Expropriation of minority shareholders and payout policy

Cesari, Amedeo De

doi:10.1016/j.bar.2012.09.002

Cited by 54 publications

(24 citation statements)

References 30 publications

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“…Generally, extant corporate governance literature focuses on the traditional shareholdermanager Agency Problem Type I -principal-agent problem (De Cesari, 2012), prevalent in widely held firms (Jensen and Meckling, 1976). However, in firms controlled by one or more shareholders with large stakes (controlling firms), corporate insiders possess incentives to pursue private benefits at the expense of outsider shareholders, resulting in minority shareholder expropriation (De Cesari, 2012), known as Agency Problem Type II -principal-principal problem, particularly prevalent in the emerging markets (Ahlstrom et al, 2010).…”

Section: Introductionmentioning

confidence: 99%

“…However, in firms controlled by one or more shareholders with large stakes (controlling firms), corporate insiders possess incentives to pursue private benefits at the expense of outsider shareholders, resulting in minority shareholder expropriation (De Cesari, 2012), known as Agency Problem Type II -principal-principal problem, particularly prevalent in the emerging markets (Ahlstrom et al, 2010). In these circumstances, family controlling shareholders assume control of most businesses and are the incentivized to expropriate minority shareholders (Cueto, 2013).…”

Section: Introductionmentioning

confidence: 99%

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Family Firms, Expropriation and Firm Value: Evidence from Related Party Transactions in Malaysia

Liew

Alfan²,

Devi³

2015

jda

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We examine the relationship between related party transactions (RPTs) and firm value and how this relationship is moderated by ownership concentration using a sample of 379 listed family and 151 non-family firms for the period 2007 to 2009. Ordinary Least Square Pooled Model as well as Fixed Effects Model panel data regressions are used in the data analysis. For family firms, we find that RPTs reduce firm value (proxied by Tobin's Q and market-to-book value). Further, controlling shareholders' ownership has a significant positive moderating effect on this relationship. However, for non-family firms, there is no significant evidence of firm value reduction and positive moderating effect respectively. We conclude that expropriation via RPTs is stronger in family firms compared to non-family firms. Additionally, an increase in controlling shareholders' ownership helps mitigate this expropriation and this mitigating effect is stronger in family firms compared to non-family firms. The implications for the capital market regulator are discussed in this paper.

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Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Family Firms, Expropriation and Firm Value: Evidence from Related Party Transactions in Malaysia

Liew

Alfan²,

Devi³

2015

jda

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“…The results are maybe less convincing than expected in terms of the family ownership impact and performance. On one hand, research supports the expropriation hypothesis at the expense of minority shareholders [16,38,39], particularly when shareholder protection is low and control is high [40]. On the other hand, various studies find no influence of family ownership on performance [27,41].…”

Section: Theoretical Background and Empirical Evidencesmentioning

confidence: 84%

Ownership Concentration and Performance Recovery Patterns in the European Union

et al. 2019

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Our study addresses the link between ownership concentration and corporate performance in the manufacturing sector in the European Union in an economic environment stressed by the global financial and sovereign debt crises. This is, to our knowledge, the first attempt to tackle differences between companies with different origin-countries in EU from the perspective of ownership concentration and corporate performance in a period marked by the adverse impact of the global financial crisis. Ownership concentration is measured by the number of shareholders and the percentage of their individual and collective holdings, while performance is measured by accounting-based and market-based indicators. Our results, based on a detailed and methodical statistical analysis, show a clear division between Western and Eastern companies in terms of ownership concentration and performance, with an impact on businesses' recovery patterns. Overall, there is a positive link between ownership concentration and corporate performance in the case of Western companies, but not for Eastern-based companies. Moreover, ownership concentration has supported business recovery in EU, but particularly for Western companies. On the other hand, our results suggest that market investors' assessment of corporate performance is disconnected from business fundamentals and do not acknowledge the role of ownership concentration (either beneficial of detrimental) for performance assessment.

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“…The cash dividend occupation hypothesis proposes a benefits transformation concept in the case of ownership concentration. This hypothesis argues that cash dividends may be the one of the ways in which companies major shareholders occupy the interests of minority shareholders, and that high cash dividends may damage enterprise value [19][20][21]. Whilst some studies have focused on the governance effect or entrenchment effect of cash dividends based on principal-agent [22], most research concentrated on testing the influencing factors of cash dividend policy, and the effect of these cash dividends on companies principal-agent conflicts.…”

Section: Cash Dividend and Enterprise Performancementioning

confidence: 99%

A research on internal control, cash dividends and enterprise performance based on economic consequences

Wang

Ruan

2016

Filomat

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Whether internal control and cash dividend will have an interactive synergetic effect on enterprise performance or not is a study of both theoretical value and practical significance. Consequently, this article adopts a two-stage investment decision research process, explains the complex theoretical relationship among internal control, cash dividend and enterprise performance and, taking the Chinese A-share motherboard as an example, further explores their interactive synergetic effect. The research concludes that: (1) Internal control and cash dividend can contribute to the improvement of both short-term and longterm enterprise performance; (2) Internal control and cash dividend do have a significant synergetic effect, however there is a large disparity between the synergetic effect on short-term and long-term enterprise performance. In addition, the study finds that internal control and cash dividends are mutually regulative, thereby diminishing the positive impact on short-term enterprise performance and conversely enhancing the positive impact on long-term enterprise performance respectively.

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Expropriation of minority shareholders and payout policy

Cited by 54 publications

References 30 publications

Family Firms, Expropriation and Firm Value: Evidence from Related Party Transactions in Malaysia

Family Firms, Expropriation and Firm Value: Evidence from Related Party Transactions in Malaysia

Ownership Concentration and Performance Recovery Patterns in the European Union

A research on internal control, cash dividends and enterprise performance based on economic consequences

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