Reforms Protecting Minority Shareholders and Firm Performance: International Evidence

Burunciuc, Corina; Gönenç, Halit

doi:10.3390/jrfm14010005

Cited by 3 publications

(3 citation statements)

References 80 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…An underdeveloped financial system is usually characterized by poor legal shareholders' protection (Shleifer and Wolfenzon (2002). In a recent study, Burunciuc and Gonenc (2021) used a dataset from the Doing Business database developed by the World Bank to identify 65 countries that undertook reforms protecting minority shareholders and investigate the impact of these reforms on firms operating in these countries. They provide evidence of a positive and significant impact of reforms that protect minority shareholders on the firm value measured by Tobin's Q and on firm's performance.…”

Section: Previous Research On the Investors' Legal Protection And Firm Financingmentioning

confidence: 99%

Agency costs and credit availability: an international study

Bahlous-Boldi

2021

EJMBE

View full text Add to dashboard Cite

PurposeThis paper aims to investigate the link between agency costs mitigation via three levels of rights protection (minority rights protection, enforcing contracts, resolving insolvency issues) provides the propitious climate for financing investment opportunities around the world.Design/methodology/approachWe use Bartlett’s three-group method to stratify countries based on how well they protect investors as measured by the scores provided in the Doing Business dataset developed by the world bank for 189 countries. We then test a variety of independent hypotheses that the alleviation of agency costs via three levels of protection (minority investors’ rights, contract enforcement, resolving insolvency issues) is associated with better access to credit via the banking system, better valuation of listed firms via the stock market and higher investment and growth.FindingsOur findings support Agency Theory which explains why the absence of legal protection of external investors leads to stock markets and financial institutions failing to fulfill their role of financing the economy.Practical implicationsThe policy implication from this study indicates that countries ought to (1) develop legislation that protects investors’ rights, (2) improve the quality of their judicial system in terms of enforcing the legislation and (3) build the framework for resolving disputes during insolvency as these are important ingredients for a developed financial system.Originality/valueWe use the World bank dataset and a new methodology to quantify the significance of the relationship between minority rights protection, ineffective enforcement, lack of bankruptcy laws and access to firm financing via the banking sector and the stock market. It provides new evidence that the quality of the judicial system in a country matter for firms’ ability to raise financing and enhance value creation.

show abstract

Section: Previous Research On the Investors' Legal Protection And Firm Financingmentioning

confidence: 99%

Agency costs and credit availability: an international study

Bahlous-Boldi

2021

EJMBE

View full text Add to dashboard Cite

show abstract

“…According to Myers' [35], firms with more leverage will forego positive net present value projects in the future in order to pay all debt obligations. From another point of view, the literature Burunciuc & Gonenc [36] said that debt could also cause financial distress "bankruptcy effect". Increased leverage increases the agency conflict between shareholders and creditors, which decreases the company's market value.…”

Section: Introductionmentioning

confidence: 99%

Types I, II, III Agency Problems, Firm Value, and National Governance Quality A Case Study of Indonesian and Singaporean Companies

Sihombing¹,

Sadalia²,

Silalahi³

2022

Advances in Economics, Business and Management Research

View full text Add to dashboard Cite

Corporate governance is mostly studied in developed countries such as the US, UK, and some developed countries in Europe, which focuses on Type I agency problems (shareholder-manager), and there is a dearth of types of agency problems such as type II problems (shareholder-shareholder) and type III problems (shareholder-creditor). Furthermore, the modern financial literature has turned to national governance quality in influencing firm value. So, this research is interested in exploring agency problems I, II, and III affecting firm value with national governance quality as a moderating variable. The research sample was manufacturing companies listed on the Indonesia Stock Exchange and Singapore Exchange from 2016–2020. The findings show that type I agency problem has a significant negative effect and Types I and II agency problem have an insignificant negative effect on firm value in Indonesia. While Types I and II agency problem have a significant negative effect. Still, Type III agency problem has an insignificant negative effect on firm value in Singapore. Moreover, national governance weakens the negative influence of the Type II agency problem on firm value in Singaporean manufacturing companies. Generally, types I, II, and III agency problems give rise to different agency cost levels in companies of a country, so the government needs to reform national governance quality to increase firm value.

show abstract

“…Corporate governance reforms have encouraged changes in the composition of boards of directors for the last two decades (Fauver et al, 2017) and have been highly recognized by regulators and corporations to strengthen investors' confidence (Burunciuc and Gonenc, 2020). Extant research has suggested that these reforms are associated with corporate outcomes, such as monitoring power (Hillier and McColgan, 2006), firm performance (Price, Román and Rountree, 2011), dividend policy (Bae et al, 2021), bank versus public debt choice (Ben-Nasr, Boubaker and Sassi, 2021), corporate risk-taking behaviour (Koirala et al, 2020) and cash holdings (Chen et al, 2020), among others.…”

Section: Introductionmentioning

confidence: 99%

The Effectiveness of Gender Diversity Reforms and the Impact of a Familial Culture: A Spillover Effect on Board Independence

Poletti‐Hughes

Dimungu‐Hewage

2022

British J of Management

View full text Add to dashboard Cite

This study examines the impact of board gender diversity reforms (i.e. voluntary and regulatory) on both their effectiveness in increasing independent female directors on boards and board independence in a sample of 41 countries (10,313 unique firms and 82,613 firm‐year observations). In an initial analysis, we find that voluntary self‐regulation via a comply‐or‐explain reform decreases the number of independent female directors on boards and board independence. However, after incorporating the moderating effect of national culture, we find that such comply‐or‐explain reforms are ineffective only in countries where the inclusion/role of women in labour markets is limited (i.e. familial culture). By contrast, quota reforms boost the appointment of independent female directors and board independence despite the cultural setting, signifying positive actions towards good corporate governance practices.

show abstract

Reforms Protecting Minority Shareholders and Firm Performance: International Evidence

Cited by 3 publications

References 80 publications

Agency costs and credit availability: an international study

Agency costs and credit availability: an international study

Types I, II, III Agency Problems, Firm Value, and National Governance Quality A Case Study of Indonesian and Singaporean Companies

The Effectiveness of Gender Diversity Reforms and the Impact of a Familial Culture: A Spillover Effect on Board Independence

Contact Info

Product

Resources

About