Board Structure and Intragroup Propping: Evidence from Family Business Groups in Hong Kong

Cheung, Yan‐Leung; Haw, In‐Mu; Tan, Weiqiang; Wang, Wenming

doi:10.1111/fima.12034

Cited by 34 publications

(28 citation statements)

References 79 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…The announcement frequency has a significantly positive effect on the market reactions toward member firms, while Tobin’s Q and technological opportunity have significantly negative effects. Our findings on technological opportunity are consistent with the argument by Kelm, Narayanan, and Pinches (1995) and Cheung et al (2014). Announcement frequency is associated with positive abnormal returns for member firms.…”

Section: Estimation and Resultssupporting

confidence: 93%

“…The evidence further shows that the positive association between the market reactions of non-announcing and announcing member firms is less pronounced with regard to the new product announcements made by member firms within family business groups. This implies that family ownership does more harm than good with regard to investor reactions to such announcements, suggesting that interfirm networks provide controlling families with more opportunities to undertake expropriation activities from minority shareholders, consistent with Cheung et al (2014).…”

Section: Introductionsupporting

confidence: 80%

“…The value-added view implies that a member firm’s performance depends not only on its own resources and financial conditions, but also on those of other members. We thus explore the evidence for this within member firms by considering the market’s ex ante valuation of new product announcements (Bae, Cheon, & Kang, 2008; Cheung, Haw, Tan, & Wang, 2014).…”

Section: Introductionmentioning

confidence: 99%

See 2 more Smart Citations

Value added or tunneling? Evidence from new product announcements by Taiwanese business groups

Chang¹,

Chen²

2016

Journal of Management & Organization

View full text Add to dashboard Cite

Using new product announcement events made by group member firms in Taiwan, this study examines whether the firms’ multiple network ties within business groups benefit member firms or whether they provide a channel for controlling shareholders to tunnel. We find that the announcement of new products by group member firms has a positive effect on the market value of other, non-announcing group peers. This evidence is consistent with the value-added hypothesis. More importantly, this effect is stronger when member firms are connected via equity ties. Furthermore, we also offer an original analysis of how family control in business groups affects the impact of network ties on value creation. Our results suggest that the controlling family may discount the market value of member firms.

show abstract

Section: Estimation and Resultssupporting

confidence: 93%

Section: Introductionsupporting

confidence: 80%

Section: Introductionmentioning

confidence: 99%

See 1 more Smart Citation

Value added or tunneling? Evidence from new product announcements by Taiwanese business groups

Chang¹,

Chen²

2016

Journal of Management & Organization

View full text Add to dashboard Cite

show abstract

“…; Cheung et al . ). Guanxi is an informal networking system that emphasizes trust and informal relationships that are not replaceable by documents and procedures; it is thus a ‘closed system of relationships’ and requires tremendous time and efforts to build (Wee and Combe ).…”

Section: Institutional Complementarities As Functionally Equivalent Gmentioning

confidence: 97%

Asian Family Firms through Corporate Governance and Institutions: A Systematic Review of the Literature and Agenda for Future Research

Dinh

Calabrò

2018

Int J Management Reviews

View full text Add to dashboard Cite

Although the corporate governance model of Asian family firms has recently gained increased attention, it remains unclear how these firms’ corporate governance mechanisms (and their effectiveness) differ from those of family firms in the western world. Drawing upon a comparative institutional perspective, this paper systematically reviews 148 published articles in peer‐reviewed journals from 1980 to 2015. The aim of this paper is to contribute to the understanding of institutional complementarities that constitute informal governance mechanisms adopted by Asian family firms by considering a wider set of institutional factors (i.e. political environment, cultural values and social norms) embedded in the Asian context. The main findings suggest that: (i) given the lack of market‐supporting institutions and the presence of strong political control over Asian economies, family firms tend to cultivate political connections to respond to the failure of legal systems; (ii) Asian family firms still rely heavily on personal networks (e.g. guanxi) to reduce uncertainty, strengthen business ties, and gain access to external resources; and (iii) cultural values and social norms (e.g. ‘face’ saving, reputational concerns and adult child adoption) lead to functionally equivalent corporate governance mechanisms in Asian family firms. The downstream effects of such mechanisms are also discussed, and future research avenues are identified.

show abstract

“…This is due to the fact that market ex ante perceives the signal (news) of propping and valuation effect comes into the picture. This is the propping hypothesis as proposed by Bae et al (2008) and followed by Cheung, Haw, Tan, and Wang (2014).…”

Section: Introductionmentioning

confidence: 82%

Propping in Business Groups: Prediction Efficacy of Earnings Announcements

Maheshwari

Gupta²

2019

Global Business Review

View full text Add to dashboard Cite

This study examines the evidences of propping in business groups in India. The article is an empirical study which adopts the event study method to ascertain the price reaction to the earnings announcement by listed group firms. Results indicate that the earnings announcements are perceived to have a positive effect on the financial health of other firms of the group. The cumulative abnormal return (CAR) of the portfolio of nonannouncing firms in a business group is found to be strongly and positively related with that of the announcing firm of that group. The findings of this article will help investors, shareholders and lenders to ex ante forecast the possible improvement in the financial performance of firms of some business groups which maybe going through tough times presently.

show abstract

Board Structure and Intragroup Propping: Evidence from Family Business Groups in Hong Kong

Cited by 34 publications

References 79 publications

Value added or tunneling? Evidence from new product announcements by Taiwanese business groups

Value added or tunneling? Evidence from new product announcements by Taiwanese business groups

Asian Family Firms through Corporate Governance and Institutions: A Systematic Review of the Literature and Agenda for Future Research

Propping in Business Groups: Prediction Efficacy of Earnings Announcements

Contact Info

Product

Resources

About