Excess control and the risk of corporate expropriation: Canadian evidence

Attig, Najah

doi:10.1002/cjas.10

Cited by 22 publications

(14 citation statements)

References 37 publications

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“…Private benefit consumption is prevalent, although not universal, in the family-dominated business groups of emerging markets (Khanna and Yafeh, 2007), but also more generally when control rights exceed cashflow rights. Thus, a number of recent studies provide evidence of tunneling: in Korea (Baek et al, 2006); in India (Bertrand et al, 2002); in Thailand (Bertrand et al, 2008); in emerging Asian economies (Claessens et al, 2002;Faccio et al, 2001;Johnson et al, 2000a,b); in Europe (Faccio et al, 2001;Johnson et al, 2000a,b); in Hong Kong (Cheung et al, 2006); in Canada (Attig, 2007); in Germany (Gugler and Yurtoglu, 2003) and in France (Ginglinger and L'her, 2006).…”

Section: Introductionmentioning

confidence: 93%

Propping and tunneling: Empirical evidence from Japanese keiretsu

Dow

McGuire

2009

Journal of Banking & Finance

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Section: Introductionmentioning

confidence: 93%

Propping and tunneling: Empirical evidence from Japanese keiretsu

Dow

McGuire

2009

Journal of Banking & Finance

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“…This conflict of interest is termed as the principal-principal agency problem by agency theorists (Attig, 2007;Dharwadkar, George, & Brandes, 2000). However, instead of debating which of these perspectives should take precedence, we assert that, at least in the context of IPOs, institutional investors will evaluate the effects of aggregated ownership to assess the firm's potential and their impact on IPO performance.…”

Section: Defining Ownership Impact On Ipomentioning

confidence: 98%

Whose firm is it anyway? Analyzing ownership effects on IPO performance

Sur

Martens

2013

Can J Adm Sci

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This study revisits current practice that ownership holding at IPO has a homogeneous impact on IPO performance. Using signalling theory, we develop and test a conceptual model explaining the relationships between the aggregated ownership structure and IPO price premium. We argue that aggregated ownership has a direct effect on issue price premium, and offer specific hypotheses on the effect of the shares sold during the offering by each type of owner on IPO performance. We use archival data from a sample of US firms that issued IPOs between 1996 and 2000 and find a significant direct effect of ownership configuration, namely, heterogeneity in effect of each ownership type on IPO performance as well as interaction effects between different ownership types. Copyright © 2013 ASAC. Published by John Wiley & Sons, Ltd.Keywords: initial public offering, ownership, issue price premium, signalling theory, aggregated ownership Résumé Cette étude réexamine la pratique courante qui veut que la possession d'un droit de propriété à l'IPO ait un impact homogène sur la performance de l'IPO. À partir de la théorie de la signalisation, l'étude met au point et teste un modèle conceptuel qui rend compte des relations entre la structure de la propriété globale et le cours de l'IPO. Elle soutient que la propriété globale a un impact direct sur le prix émis et propose des hypothèses précises sur l'effet des actions vendues, pendant l'offre par chaque type de propriétaire, sur la performance de l'IPO. Les données d'archive utilisées proviennent d'un échantillon de firmes américaines émettrices d'IPOs entre 1996 et 2000. Les résultats mettent en évidence un effet direct significatif de la configuration de la propriété, notamment de l'hétérogénéité de chaque type de propriété sur la performance de l'IPO. Ils démontrent aussi les effets d'interaction qu'il y a entre les différents types de propriété.

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“…In firms with actual ownership and control spread, pyramidal firms allow higher control rights over cash flow rights. Thus, the control right concentration enables the ultimate controlling shareholders to tunnel corporate resources for personal benefits with no regards to minority shareholders in lower level firms by appointing directors they preferred and making decisions on issuance of securities even though their ownership is smaller (Attig, 2007).…”

Section: Excess Control Rights and Minority Shareholder Expropriationmentioning

confidence: 99%

Length of Chain in Pyramidal Firms towards Expropriation of Minority Interest

Malan¹,

Salamudin²,

Ahmad³

2015

IBR

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It is documented that there is a large divergence of cash flow rights and control rights in ownership concentrated corporations whereby power lies in the hands of the ultimate controlling shareholder especially for Malaysian pyramidal firms. The divergence of these two rights via length of chain leads to the expropriation of minority shareholders interest. Thus, this study aims to examine the factors influencing the length of chain of Malaysian pyramidal firms implying expropriation of minority interest. This study hypothesizes that the distance separating the ultimate controlling shareholder from their affiliated firms is positively related to the presence of eventual negative shocks and vice-versa. Applying the Attig Model and Panel Generalised Least Square (GLS) estimation on Malaysian pyramidal firms between 1990 to 2010 as the underlying statistical test, the results show that there is association between the length of chain separating ultimate controlling shareholder from the affiliated groups and the entrenchment effect. Factors influencing the length of chain such as risk, cash, size, TobinQ, duality, financial institution and liquidity posit significant results and consistent with the entrenchment effect. Future research needs to highlight on identifying the heterogeneous factors that improve the generalizability of research.

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Excess control and the risk of corporate expropriation: Canadian evidence

Abstract: Abstract

Cited by 22 publications

References 37 publications

Propping and tunneling: Empirical evidence from Japanese keiretsu

Propping and tunneling: Empirical evidence from Japanese keiretsu

Whose firm is it anyway? Analyzing ownership effects on IPO performance

Length of Chain in Pyramidal Firms towards Expropriation of Minority Interest

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