Managerial concentration, ownership concentration, and firm value: Evidence from Spanish SMEs

Abstract

Various corporate governance theories indicate that governance in small and medium-sized enterprises (SMEs) differs to that of larger corporations due to the ownership-management function within the organizational structure. This article provides empirical evidence of enhanced firm value in a sample of listed SMEs resulting from certain corporate governance mechanisms related to managerial and ownership concentration. The empirical analysis conducted in this paper is based on a panel data set consisting of 108 small and medium-sized public firms on the Spanish alternative stock exchange over a time frame of five years (2015-2019). The results suggest that CEO duality, the controlling shareholders, and the second largest shareholders all improve firm value. Conversely, the ratio of independent directors has a negative impact on firm value. These findings are robust to alternative model specifications such as dynamic panel estimators (Generalized Method of Moments -GMM-) and instrumental variable methods. Overall, we show that the governance configuration of listed SMEs can mitigate several of the central issues, such as agency problems, that large corporations face.

Human Capital and Performance of Micro, Small and Medium Enterprises: A Literature Review

“…The influence of entrepreneurial orientation, isolation mechanisms, strategy quality, and network capabilities on the marketing performance of batik SMEs in Central Java, Indonesia (Mustikowati et al, 2022). The impact of managerial concentration and ownership on firm value in Spanish SMEs (Rodriguez-Valencia & Lamothe Fernandez, 2023). This research finds that there is a relationship between family involvement in ownership and the performance of SMEs supported by private equity (Salerno, 2019) and there is a relationship between entrepreneurship, innovation and quality performance in SMEs (Ebrahimi et al, 2018).…”

Equity ownership concentration and firm growth: the moderating role of industry growth

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