Management ownership and corporate value

Chen, Haiyang; Hexter, J. Lawrence; Hu, Michael Y.

doi:10.1002/mde.4090140406

Cited by 45 publications

(25 citation statements)

References 43 publications

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“…The non‐linear relation of the present study matches with those found by Belkaoui and Pavlik (1992) in the US and Prevost et al (2002) in New Zealand with the exception of the range of board ownership and the use of OLS regression – piecewise vs. cubic. However, the cubic‐form non‐linearity of board ownership found in this study stands in contrast to that found in Chen et al (1993) and Short and Keasey (1999), where the direction of non‐linearity and the turning points are the opposite from these found in this study.…”

Section: Resultscontrasting

confidence: 99%

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Corporate Governance in Bangladesh: Link between Ownership and Financial Performance

Farooque¹,

Zijl

Dunstan

et al. 2007

Corporate Governance

144

132

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This paper investigates empirically the effect of board ownership on firm performance in Bangladesh. By estimating single equation and simultaneous equation models on an unbalanced pooled sample of listed firms, it offers some new insight into the ownership-performance link in Bangladesh. Building on extant literature, it examines the ownership-performance relationship in an emerging market economy considering ownership as exogenous and as endogenous. The latter approach is favoured as recent empirical evidence shows that ownership and performance are endogenously determined and there is either a reverse-way or two-way causality relationship between the two. While OLS regression analysis indicates a linear and non-linear relationship between board ownership and performance, this disappears when 2-SLS estimation of a simultaneous equation model is carried out. Instead, a reverse causality relationship emerges. Other governance and control variables appear to have effects consistent with the literature. These results suggest a need to strengthen the internal control mechanisms within listed firms in Bangladesh. Copyright (c) 2007 The Authors; Journal compilation (c) 2007 Blackwell Publishing Ltd.

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Section: Resultscontrasting

confidence: 99%

“…Chen et al (1993) report a non‐linear relation where performance rises at ownership levels of 0 per cent to 5 per cent/7 per cent and falls between 10 per cent and 12 per cent range. Beyond this range, performance continues to fall in one cross‐sectional sample but starts to rise in two other cross‐sectional samples.…”

Section: Literature Reviewmentioning

confidence: 97%

Corporate Governance in Bangladesh: Link between Ownership and Financial Performance

Farooque¹,

Zijl

Dunstan

et al. 2007

Corporate Governance

144

132

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“…The Morck et al (1988) hypothesis is supported by the findings of Chen et al (1993) who examine the relationship between ownership structure and corporate value using samples of Fortune 500 firms in 1976, 1980 and 1984. They found that corporate value as measured by Tobin's q is a function of management ownership. Specifically, q rises when management ownership is between 0 and 7%.…”

Section: Management Ownership and Firm Performancementioning

confidence: 75%

“…Previous studies (McConnell and Servaes, 1990;Chen et al, 1993) found a nonlinear relationship between management ownership and the value of the firm. Therefore, the first relationship examined is the one between firm value and management ownership.…”

Section: Resultsmentioning

confidence: 97%

CEO ownership and firm value

Griffith

1999

Manage. Decis. Econ.

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“…A 10 per cent threshold has often been used to identify the presence of a dominant shareholder. The results generally support a non-monotonic linear relationship between firm performance and ownership concentration -with a change from alignment to entrenchment and then back to alignment as ownership concentrates (for example, Hermalin and Weisbach, 1991;Chen et al, 1993;Faccio and Lasfer, 1999;Holderness et al, 1999;Short and Keasey, 1999).…”

Section: Governance-performance Relationship and Ownership Concentrationmentioning

confidence: 88%

Governance practices and firm performance: Does shareholders’ proximity to management matter?

Bozec

Dia

2014

Int J Discl Gov

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Richard Bozecis a Full Professor of Accounting at the Telfer School of Management, University of Ottawa where he currently teaches advanced financial accounting courses. He is joining the growing number of researchers in the field of corporate governance who are shifting to more holistic analytical approaches, taking into account the variety of controls that interact to affect a firm's performance. ABSTRACT This article investigates the link between corporate governance practices and firm performance, a topic that received a lot of attention by regulators, interest groups and academics. Research in this field has recently shifted from the analysis of one or more specific governance provisions to the analysis of multiple aspects of corporate governance. In fact, most studies now use corporate governance indexes that capture a wide range of corporate governance provisions (index-based studies). The objective and main contribution of this article is to revisit the governance-performance relationship while taking into account shareholders' proximity to the locus of management. Shareholders' proximity is defined based on ownership concentration and whether or not the dominant/controlling shareholder holds top executive positions in the firm. The lowest level of proximity is evidenced in firms with dispersed ownership, the highest level in controlled entities where the controlling shareholder holds the CEO and/or Chair positions. Governance is measured on a global scale using the Report on Business (ROB) index. The study is conducted over a 4-year period (2002)(2003)(2004)(2005) using panel regressions in a two-stage least squares framework on a sample of Canadian publicly traded companies (470 firm-year observations). The results of the study show a positive relationship between the ROB global index (and sub-indexes) and Tobin's Q whether ownership is dispersed or is concentrated in the hands of a dominant or controlling shareholder. Shareholders' proximity to management has no impact on the governance-performance relationship. Overall, the results support a one-size-fits-all approach to governance, a policy adhesion that underlined the widespread adoption of Codes of Good Governance and legal/ regulatory changes in the years following Enron's collapse in the United States. Initiatives were in large part supported by a general consensus toward a stock market-centered model of governance. However, with the recent debt crisis in the United States, public perception has changed. The credibility of such a model for governing our institutions is called into question. Our study tempers these concerns by showing that governance controls should not account for ownership differences in the context of publicly traded companies. Instead, good governance practices based on an independent board of directors that promotes transparency and protects shareholders' rights should be prioritized whether or not ownership is dispersed or concentrated. From a corporate governance standpoint, this study sheds new light on controlled compani...

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Management ownership and corporate value

Cited by 45 publications

References 43 publications

Corporate Governance in Bangladesh: Link between Ownership and Financial Performance

Corporate Governance in Bangladesh: Link between Ownership and Financial Performance

CEO ownership and firm value

Governance practices and firm performance: Does shareholders’ proximity to management matter?

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