavior. Further analysis arising from introducing outsiders’ representation on the board as a mediating variable reveals that the relationship is fully mediated by this variable.

Practical implications

This study gives insights to policy makers who are interested in improving board efficacy in emerging economies such as Tunisia. Indeed, the study results should encourage nominating committees and seniors to reflect warily on an effective structuring of board composition by ensuring a certain priority for innovation activities in the firm.

Originality/value

This paper extends the understanding of how ownership structure shapes strategic decisions such as innovation in emerging markets. In addition, it fills the literature void by introducing the board composition as a mediating concept between ownership structure and innovative behavior, which was neglected by previous researchers.

Details

Journal of Accounting in Emerging Economies, vol. 4 no. 2
Type: Research Article
ISSN: 2042-1168

Keywords

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 between…

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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

Book part
Publication date: 2 September 2016

Bernard Paranque and Hugh Willmott

From a perspective of ‘critical performativity’, John Lewis is of special interest since it is celebrated as a successful organization and heralded as an alternative to more…

Abstract

Purpose

From a perspective of ‘critical performativity’, John Lewis is of special interest since it is celebrated as a successful organization and heralded as an alternative to more typical forms of capitalist enterprise.

Methodology/approach

Our analysis uses secondary empirical material (e.g. JLP documents in the public domain, histories of John Lewis and recent empirical research). Our assumption is that engagement and interrogation of existing empirical work can be at least as illuminating and challenging as undertaking new studies. In addition to generating fresh insights, stimulating reflection and fostering debate, our analysis is intended to contribute to an appreciation of how structures of ownership and governance are significant in enabling and constraining practices of organizing and managing.

Findings

The structures of ownership and governance at John Lewis, a major UK employee-owned retailer, have been commended by those who wish to recuperate capitalism and by those who seek to transform it.

Research limitations/implications

JLP can be read as a ‘subversive intervention’ insofar as it denies absentee investors access to, and control of, its assets. Currently, however, even the critical performative potential of the Partnership model is impeded by its paternalist structures. Exclusion of Partners’ participation in the market for corporate control is reflected in, and compounded by, a weak form of ‘democratic’ governance, where managers are accountable to Partners but not controlled by them.

Practical implications

Our contention is that JLP’s ownership and governance structures offer a practical demonstration, albeit flawed, of how an alternative form of organization is sufficiently ‘efficient’ and durable to be able to ‘compete’ against joint-stock companies.

Originality/value

By examining the cooperative elements of the John Lewis structures of ownership and governance, we illuminate a number of issues faced in realizing the principles ascribed to employee-owned cooperatives – notably, with regard to ‘democratic member control’, ‘member economic participation’ and ‘autonomy and independence’.

Details

Finance Reconsidered: New Perspectives for a Responsible and Sustainable Finance
Type: Book
ISBN: 978-1-78560-980-0

Keywords

1 – 10 of over 60000