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Article

Zhonghui Hugo Wang

The purpose of this paper is to complement existing research of the relationship between concentrated ownership and firm performance by theoretically exploring the impact…

Abstract

Purpose

The purpose of this paper is to complement existing research of the relationship between concentrated ownership and firm performance by theoretically exploring the impact of outside blockholders on the firm, primarily from the perspective of voting power.

Design/methodology/approach

This paper proposes theoretical propositions based on analyses and logical extension of results of the existing theoretical and empirical studies.

Findings

This paper proposes three theoretical predictions: First, voting power provides outside blockholders a necessary condition to pursue shared and private benefits of control, and it is positively correlated with blockholders’ capability of influencing firm value. Second, everything else being equal, an outside blockholder is more (less) likely to pursue private benefits than shared benefits when the equity market is efficient and when the blockholder’s voting power is less (more) than 50 per cent. Third, controlling outside blockholders can capitalize on their voting power to appoint managerial delegates and board representatives to the invested firms for the purpose of pursuing private benefits of control.

Originality/value

This paper tries to make two contributions to the corporate governance literature. First, this research relies on a new perspective to explore the relationship between ownership structure and firm value. Second, this paper presents the first theoretical argument which states that controlling outside blockholders rely on their managerial delegates and board representatives to pursue their private benefits of control.

Details

Corporate Governance, vol. 16 no. 2
Type: Research Article
ISSN: 1472-0701

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Article

He Weifeng, Zhang Zhaoguo and Zhu Shasha

This study aims to investigate the relationship between the ownership structure of firms and the private benefits of control through an analysis of Chinese listed firms.

Abstract

Purpose

This study aims to investigate the relationship between the ownership structure of firms and the private benefits of control through an analysis of Chinese listed firms.

Design/methodology/approach

Using a sample of Chinese firms, cases were examined where there had been a transaction involving non‐tradable stock. The cases where there had been stock transactions which both did and did not involve the transfer of control within a single year were selected. The difference between these two types of transaction was used to estimate the private benefits of control in Chinese listed firms. Regression analysis was used to explore the relationship between ownership structure and private benefits of control in Chinese listed firms.

Findings

The results show that the average private benefit of control is 18.52 percent in China. The regression results show a significant, positive relationship between the controlling shareholders, the combined shareholdings of the second to fifth largest shareholder and private benefits of control. However, there is a negative but insignificant relationship between the tradable share value and private benefits of control. With regard to the relationship between managerial shareholding and private benefits of control, the regression results show a positive but insignificant relationship.

Research limitations/implications

Further insights into the private benefits of control can be obtained by inspecting the change around major corporate events involving significant ownership changes. In this study, the focus was on non‐tradable stock. Investigating all stock would be a fruitful area for future research.

Practical implications

In China, firms should optimize the ownership structure and curb expropriation by controlling shareholders. This would help to promote a sound development of Chinese listed firms and the capital market.

Originality/value

The research provides useful information on the impact of ownership structure on private benefits of control in a sample of listed firms in China.

Details

Corporate Governance: The international journal of business in society, vol. 8 no. 3
Type: Research Article
ISSN: 1472-0701

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Article

Shijing Liu, Hongyu Jin, Chunlu Liu, Benzheng Xie and Anthony Mills

Targeting public–private partnership (PPP) rental retirement villages, the purpose of this paper is to bring forward the solution of insufficient research in a…

Abstract

Purpose

Targeting public–private partnership (PPP) rental retirement villages, the purpose of this paper is to bring forward the solution of insufficient research in a non-competitive guarantee (a restrictive agreement) towards the compensation and guarantee costs in consideration of benefit redistribution if the governments are unable to keep the promise on guarantee provision.

Design/methodology/approach

Real option principles are applied to assess the public–private investment proportions and the expected return rates of the private sector in a non-competitive guarantee and analyse their effects on the public–private benefit and risk allocations as well as the success of the project. Instead of granting direct capital support, this research accomplishes the compensation of non-competition guarantee by adjusting the project benefit distribution ratios between the government and the private sector to achieve the option value of the guarantee. An empirical example with alternative scales, which is developed from an existing rental village in Geelong, is used to numerically verify the research process.

Findings

The results illustrate that the option value of the non-competition guarantee plays an important role in supporting the implementation of the PPP rental retirement village projects. The option value of the non-competition guarantee has a close relationship with the guarantee level and the government guarantee cost, which is positively correlated with the guarantee level and negatively correlated with the government guarantee cost. To reduce the government guarantee cost, the government should carefully determine the public–private investment proportion, appropriately control the return rate of the private sector and approve the construction of the new project after the investment recovery of the private sector.

Research limitations/implications

This research mainly focusses on the economic loss of the government due to the guarantee responsibility. Further research could be conducted to determine the guarantee level more precisely and take the social cost of the government guarantees into consideration.

Originality/value

This research is the first attempt to investigate the government compensation and costs of non-competition guarantee for PPP rental retirement village projects and will enhance the understanding of the nature of PPP applications. The evaluation process and the implementation of the compensation through the adjustment of benefit distribution provides a comprehensive method to analyse the non-competition guarantee of PPP projects and help the parties negotiate in good faith to agree on a method of redress.

Details

Engineering, Construction and Architectural Management, vol. 27 no. 1
Type: Research Article
ISSN: 0969-9988

Keywords

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Article

Hong Zhang, Lu Yu and Wenyu Zhang

This study is aimed to explore the dynamic performance incentive model for a flexible PPP contract to handle uncertainties based on supervision during the long-time…

Abstract

Purpose

This study is aimed to explore the dynamic performance incentive model for a flexible PPP contract to handle uncertainties based on supervision during the long-time concession period, so as to ensure operation performance and benefits of the public sector while protecting the economic benefit of the private sector, thus avoiding unnecessary renegotiation.

Design/methodology/approach

The microeconomic and principal–agent theories and relevant studies on the basic incentive model and flexible contract are fully utilized. The procedure for developing the dynamic incentive model and the assumptions about the quantitative relationships among fundamental variables or factors are first proposed. The static incentive model without incentive parameter adjustment and then the dynamic incentive model allowing incentive parameter adjustment are successively developed. Finally, the propositions regarding the valid adjustment ranges of the incentive parameter with respect to the economic, social and hybrid benefits of the public sector and the economic benefit of the private sector are suggested.

Findings

The dynamic incentive model enables to achieve a flexible contract to handle uncertainties on the PPP project to ensure the benefits of the public sector while protecting the benefit of the private sector. The economic, social and hybrid benefits of the public sector and the economic benefit of the private sectors can be respectively realized through adjusting the reward–punishment coefficient under different adjustment ranges and different importance. The incentive model is able to ensure the benefits of the public sector while protecting the benefit of the private sector by controlling the private sector's effort level unknown to the public sector.

Originality/value

The dynamic incentive model helps implement a flexible PPP contract to handle uncertainties during the operation period, thus controlling the effort level of the private sector and ensuring the benefits of the public sector while protecting the economic benefit of the sector. It enables to clarify the quantitative relationships between the operation performance, the benefits of the stakeholders, the effort level of the private sector and the reward–punishment coefficient. This study contributes to the domain knowledge of the incomplete contract theory for designing a flexible PPP contract with dynamic incentive and supervision mechanism by applying the microeconomic and principal–agent theories.

Details

Engineering, Construction and Architectural Management, vol. 27 no. 9
Type: Research Article
ISSN: 0969-9988

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Article

Mei-Shiu Chiu

The purpose of this paper is to investigate whether Taiwan’s “Stars Policy” for university admission can fulfill its major aim to promote educational equity. Implemented…

Abstract

Purpose

The purpose of this paper is to investigate whether Taiwan’s “Stars Policy” for university admission can fulfill its major aim to promote educational equity. Implemented by the government, the policy relies on student within-school ranks to admit high achievers to top universities or departments, mainly in medicine.

Design/methodology/approach

Open data were collected from the government, universities, high schools, and news reports. High schools were identified as having benefited from the Stars Policy if more students were accepted into medical departments in the first year of the policy than one year before its implementation. χ2 tests and logistic regression were used to examine how the benefit status interacted with school types and regions.

Findings

The results indicated that the Stars Policy benefited 25 high schools, namely, 9 community public schools (not top achieving in a region) and 16 struggling private schools (especially vocational). Contrary to expectations, private schools were three times as likely and private school students seven times as likely to have benefited from the Stars Policy. Schools located in disadvantaged regions did not benefit.

Originality/value

The Stars Policy is unique given its centralized and school-based system. The design, however, increases educational equity in a manner that fails to benefit disadvantaged students seeking admission to the top-achieving medical departments in Taiwan.

Details

Journal of Applied Research in Higher Education, vol. 10 no. 2
Type: Research Article
ISSN: 2050-7003

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Article

John Z. Ni, Steve A. Melnyk, William J. Ritchie and Barbara F. Flynn

The purpose of this paper is to focus on adoption of certified management standards, specifically public standards. Such standards play an increasingly important role in…

Abstract

Purpose

The purpose of this paper is to focus on adoption of certified management standards, specifically public standards. Such standards play an increasingly important role in today’s business environment. However, to generate adoption benefits, they must be first widely accepted – a situation where they have become viewed as the de facto norms. For this state to occur early adopters play a critical role. Past research has argued that early adopters, in exchange for assuming more risk, are rewarded with higher economic returns. Yet, these findings are based on private, not public standards. With public standards, early adopters do not receive such benefits. There is evidence that public standards are becoming more important. This situation leads to a simple but important question addressed in this study – if early adopters assume the risks of embracing a new public standard without economic benefits, then what is their motivation? To resolve this question, this study draws on agency theory and prospect theory. The authors argue that early adopters embrace such standards because of their desire to minimize risk resulting from failure to support the goal at the heart of the public standards.

Design/methodology/approach

Data were obtained from the Customs-Trade Partnership Against Terrorism (C-TPAT) Partners Cost Benefit Survey and analyzed through structural equation modeling.

Findings

Early adopters of public standards are not driven by economic benefits but rather by the need to minimize their exposure to the risks associated with failing to satisfy the goals associated with a public standard. In other words, they were motivated by the need to minimize costs. In the case of C-TPAT, these costs are those of failing to provide or improve network security.

Research limitations/implications

This study has shed new light on the standards adoption process by clarifying the specific motivations that drive early adoption of a public standard. In addition to identifying the loss aversion motives of early adopters and economic benefit motives of later adopters, the authors have also elaborated on the notion that standards have differing levels of precedence, particularly when comparing private with public standards.

Practical implications

In a world characterized by increasing demands for outcomes such as improved security and where governmental funding is falling, due to growing deficits and governments that are becoming more conservative, the authors expect the use of public standards to increase.

Originality/value

Different from prior research on private standard, the paper focuses on the organizations involved in the adoption and diffusion of a public standard, with special attention being devoted to the early adopters. The paper provides a theoretical explanation for the actions of early adopters of a public standard through the theoretical lens of prospect theory.

Details

International Journal of Operations & Production Management, vol. 36 no. 10
Type: Research Article
ISSN: 0144-3577

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Article

Jared J. Llorens

Compensation systems serve a critical role in strategic human resources management, and over the past twenty-five years, there have been an increasing number of public…

Abstract

Compensation systems serve a critical role in strategic human resources management, and over the past twenty-five years, there have been an increasing number of public sector reform efforts aimed at better aligning compensation practices with institutional workforce needs. While many past reforms have been performance driven, the nationʼs most recent economic downturn has served as potent catalyst for a renewed focus on public sector compensation, particularly reforms to public sector retirement benefits. However, given the traditional importance of public sector retirement benefits within broader bureaucratic structures, these new reforms hold the potential to substantially alter human capital capacity in the public sector. Using wage and retirement benefit data from the U.S. Census Bureauʼs Current Population Survey and National Compensation Survey, this paper finds that state and local governments face significant threats to their long-term human capital capacity in light of potential benefit reforms that place a disproportionate emphasis upon competitive wage rates.

Details

International Journal of Organization Theory & Behavior, vol. 18 no. 1
Type: Research Article
ISSN: 1093-4537

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Book part

M.V. Shyam Kumar

In this research, we address the following questions: (1) Do joint ventures (JVs) create value for both parent firms in the dyad? (2) How is the total value created in the…

Abstract

In this research, we address the following questions: (1) Do joint ventures (JVs) create value for both parent firms in the dyad? (2) How is the total value created in the venture influenced by resources and capabilities of the two parent firms? In addressing these questions, our objective is to provide added insight into the performance of JVs by shifting the level of analysis to the dyad from the individual parent firm. Our results indicate that a significant proportion of JVs created value for both parents. However, there was also considerable evidence of value destruction with a large proportion of JVs resulting in positive returns to one parent and negative returns to the other. In terms of the second question, we find that the total value created in a JV increases as the value of resources in the dyad increases and decreases with the differential in the value of resources between parents. We argue that the latter effect occurs because when there is a wide differential in capabilities, incentives are shifted away from joint value creation and cooperative behavior toward non-cooperative behavior and appropriating private benefits. Our findings broadly highlight the important role of private benefits in JVs and provide evidence that these benefits significantly influence the performance and dynamics of inter-firm collaboration in various ways.

Details

Advances in Mergers and Acquisitions
Type: Book
ISBN: 978-1-84855-100-8

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Article

Marco K.W. Yu

The aim of this paper is to evaluate the impact of social discount rates on the economic significance of CO2 mitigation in the benefit‐cost analysis of recent amendments…

Abstract

Purpose

The aim of this paper is to evaluate the impact of social discount rates on the economic significance of CO2 mitigation in the benefit‐cost analysis of recent amendments of Building Regulations Part L.

Design/methodology/approach

The benefit of mitigating CO2 emission by raising the standard of building in amended building regulations is estimated by an integrated‐assessment economic model called DICE at different social discount rates proposed by economists and government.

Findings

The benefit of CO2 mitigation is highly sensitive to the choice of social discount rate that the value of social discount rate is a crucial factor to decide the economic viability of recent and future amendments of Building Regulations Part L. The more positive the social discount rate used in the benefit‐cost analysis, the less sustainability appears to be because higher discount rate tips the balance in favour of current benefits against future costs.

Research limitations/implications

This paper focuses on the impact of social discount rates on the shadow price of CO2 emission. Further researches are needed to estimate the private benefits and costs to construct and operate buildings complying with amended Building Regulations Part L so as to produce a solid benefit‐cost analysis on the amendment of the building regulations.

Practical implications

If sustainable development, similar to other traditional investment, is subject to feasibility judgement in a common metric, more attentions are needed to be given by sustainability literature on the issue of discounting.

Originality/value

This paper for the first time evaluates the environmental benefits of amending the Building Regulations and the sensitivity of the benefits to the choice of social discount rates.

Details

Property Management, vol. 24 no. 2
Type: Research Article
ISSN: 0263-7472

Keywords

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Article

Xiaoling Wu, Yichen Peng, Xiaofeng Liu and Jing Zhou

The purpose of this paper is to analyze the effects of private investor's fair preference on the governmental compensation mechanism based on the uncertainty of income for…

Abstract

Purpose

The purpose of this paper is to analyze the effects of private investor's fair preference on the governmental compensation mechanism based on the uncertainty of income for the public-private-partnership (PPP) project.

Design/methodology/approach

Based on the governmental dilemma for the compensation of PPP project, a generalized compensation contract is designed by the combination of compensation before the event and compensation after the event. Then the private investor's claimed concession profit is taken as its fair reference point according to the idea of the BO model, and its fair utility function is established by improving the FS model. Thus the master-slave counter measure game is applied to conduct the behavior modeling for the governmental compensation contract design.

Findings

By analyzing the model given in this paper, some conclusions are obtained. First, the governmental optimal compensation contract is fair incentive for the private investor. Second, the private fair preference is not intuitively positive or negative related to the social efficiency of compensation. Only under some given conditions, the correlation will show the consistent effect. Third, the private fair behavior’s impact on the efficiency of compensation will become lower and lower as the social cost of compensation reduces. Fourth, the governmental effective compensation scheme should be carried out based on the different comparison scene of the private claimed portfolio profit and the expected revenue for the project.

Originality/value

This study analyzes the effects of private investor's fair preference on the validity of governmental generalized compensation contract of the PPP project for the first time; and the governmental generalized compensation contract designed in this study is a pioneering and exploratory attempt.

Details

China Finance Review International, vol. 8 no. 1
Type: Research Article
ISSN: 2044-1398

Keywords

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