Keeping it real or keeping it simple? Ownership concentration measures compared

Mavruk, Taylan; Overland, Conny; Sjögren, Stefan

doi:10.1111/eufm.12249

Cited by 8 publications

(7 citation statements)

References 108 publications

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“…Ownership concentration measures most commonly found in earlier research include existing concentration measures in the economic literature and threshold measures for a controlling shareholder (Mavruk, Overland & Sjögren 2019). For the purpose of the present study, high ownership concentration is measured in terms of the Herfindahl ownership concentration index (hereafter referred to as the Herfindahl index [HOCI]) which reflects ownership concentration based on the top five shareholders in companies (Gonzalez et al 2017;Harada & Nguyen 2011).…”

Section: Defining Ownership Concentration and Payout Methodsmentioning

confidence: 99%

“…For the purpose of the present study, high ownership concentration is measured in terms of the Herfindahl ownership concentration index (hereafter referred to as the Herfindahl index [HOCI]) which reflects ownership concentration based on the top five shareholders in companies (Gonzalez et al 2017;Harada & Nguyen 2011). Additionally, in line with earlier studies (Mavruk et al 2019;Trinchera 2012), a controlling shareholder is defined as a shareholder who owns at least 20% of a company. This line of thought is also supported by the argument made by La Porta, Lopez-de-Silanes and Shleifer (1999) that a stake of 20% of voting rights is typically sufficient to gain effective control (Trinchera 2012).…”

Section: Defining Ownership Concentration and Payout Methodsmentioning

confidence: 99%

“…A binary variable was applied to indicate observations with high ownership concentration (as '1') and low ownership concentration (as '0'). A controlling shareholder is one that has a shareholding of at least 20% in a company (Mavruk et al 2019). A binary variable was applied to indicate observations with a controlling shareholder (as '1') and observations with no controlling shareholder (as '0').…”

Section: Ownership Concentration Dummy Variablesmentioning

confidence: 99%

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The association between ownership concentration and payout behaviour: Evidence from South Africa

2021

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Orientation: The study investigated the association between ownership concentration and different payout methods of selected companies listed on the Johannesburg Stock Exchange (JSE) in South Africa for the financial reporting periods 2012 to 2019.Research purpose: The research objective was to investigate whether payout behaviour differed when low and high ownership concentration was compared.Motivation for the study: An understanding of the association between ownership concentration and payout policies is an important corporate governance aspect that could reveal the agency conflict between majority and minority shareholders. No previous South African empirical study has considered testing or investigating the two opposing agency-based hypotheses, namely the monitoring and rent extraction hypotheses, with reference to different payout methods.Research design, approach, and method: An empirical research design was followed, which is descriptive in nature. Descriptive statistics and a mixed-model analysis of variance were employed to describe the different payout methods – that is ordinary dividends, special dividends, capital distributions, additional shares, general share repurchases, and specific share repurchases – employed by companies listed on the JSE based on a distinction between low and high ownership concentration.Main findings: High ownership concentration was found to be associated with statistically significant lower ordinary dividends and capital distributions in support of the rent extraction hypothesis. Rent extraction highlights the agency conflict between majority and minority shareholders.Practical/managerial implications: Findings of the present study revealed agency conflicts that may be informative to those charged with corporate governance to help them resolve agency conflict.Contribution/value-add: This study is the first to consider the association between ownership concentration and payout behaviour in South Africa subsequent to the introduction of the dividends tax regime in 2012. The descriptive evidence submitted can serve as a basis for further explanatory research relating to ownership concentration and payout behaviour of companies.

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Section: Defining Ownership Concentration and Payout Methodsmentioning

confidence: 99%

Section: Defining Ownership Concentration and Payout Methodsmentioning

confidence: 99%

Section: Ownership Concentration Dummy Variablesmentioning

confidence: 99%

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The association between ownership concentration and payout behaviour: Evidence from South Africa

2021

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“…the percentage of independent directors in our sample mostly refers to independence 'with respect to the largest shareholders'. Given that a more precise definition of independent directors also concerns the presence of controlling owners on the board who may seek to reap private benefits (Adams et al, 2010;Mavruk, Overland & Sjögren, 2020), we control for the percentage of independent directors on the board, referring to members that have no stated affiliation to large owners.…”

Section: Abnormal Accrualsmentioning

confidence: 99%

The Sheep Watching the Shepherd: Employee Representation on the Board and Earnings Quality

Overland

Samani

2021

European Accounting Review

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We investigate to what degree employee representatives contribute to the board's monitoring of earnings quality. We argue that employee representatives have incentives to prevent earnings manipulations motivated by negotiation considerations. Furthermore, they seek risk reducing policies, have a long-term interest in their firm and possess firm-specific knowledge, which in turn can result in improved earnings quality. Employee representation also increases the diversity on the board, which can enhance the board of directors' internal communication and monitoring. Using a sample of firms listed on the Stockholm Stock Exchange (2006-2014), we find lower abnormal accruals as well as less excessive R&D cuts in firms with employee representation, controlling for alternative model specifications and potential sample selection bias. Moreover, we find less income-decreasing abnormal accruals in firms with employee representatives during the 2010-2011 collective bargaining period. This study also reveals that earnings quality varies with the characteristics of employee representatives. Our findings contribute to the literature on boards' monitoring and financial reporting quality, as it examines a less noticed aspect of board diversity, i.e. employee representation.

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“…H2: There is a significant impact of Investor Protection Strength on Stock Market Capitalization Ownership rate At the core of the study of corporate ownership is the question what it takes for an owner to exercise an effective control over business activities. (Mavruk, Overland, & Sjögren 2019) define a controlling owner as an owner that holds at least 20 percent of the company. Below this threshold, firms were regarded to be under management control.…”

Section: Strength Of Investor Protectionmentioning

confidence: 99%

The Impact of Transparency and Disclosure on Stock Market Capitalization Through the Dividend Yield Eidolon

Khan

Siddiqui

Fayyaz

2020

IJMRES

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Purpose: The paper aims to access the impact of financial transparency and disclosure on stock market capitalization. The financial transparency and disclosure measure the extent to which the firms have open firm-specific information for the investors. More transparency leads to strong investor protection. Design/methodology: The study has been conducted on the Pakistan Stock Exchange from period 2008 to 2017. Descriptive Statistics, Correlation, and Regression Analysis have been used to find out the impact of the above-mentioned variables on the Stock market Capitalization. Findings: The results support our hypothesis that information disclosure and strength of investor protection has a positive significant impact on market capitalization. Research Limitation: While our study focuses on the significance of information disclosure and transparency, it does not measure the quality and accuracy of the information disclosed. Practical Implication: The results might be of interest to potential investors who will be able to diversify their investment in a way that minimizes risks based on the disclosure practices of the firms. Originality/value: The research contributes to the finance literature by finding out the impact of information disclosure on stock market capitalization in the Pakistan Stock Exchange on recent data.

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Keeping it real or keeping it simple? Ownership concentration measures compared

Cited by 8 publications

References 108 publications

The association between ownership concentration and payout behaviour: Evidence from South Africa

The association between ownership concentration and payout behaviour: Evidence from South Africa

The Sheep Watching the Shepherd: Employee Representation on the Board and Earnings Quality

The Impact of Transparency and Disclosure on Stock Market Capitalization Through the Dividend Yield Eidolon

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