The Separation of Ownership and Control in East Asian Corporations

Claessens, Stijn; Djankov, Simeon; Lang, Larry H.P.

doi:10.2139/ssrn.206448

Cited by 1,271 publications

(1,993 citation statements)

References 12 publications

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“…In contrast to our findings, however, he finds only weak evidence that the separation of cash flow and control rights affects firm performance during the crisis period. We discuss in detail how our results relate to those of Mitton in Section II.C. Claessens, Djankov, and Klapper (2003) find that East Asian companies controlled by management/family groups were less likely to file for bankruptcy during the crisis. They argue that this insurance against bankruptcy may come at the expense of minority shareholders.…”

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confidence: 55%

Ownership Structure, Corporate Governance, and Firm Value: Evidence from the East Asian Financial Crisis

Lemmon¹,

Lins²

2003

The Journal of Finance

1,050

285

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We use a sample of 800 ¢rms in eight East Asian countries to study the e¡ect of ownership structure on value during the region's ¢nancial crisis. The crisis negatively impacted ¢rms' investment opportunities, raising the incentives of controlling shareholders to expropriate minority investors. Crisis period stock returns of ¢rms in which managers have high levels of control rights, but have separated their control and cash £ow ownership, are 10^20 percentage points lower than those of other ¢rms.The evidence is consistent with the view that ownership structure plays an important role in determining whether insiders expropriate minority shareholders.

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confidence: 55%

Ownership Structure, Corporate Governance, and Firm Value: Evidence from the East Asian Financial Crisis

Lemmon¹,

Lins²

2003

The Journal of Finance

1,050

285

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“…() and Claessens et al . () to determine the ultimate owner. An ultimate owner is defined as the shareholder who maintains control over the listed firm with greater than 20 percent cash flow and is not controlled by any other entity.…”

Section: Methodsmentioning

confidence: 99%

The disclosure of corporate social responsibility reports and sales performance in China

Wei

Zheng

2018

Accounting & Finance

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Based on legitimacy and stakeholder theory, we investigate whether there is an association between the disclosure of corporate social responsibility reports and a firm's sales performance in China. The empirical results reveal that the return on sales and sales growth are positively associated with the level of corporate social responsibility reporting in China. This positive association is strengthened when firms have concentrated customers. Firms use corporate social responsibility reports to improve sales performance and attract customers, who are one of their major stakeholders, and retain their legitimacy.

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“…The literature offers a number of examples of pyramids in which the family achieves substantial deviation from one share–one vote (see La Porta et al (1999), Claessens et al (2000)). However, there are also many other cases in which the separation achieved is small and does not warrant the use of a pyramid.…”

Section: Empirical Implicationsmentioning

confidence: 99%

“…Because this view suggests that pyramids are created to separate cash flow from voting rights, it predicts that pyramidal firms should have a significant degree of separation between ownership and control. Indeed, the literature provides many examples of pyramidal groups that exhibit extreme degrees of separation (see Claessens et al (2000)).…”

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A Theory of Pyramidal Ownership and Family Business Groups

Almeida¹,

Wolfenzon²

2006

The Journal of Finance

664

175

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We provide a rationale for pyramidal ownership (the control of a …rm through a chain of ownership relations) that departs from the traditional argument that pyramids arise to separate cash ‡ow from voting rights. With a pyramidal structure, a family uses a …rm it already controls to set up a new …rm. This structure allows the family to 1) access the entire stock of retained earnings of the original …rm, and 2) to share the new …rm's non-diverted payo¤ with minority shareholders of the original …rm. Thus, pyramids are attractive if external funds are costlier than internal funds, and if the family is expected to divert a large fraction of the new …rm's payo¤; conditions that hold in an environment with poor investor protection. The model can di¤erentiate between pyramids and dual-class shares even in situations in which the same deviation from one share-one vote can be achieved with either method. Unlike the traditional argument, our model is consistent with recent empirical evidence that some pyramidal …rms are associated with small deviations between ownership and control. We also analyze the creation of business groups (a collection of multiple …rms under the control of a single family) and …nd that, when they arise, they are likely to adopt a pyramidal ownership structure. Other predictions of the model are consistent with systematic and anecdotal evidence on pyramidal business groups.

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The Separation of Ownership and Control in East Asian Corporations

Cited by 1,271 publications

References 12 publications

Ownership Structure, Corporate Governance, and Firm Value: Evidence from the East Asian Financial Crisis

Ownership Structure, Corporate Governance, and Firm Value: Evidence from the East Asian Financial Crisis

The disclosure of corporate social responsibility reports and sales performance in China

A Theory of Pyramidal Ownership and Family Business Groups

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