Optimal ownership structure and monitoring in entrepreneurial firms

Loyola, Gino; Portilla, Yolanda

doi:10.1016/j.frl.2019.06.005

Cited by 3 publications

(2 citation statements)

References 32 publications

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“…Given that dispersed ownership, which offers an ideal environment for the emergence of principal-agent conflict, remains in a global context more the exception than the rule (La Porta et al 1999) more interest in corporate governance studies has been devoted to concentrated ownership (Su et al 2008;Loyola and Portila 2019). While concentrated ownership provides a natural mechanism for mitigating principal-agent conflict (Coffee 1999;Berglöf and Claessens 2006), it leads to the emergence of the agency conflict type II, which refers to the relations between majority and minority shareholders (Wang and Shailer 2015;Edmans 2014;Khan et al 2020).…”

Section: Corporate Governance Code In the View Of Theorymentioning

confidence: 99%

Does Corporate Governance Compliance Increase Company Value? Evidence from the Best Practice of the Board

Aluchna

Kuszewski²

2020

JRFM

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Drawing upon agency theory, we address the limitations of best practice code in the context of emerging governance, emphasizing the role of concentrated ownership. While the code provisions were formulated in developed countries, the transfer of one-size-fits-all guidelines may not address the characteristics and challenges of emerging and post-transition economies. Specifically, we emphasize that provisions of corporate governance codes are aimed at solving the principal–agent conflict between shareholders and managers. These guidelines may remain limited in addressing principal–principal conflicts between majority and minority shareholders and have either a lesser effect on valuation or none at all. Using a unique sample of 155 companies listed on the Warsaw Stock Exchange during the period 2006–2015, with hand-collected data from declarations of conformity, we tested the hypotheses on the link between corporate governance compliance (with board) practice and company value. The period of 2006–2015 was chosen deliberately, due to the relative stability of corporate governance code recommendations over this time. The results of our panel model reveal a negative and statistically significant relation between corporate governance compliance and company value. We contribute to the existing literature providing new evidence on compliance practice in the context of concentrated ownership, and the limited effect of code provisions in addressing structural challenges of corporate governance in emerging post-transition economies and hierarchy-based control systems.

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Section: Corporate Governance Code In the View Of Theorymentioning

confidence: 99%

Does Corporate Governance Compliance Increase Company Value? Evidence from the Best Practice of the Board

Aluchna

Kuszewski²

2020

JRFM

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“…Gompers (1997) point out that VC projects – characterized by extreme uncertainty, severe asymmetry of information and potentially high rewards – provide a unique context to assess the role of financing contracting and corporate control. Nevertheless, in recent years apart from some studies (Kaplan and Strömberg, 2003; Cumming, 2005; Loyola and Portilla, 2020; Correia and Meneses, 2019) most VC research has focussed on the role played by individual rather than multiple contractual features in resolving issues regarding the allocation of cash-flow rights or corporate control rights. In this regard, this paper is novel in many ways.…”

Section: Introductionmentioning

confidence: 99%

Optimal design of venture capital financing contracts: the case of Portuguese, Spanish and German markets

Correia

Meneses

2021

SEF

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Purpose This study aims to investigate the use of convertible securities and control rights covenants for a sample of 53 Portuguese, Spanish and German venture capital (VC) firms. Design/methodology/approach A relatively new methodology in business sciences – a fuzzy set qualitative comparative analysis – that considers both quantitative and qualitative factors is used for obtaining a solution that best fits the empirical data. Findings The results show that the use of convertible securities is affected by agency predictions, namely, the anticipated severity of double-sided moral hazard problems. On the other hand, a mixed support is provided to the agency predictions regarding the use of control right covenants. The results seem to suggest that control right covenants tend to play a different role from convertible securities in the optimization of contract design for VC-backed investments. Originality/value Existing literature on VC contract design is extended by providing a cross-border analysis to VC financing decision.

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Does the paternalism of founder-managers improve firm innovation? Evidence from Chinese non-state-owned listed firms

Sun

Liu

Chen

2022

Finance Research Letters

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Optimal ownership structure and monitoring in entrepreneurial firms

Cited by 3 publications

References 32 publications

Does Corporate Governance Compliance Increase Company Value? Evidence from the Best Practice of the Board

Does Corporate Governance Compliance Increase Company Value? Evidence from the Best Practice of the Board

Optimal design of venture capital financing contracts: the case of Portuguese, Spanish and German markets

Does the paternalism of founder-managers improve firm innovation? Evidence from Chinese non-state-owned listed firms

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