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The purpose of this paper is to empirically test how ultimate controlling shareholders' ownership‐control rights divergence and government intervention affect choice of capital structure (CS), and how the relationship between controlling shareholders' ownership‐control rights divergence and choice of CS is affected by government intervention.

Integrating the institutional background of China, the paper adopts balanced panel data containing related continuously obtainable information of 1,076 non‐financial companies listed in Shanghai and Shenzhen from 2004 to 2008 (a total of 5,380 observed values), and applies a series of generalised least squares to empirically test how ultimate controlling shareholders' ownership‐control rights divergence and government intervention affect choice of CS, and how the relationship between controlling shareholders' ownership‐control rights divergence and choice of CS is affected by government intervention.

The empirical evidence provided by this paper indicates that: controlling shareholders' ownership‐control rights divergence is negatively correlated with leverage; government intervention is positively correlated with leverage; and government intervention will weaken the negative relationship between controlling shareholders' ownership‐control rights divergence and leverage, and make debt capital suppliers (especially financial institutions like banks, etc.) provide loans, especially long‐term ones, to companies with high ownership‐control rights divergence.

So far, it is still little‐known how ownership‐control rights divergence affects choice of CS and how government intervention affects the relationship between ownership and control rights divergence and choices of CS. This paper is the first to test how ultimate controlling shareholders' ownership‐control rights divergence and government intervention affect choice of CS, and how the relationship between controlling shareholders' ownership‐control rights divergence and choice of CS is affected by government intervention based on the institutional background of China.

The goal of this paper is to investigate the relationship between government control and firm value in China.

Government might extract social or political benefits from a state-controlled firm, thus decreases firm value. However, government’s monitoring on firm management reduces managers’ agency problem, which increases firm value. We first build a game-theoretic model to prove the existence of optimal government control given these two roles of government, and we then employ the OLS regression method to test the theory predictions using the length of intermediate ownership chains connecting the listed state-owned enterprises to their ultimate controllers as the measure of government control.

We find that firm values first increase then decrease as government control weakens. Moreover, we find that government usually retains a stronger control over state-owned enterprises than the optimal level. In addition, we show that government control can be further weakened in firms with good corporate governance mechanisms, which serve as a substitution of government monitoring.

Our results demonstrate that government control in China is still a necessary but costly mechanism to mitigate agency costs, especially when corporate governance system is underdeveloped.

We identify the substitution effect between government control and corporate governance using a unique measure of government control.

The purpose of this paper is to study the ownership‐liquidity relation in the context of the Tunisian Stock Exchange.

In particular, the paper examines two empirical relationships: the relationship between ownership concentration and stock liquidity and the relationship between the separation of ownership from control and market liquidity.

The empirical findings verify that the structure of ownership remains concentrated in the majority of the Tunisian firms. It is found that stock liquidity decreases significantly with concentrated ownership. Different devices are used to gain control and hence a significant separation of ownership from control affects liquidity in different ways. The results indicate that pyramidal structures have a significant negative impact on liquidity for all controlled firms. However, for family firms, non‐voting shares increase liquidity for minority shareholders by reducing the probability of informed trading.

Overall, this study reports that non‐voting shares may be a liquidity enhancing device for family firms.

The purpose of this paper is to empirically analyze the motive of family‐controlled firms to pay cash dividends in China.

Using some econometrical models, the paper designs and conducts a series of empirical research on cash dividends behavior, thus acquiring credible empirical data.

Using a sample of 204 family firms, the motive of family‐controlled firms to pay cash dividends was investigated. Dividend ratio was found to decrease with the separation of ultimate ownership and control right; this may reflect the tunneling motive of the family owners. Different from others, it was also found that high‐growth firms pay more dividends and that the family doing so may want to build a high reputation for the friendly treatment of minority investors for future financing.

The paper discusses investor protection matters in China.

The paper' findings provide policy implications for corporate governance reform and capital market development in China.

The article aims to investigate the effects of ownership and capital structure on postacquisition operating performance.

The article extends the ongoing literature from an operating loss perspective and provides empirical evidence on the probability of acquirers’ operating loss in relation to ownership and capital structure. The operating performance of publicly listed manufacturing firms in China was tracked up to five years since the completion of the mergers and acquisitions (M&A) during 2003–2014.

The empirical results show that, in a five-year postacquisition period, state-owned enterprises (SOEs) are more likely to experience operating loss than non-SOEs. The likelihood of the operating loss is negatively associated with ownership concentration, implying that concentrated ownership may serve as an effective corporate governance mechanism in the emerging economy and improve postacquisition performance. The rise in leverage increases the likelihood of postacquisition operating loss, indicating that the costs of debt may outweigh the benefits.

The findings contribute to the literature on ownership, debt governance and post-M&A performance from an emerging economy perspective.

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.

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

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.

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.

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.

The purpose of this research is to examine the influence of ownership structure, independent directors, managerial agency costs and audit's opinion on the firm's financially distressed status using a sample of distressed companies and a matched‐pair sample of non‐distressed companies listed on Chinese stock markets.

The study utilizes publicly‐available data from annual reports of a sample of 404 non‐finance distressed firms listed on Chinese stock markets and a sample of matched 404 non‐distressed firms for a period covering the 1998‐2005 financial years with binary logistic analysis.

Ownership concentration, state ownership, ultimate owner, independent directors and auditors' opinion turn out to be negatively associated with the probability of financial distress, while administrative expense ratio is positively related with the likelihood of financial distress. Managerial ownership does not appear to be a significant determinant.

The paper offers evidence on the extent to which distress is associated with corporate governance from the emerging stock markets. It would be educational to Chinese small investors who excessively favour pursuing short‐term returns and be helpful for regulatory authorities in making policies on corporate governance reformation.

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.

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.

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.

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.

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.

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.

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.

The purpose of this paper is to examine whether any specific informal corporate governance mechanisms under consideration in this study, namely, political connection, business group affiliation and ownership concentration, are able to mitigate the diversification discount for emerging-market diversified firms using Malaysia as an examination lab.

The study uses a sample data of the entire non-financial public-listed firms in Malaysia over a 12-year period from 2001 to 2012. The generalized method of moments estimators are employed to account for the endogeneity of both corporate governance and diversification.

This study finds that business group affiliation particularly with large size can help to mitigate the diversification discount whereby political connection and ownership concentration magnify the discount. The finding is robust to alternative diversification measurements, to alternative methods and to endogeneity bias.

This result implies that diversified firms with affiliation to large business groups are able to reduce the magnitude of the discounted value of diversification.

This study helps managers, shareholders and investors to evaluate their current/future investments related to firms with diversified business segments. This study also provides implications for policymakers and regulatory bodies to assess the adequacy and competency of the current corporate governance frameworks in place.

This study incorporates the country-specific institutional dimension in designing a research framework that is more relevant in examining the influential effect of governance-related characteristics on the diversification-firm value relationship in an emerging market.

The purpose of this paper is to identify the extent to which the company's post- initial public offering (IPO) outcome varies, along with the determinants of the post-IPO outcomes.

The authors use Cox proportional hazards models to examine what determines the company's post-IPO transition to one of the classified outcomes, delisting, acquisition due to strong performance, and acquisition due to weak performance. The authors develop models taking in a range of information concerning pre-IPO characteristics, offering characteristics, financial indicators, company specifics, industry features, and corporate ownership and governance.

Delisting is predominantly influenced by the company’ pre-IPO operating performance, as well as financial indicators and governance structure at the time of the IPO. Sound governance structure and good financial standing of the company aid it to achieve its goal. Mergers and acquisitions (M&As) of both forms are distinguished most significantly by ownership structure and industry features, which is consonant with the position that M&As are majorly motivated by social concerns and corporate control considerations. Centrally, corporate evolution is jointly shaped by market force and state control.

The findings can inform public policy decisions. There is a case for gradual introduction of institutional changes which facilitate, regulate, and monitor orderly market operations in line with the market mechanism and sound corporate governance.

The study is among the first efforts to examine what determines the company's transition to one of the post-IPO states following the IPO in China's stock market.