Do Monitoring and Alignment Mechanisms Influence Diversification Strategies ? The Case of French Companies

Lacoste, D.; Lavigne, Stéphanie; Rigamonti, Éric

doi:10.3917/mana.135.0342

Cited by 7 publications

(8 citation statements)

References 45 publications

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“…Talukdar et al's (2021) findings are consistent with earlier studies (e.g. Alessandri and Seth, 2014;Amihud and Lev, 1981;Goranova et al, 2007;Lacoste et al, 2010).…”

Section: Agency Motives For Diversificationsupporting

confidence: 86%

“…The views of corporate executives provide a means of verifying the conclusions arrived at in quantitative studies that analyzed the ownership-diversification relationship (e.g. Alessandri and Seth, 2014;Chen and Yu, 2012;Denis et al, 1997;Lacoste et al, 2010;Goranova et al, 2007;Sener and Akben-Selcuk, 2020;Talukdar et al, 2021).…”

Section: Q2mentioning

confidence: 94%

“…Denis et al (1997) and Nguyen (2018) based their study on the assumption that diversification is value-destroying and considered the interest alignment implications of managerial ownership, which they assumed would curb this value-destroying strategy. However, managerial ownership is not solely an incentive alignment tool but may also induce risk-reducing behavior toward unrelated diversification as ownership increases (Alessandri and Seth, 2014; Amihud and Lev, 1981; Goranova et al , 2007; Lacoste et al , 2010; Purkayastha et al , 2022; Talukdar et al , 2021). Many researchers have shown that diversification is not always value-destroying (Aivazian et al , 2019; Bhatia and Thakur, 2018; Hund et al , 2019; Villalonga, 2004), and the possibility of ownership-induced risk-reducing behavior contradicts the agency cost hypothesis.…”

Section: Literature Reviewmentioning

confidence: 99%

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Agency motives and the corporate diversification decision: perspectives of corporate executives in Nigeria

Ibekwe

2023

QRFM

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Purpose The purpose of this study was to explore the motives (especially the agency motives) for corporate diversification from the perspective of corporate executives who make such strategic decisions and manage the diversified firms daily. Design/methodology/approach A qualitative research approach was adopted, and 12 chief executive officers (CEOs) of diversified firms in Nigeria were interviewed for their perspectives on the motives for corporate diversification. Findings Stewardship motives – diversification to use excess capacities in assets and resources to exploit opportunities in the market and defend against adverse environmental developments – were the most cited reasons for diversification. The relevant agency problem related to corporate diversification motive in Nigeria is the principal–principal (majority shareholder-minority shareholder) one. CEOs with substantial holdings in their firms indicated that they use diversification to reduce their investment risk and retain control of their portfolio. Practical implications The findings suggest that in corporate environments such as Nigeria that feature blockholding prominently, the corporate strategy-related agency problem that policymakers should pay greater attention to is the principal–principal conflict rather than the traditional agent–principal problem that has influenced corporate governance over the years. There is also a need to revise the dominant view that diversification is a value-destroying strategy motivated by the self-seeking behavior of managers who have little or no shares in the companies they manage. Originality/value The few studies on motives for corporate diversification that incorporated the perspectives of corporate executives did not address the agency motives of diversification. To the best of the authors’ knowledge, this is the first study that has done so.

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“…Talukdar et al's (2021) findings are consistent with earlier studies (e.g. Alessandri and Seth, 2014;Amihud and Lev, 1981;Goranova et al, 2007;Lacoste et al, 2010).…”

Section: Agency Motives For Diversificationsupporting

confidence: 86%

Section: Q2mentioning

confidence: 94%

Section: Literature Reviewmentioning

confidence: 99%

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Agency motives and the corporate diversification decision: perspectives of corporate executives in Nigeria

Ibekwe

2023

QRFM

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“…Bebchuk, Cohen, Ferrell find that increases in the level of this index are monotonically associated with economically significant reductions in firm valuation, as measured by Tobin's Q, and present suggestive evidence that the entrenching provisions cause lower firm valuation. D. Lacoste, S. Lavigne, E. Rigamonti consider the relationship between ownership structure and corporate diversification strategy (Lacoste et al, 2010). Their research shows an increase in managerial ownership, far from leading to alignment, leads to managerial behavior that goes against the interests of shareholders and more precisely to unrelated diversification strategies.…”

Section: Literature Reviewmentioning

confidence: 99%

Corporate governance model in Ukraine: The conflict resolution problems

Nosova¹

2015

Zeszyty Naukowe Uniwersytetu Szczecińskiego. Service Management

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Abstr actThe purpose of the article is to examine whether there is a corporate governance model that could minimize the negative effects of conflicts, align of managers' behavior with stockholders, and provide stock markets development. The analysis of numerous studies helps to clarify the basic issues including objectives, interests, methods of achievement, and benefits of managerial and stakeholder conflicts. The corporate sector development demonstrates the use of mixed model in Ukraine, based partly on the application of the principals of American, and German models of corporate governance. The causes of corporate governance conflicts are considered in Ukraine. The application of the economic and legal mechanisms for corporate conflicts elimination is proposed. Specific policy proposals designed to achieve the goal to separate regulators from company management and owners. Governance must clearly define the functions and relationships of the various parties, and separate oversight from operational and financial management. The public accountants objectivity can be introduced in Ukraine through creation of institutional structures that define and require regulation, records, and audit. In the new context, auditors will be private contractors serving as regulators, and they will work for boards of directors. Management is not involved. The article analyses the measures that have been taken to create an effective corporate governance model in Ukraine. The international accounting standards application, based on American and European accounting standards in corporate governance, will be directed to create mechanism for disclosures and frauds preventing in all companies. The national accounting agencies foundation in East European countries, including Ukraine will provide the adoption of international accounting standards at the country's level.

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“…As a result, institutional and foreign ownership concepts were important in the study. To begin with, institutional investors are major actors (Gharbi & Jarboui, 2017) with control (Gomez, 2014) and influence on firm's strategy decisions (Lacoste, Lavigne, & Rigamonti, 2010). In terms of investments, institutional investors monitor and mitigate diversification discount (Hartzell, Sun, & Titman, 2014), are known to be prudent (Jafarinejad, Jory, & Ngo, 2015), careful and cautious (Bushee, Carter, & Gerakos, 2013).…”

Section: Introductionmentioning

confidence: 99%

Effect of Ownership Structure on Corporate Diversification of Listed Firms in Kenya

Tanui

Yegon

Bonuke

2019

SJOM

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Purpose - This paper aimed to examine the moderating role of capital structure in the relationship between institutional and foreign ownerships on corporate diversification of listed firms at the Nairobi Securities Exchange, Kenya. Design/Methodology - The target population comprised of all the 65 listed firms at Nairobi Securities Exchange in Kenya. However, the inclusion criteria were based on all firms listed at the NSE from 2003 to 2017. Findings - Capital structure significantly moderated the relationship between institutional ownership and corporate diversification. However, there was a statistically insignificant moderating effect of capital structure in the relationship between foreign ownership and corporate diversification. Practical Implications - As to increase diversification, listed firms are suggested to have low levels of capital structure and institutional ownership. Furthermore, low levels of foreign ownership and high capital structure is vital in attaining high diversification levels. Originality - The study contribution is the moderating effect of capital structure in institutional ownership - corporate diversification linkage.

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Do Monitoring and Alignment Mechanisms Influence Diversification Strategies ? The Case of French Companies

Cited by 7 publications

References 45 publications

Agency motives and the corporate diversification decision: perspectives of corporate executives in Nigeria

Agency motives and the corporate diversification decision: perspectives of corporate executives in Nigeria

Corporate governance model in Ukraine: The conflict resolution problems

Effect of Ownership Structure on Corporate Diversification of Listed Firms in Kenya

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