Meta-Analyzing Ownership Concentration and Firm Performance in Asia: Towards a More Fine-Grained Understanding

Abstract

We present a meta-analysis of the relationship between concentrated ownership and firm financial performance in Asia. At the cross-national level of analysis, we find a small but significant positive association between both variables. This finding suggests that in regions with less than perfect legal protection of minority shareholders, ownership concentration is an efficient corporate governance strategy. Yet, a focus on this aggregate effect alone conceals the existence of true heterogeneity in the effect size distribution. We purposefully model this heterogeneity by exploring moderating effects at the levels of owner identity and national institutions. Regarding owner identity, we find that our focal relationship is stronger for foreign than for domestic owners, and that pure "market" investors outperform "stable" or "inside" owners whom are multiply tied to the firm. Regarding institutions, we find that a certain threshold level of institutional development is necessary to make concentrated ownership an effective corporate governance strategy. Yet we also find that strong legal protection of shareholders makes ownership concentration inconsequential and therefore redundant. Finally, in jurisdictions where owners can easily extract private benefits from the corporations they control, the focal relationship becomes weaker, presumably due to minority shareholder expropriation.Asia Pac J Manag (2009) 26:481-512 DOI 10.1007 Authors are listed alphabetically. A shorter version of this paper is included in the 2008 Academy of Management Best Paper Proceedings. We are indebted to APJM guest editors Eric Gedajlovic and Mick Carney for their editorial guidance, and to two anonymous reviewers for their insightful feedback. A special word of thanks goes out to Tammo Bijmolt and David Wilson, who graciously supplied us with methodological advice. We are nevertheless responsible for any remaining errors.

Does Ownership Structure Matter for Bank Performance in the MENA Region? An Empirical Evidence

“…This confirm the expropriation hypothesis which states that ownership concentration has an adverse effect on bank performance as it may increase the agency costs and cause tunneling problem. The results is consistent with (Gutiérrez &Tribo, 2004;Boyd et al, 1998;Filatotchev et al,2001;Alimehmeti and Paletta, 2012;Pinto and Augusto,2014;Lee, 2008;Su and He,2012) and contradicts with (Jensen and Meckling, 1976;Shleifer and Vishny, 1986;Affes and Hakim, 2013;Heugens et al, 2009;Son et al,2015) who support the positive association between ownership concentration and bank performance according to the monitoring hypothesis. Bank size has a significant positive effect on overall bank performance measured by BSC.…”

Firms’ Board Independence and Corporate Social Performance: A Meta-Analysis

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“…The BRIC countries, as most emerging economies, are characterized by corporate governance structures with high concentration of ownership and inside investors (Gerlach, 1992;Heugens, van Essen, & van Oosterhout, 2009). The consequences of the potential principal-principal problems that follow from concentrated ownership depend largely on the way the key institutions, formal and informal, in the country work.…”

“…There may be opportunities for tunneling through corruption in enforcement of codes, in the recognition of formal ownership rights, in the operation of the courts, in the ability of the government to take on the dominant owners, or through transfer prices of assets being negotiable, or providers of assets or products being negotiable (Heugens et al, 2009).…”