Informational role of ownership concentration: evidence from the Casablanca stock exchange

Farooq, Omar; Aktaruzzaman, Khondker

doi:10.1108/jiabr-11-2016-0141

Cited by 5 publications

(8 citation statements)

References 23 publications

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“…Lagoarde-Segot and Lucey (2008) find that poor corporate governance is associated with market inefficiency in the emerging markets, which should also lead to slower information flows. Other literature suggests that firms with concentrated ownership have lower agency costs and thus a better information environment, and information from these stocks can be used to predict stock prices of firms with more dispersed ownership (Farooq and Aktaruzzaman, 2019). Given the high degree of ownership concentration in maritime stocks, this research suggests that information from maritime stocks may be able to predict the prices of non-maritime stocks.…”

Section: Literature Reviewmentioning

confidence: 90%

Maritime Stock Prices and Information Flows: A Cointegration Study

et al. 2021

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In this study, the issue of how global maritime stock prices influence the stock prices of large transportation companies in the U.S. and other large markets is examined. Maritime stocks are chosen because they are central in global trade and thus may be good indicators of future global stock market and economic trends. Maritime companies are often owned by families or governments and are traded in stock markets with lower standards of accountability, hence information flows from maritime stocks may be slower than flows from other stocks. Cointegration and vector error-correction analysis is used to analyze the short-term and long-term relationships between maritime stocks, rail stocks, and trucking stocks. Evidence is found of a gradual diffusion of information from maritime stock prices to large rail or trucking stocks. This suggests that price changes in maritime stocks may help predict changes in prices in non-maritime transportation stocks.

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Section: Literature Reviewmentioning

confidence: 90%

Maritime Stock Prices and Information Flows: A Cointegration Study

et al. 2021

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“…Prior literature argues that the incentives to expropriate/ misuse corporate resources increase as the uncertainty in the economic environment goes up (Farooq & Jabbouri, 2015;Mitton, 2002). Therefore, any mechanism that can help reduce agency problems becomes more important in these times.…”

Section: Economic Uncertainty and The Value Of Advertising Expenditur...mentioning

confidence: 99%

Economic policy uncertainty nexus with the value relevance of advertising: Evidence from an emerging market

2023

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This paper aims to document the effect of economic policy uncertainty on the value of advertising expenditures within the context of an emerging market. The paper shows that the value of advertising expenditures is an increasing function of economic policy uncertainty. The impact of advertising on firm performance is more pronounced during the periods characterized by higher economic policy uncertainty. We argue that, during uncertain times, the financial information loses its relevance. Therefore, during these periods, non‐financial traits, such as brand image, customer equity, relationship capital, and familiarity that characterizes firms with high advertising become more important. The findings hold in various sub‐samples and across various proxies of advertising activity. The findings also hold under alternate estimation procedures (pooled OLS regression, panel data with fixed effects and instrument variable regression). More importantly, this paper also shows that, relative to other agency reducing mechanisms (such as analyst coverage, asset utilization ratio, expense ratio and dividend payments), advertising is more valuable during periods with high economic policy uncertainty.

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“…Furthermore, ownership concentration is an internal governance device that allows the largest shareholder to gain control over management behaviour and decisions. According to Farooq and Jai (2012), concentrated ownership is widespread in nations where minority shareholders' legal rights are weak. Gaining control over management in these countries reduces conflict of interest between management and shareholders, reducing agency concerns.…”

Section: Real Earnings Managementmentioning

confidence: 99%

“…The findings from the study indicate that, on average, ownership concentration provide effective monitoring of earnings management in Portuguese listed firms. Farooq and Jai (2012) examined the relationship between ownership structure and earnings management for firms listed at the Casablanca Stock Exchange and their sample consists of all non-financial firms during the period between 2004 -2007. The study used multiple regression technique for the panel data analysis and the results from the study show that ownership concentration insignificantly affects earnings management in listed non-financial Moroccan firms.…”

Section: Review Of Empirical Studiesmentioning

confidence: 99%

Ownership Concentration and Earnings Management of Listed Manufacturing Firms in Nigeria: Audit Committee Financial Expertise

Irom¹,

Okpanachi²,

Ahmed³

et al. 2023

IJBMR

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Significant corporate shareholders can exert undue pressure on managers to enhance earnings in order to increase corporate value, and that as a result of this undue pressure, managers to resort to earnings management practice in the corporations they manage. This study examined the moderating role of audit committee expertise on the relationship between ownership concentration and real-earnings management in Nigeria. The independent variable (ownership concentration) was measured as shareholders who have more than 5% equity stake in a company, and real-earnings management was measured using the Roychowdhury approach. Audit committee financial expertise which is the moderator, was measured in binary form, 1 if at least one member of the committee has accounting experience, and 0 otherwise. This paper used a sample of 34 manufacturing companies listed on the Nigerian Exchange (NGX) over a period of 15 years from 2007 to 2021. Data was collected from the annual financial reports of the sampled companies. Descriptive statistics, Pearson correlation and Quantile regression was employed for data analysis and the findings show OWNCON has a positive and insignificant effect on REM. However, when audit committee financial expertise was used as a moderator, the effect of ownership concentration on the real- earnings management of listed manufacturing companies in Nigeria became statistically significant. Based on the findings, the study recommends that manufacturing companies should have more concentrated owners because the higher the concentration the less tendency of REM of listed manufacturing companies in Nigeria.

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Informational role of ownership concentration: evidence from the Casablanca stock exchange

Cited by 5 publications

References 23 publications

Maritime Stock Prices and Information Flows: A Cointegration Study

Maritime Stock Prices and Information Flows: A Cointegration Study

Economic policy uncertainty nexus with the value relevance of advertising: Evidence from an emerging market

Ownership Concentration and Earnings Management of Listed Manufacturing Firms in Nigeria: Audit Committee Financial Expertise

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