Ownership structure and efficiency in large economies

Bejan, Camelia; Bidian, Florin

doi:10.1007/s00199-010-0585-3

Cited by 7 publications

(2 citation statements)

References 26 publications

(27 reference statements)

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“…However, there is a lack of extant literature on exploring the governance mechanisms of zombie firms from the perspective of ownership structure. It has been demonstrated that ownership structure has a significant impact on corporate behaviour and strategic decision‐making (Fan and Wong, 2002; Bejan and Bidian, 2012; McGuinness et al, 2017). Combined with the emerging phenomenon of common institutional ownership in recent years, we find that common institutional ownership plays a synergistic governance role and thus inhibits the formation of zombie firms.…”

Section: Conclusion and Discussionmentioning

confidence: 99%

Can common institutional ownership inhibit the formation of zombie firms? Evidence from China

Ding

2024

Asian-Pac Economic Lit

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The survival of zombie firms severely crowds out healthy corporate investment and employment growth, eventually undermining economic growth potential. Hence, how to properly address the problem of corporate zombification is an essential part of achieving high‐quality economic development in China. In recent years, the phenomenon of common institutional ownership has become increasingly widespread in the capital markets and has a significant impact on the strategic decisions of companies. There are currently two views on the corporate governance role of common institutional ownership: the synergistic governance effect and the collusive fraud effect. Using data from Chinese‐listed firms from 2009 to 2021, this paper finds that common institutional ownership can significantly inhibit the formation of zombie firms. The higher the degree of their linkage and the greater the shareholding, the more pronounced the synergistic effect. The findings remained valid after considering the endogeneity issue and conducting robustness tests. Furthermore, the mechanism test suggests that common institutional ownership inhibits the formation of zombie firms by improving internal control quality and reducing agency costs. This paper contributes to the study of how to inhibit the formation of zombie firms by identifying common institutional ownership from the perspective of external governance mechanisms. In addition, this paper enriches the research on the economic consequences of common institutional ownership. Finally, various practical implications for policymakers may be realised, which may help curb the trend of corporate zombification through equity‐based instruments.

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Section: Conclusion and Discussionmentioning

confidence: 99%

Can common institutional ownership inhibit the formation of zombie firms? Evidence from China

Ding

2024

Asian-Pac Economic Lit

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“…Furthermore, various researchers such as Williamson (1964), Marris (1964), Galbraith (1967), Pfeffer and Salancik (1978), Salami (2011), Su and He (2012), Bejan and Bidian (2012) have argued that ownership structure has important implications for firm efficiency and strategic development. Based on the principal-agency problem model, Jensen and Meckling (1976) have argued that a firm's performance will be negatively related to low ownership concentration and positively related to high ownership concentration.…”

Section: Literature Reviewmentioning

confidence: 99%

Ownership Structure Variation and Firm Efficiency

Hassan¹,

Othman²,

Harun³

2014

ASS

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Firms with different ownership structures could be argued to have different levels of efficiency. Highly concentrated firms are expected to be more efficient as this type of ownership structure may alleviate the conflict of interest between managers and shareholders. In Malaysia, public-listed firms have been found to have highly concentrated ownership structure. However, whether this evidence holds for every industry has not been established. Hence, the objective of this paper is to investigate whether there are variations in ownership structure and firm's efficiency across sectors. To achieve this objective, the frequency distributions of ownership structure were calculated and firms' efficiency scores for consumer products, industrial products, construction and trading/services sectors were measured. Data Envelopment Analysis (DEA) under the assumptions of constant returns to scale (CRS) and variable returns to scale (VRS) was employed to estimate firms' efficiency scores. A sample of 156 firms listed on the Kuala Lumpur Stock Exchange (KLSE) was selected using the stratified random sampling method. The findings have shown that there are variations in firm ownership structure and efficiency across sectors.

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