The Effect of Private Benefits of Control on Minority Shareholders: A Theoretical Model and Empirical Evidence from State Ownership

Liu, Kerry

doi:10.25103/ijbesar.102.03

Cited by 2 publications

(1 citation statement)

References 13 publications

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“…Such transactions include outright theft or fraud, transfer of assets from a firm to the controlling shareholder at nonmarket prices, loan guarantees using the firm’s assets as collateral, excessive executive compensation and expropriation of corporate opportunities. It can also take the form opposed to the above real transactions, such as dilution of minorities (Liu, 2017a). At the same time, controlling shareholder(s) also have the incentive to monitor management so that the interests of managers are more aligned with those of the firm.…”

Section: Theoretical Implication: Ownership Structure and Performancementioning

confidence: 99%

Chinese banking failure: the case of Baoshang Bank and its implications

Liu

2020

JFEP

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Purpose On May 24, 2019, the People’s Bank of China (China’s central bank) announced that the Baoshang Bank had been taken over because of credit risk. The Baoshang Bank failure has caused concerns over the stability of the Chinese financial system and the Chinese economy. This study aims to examine the case of Baoshang Bank’s failure and its theoretical implications including the relation between ownership structure and bank performance, the monetary transmission during a banking crisis and the market response to Baoshang Bank failure. Then this study discusses policy implications. Design/methodology/approach This study adopts a two-stage least squared model to examine the relation between ownership structure and bank performance, a series of rolling regressions to examine the monetary transmission and event studies to examine the market response to Baoshang Bank failure. Findings This study finds that there is a nonlinear relation between ownership structure and bank performance, the interest pass-through has broken down after the Baoshang Bank failure and the Baoshang Bank failure and the gradual exit of implicit guarantee from the Chinese government are considered to be positive to the Chinese banking sector. Originality/value First, although previous studies on ownership structure and bank performance classified different types of larger shareholders and found that this nonlinear relation is insignificant, this study finds a significant relation by innovatively using a combined ownership. Second, further contributing to the studies on monetary transmission in banking crisis based on international data, this study based on Chinese data sets finds that the interest rate pass-through has broken down after the Baoshang Bank failure.

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Section: Theoretical Implication: Ownership Structure and Performancementioning

confidence: 99%

Chinese banking failure: the case of Baoshang Bank and its implications

Liu

2020

JFEP

Self Cite

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An investigation of the performance of luxury firms in Europe from an agency theory perspective

Campa¹

2018

COC

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The luxury sector is one of the most significant segments of the economy. It is increasingly attracting the interest of investors given the high margins and growth that companies in this sector exhibit. What is the “secret” of this outstanding performance? Extant literature shows that firm-level strategies, i.e. marketing policies, supply-chain management, R&D investments, etc. are the keys to luxury company success. However, it neglected the investigation of ownership structure, in the context of the agency theory, as another determinant of company performance. This is an important gap since evidence indicates that ownership structure affects features that are crucial to the success of luxury firms. Accordingly, this paper uses a large panel dataset of luxury companies (1,153 unique firms and 8,253 firm-year observations) located in the European continent, OLS multivariate regression models with robust econometric features as well as a robustness test that controls for endogeneity and explores these firms from an agency theory perspective. It finds that luxury entities with higher ownership concentration perform better than the others. This relationship is stronger among non-EU member states and was not affected by the financial crisis. This investigation complements extant research on luxury companies showing that their governance does matter in explaining their success; thus it suggests to researchers of the luxury sector that the ownership structure of these entities cannot be ignored. The evidence reported in the paper helps owners and managers of luxury firms to detect potential agency issues and investors to spot features of highly profitable luxury firms.

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The Effect of Private Benefits of Control on Minority Shareholders: A Theoretical Model and Empirical Evidence from State Ownership

Cited by 2 publications

References 13 publications

Chinese banking failure: the case of Baoshang Bank and its implications

Chinese banking failure: the case of Baoshang Bank and its implications

An investigation of the performance of luxury firms in Europe from an agency theory perspective

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