Revisiting Managerial Ownership and Firm Value in the Absence of Market Forces: Evidence from Singapore and Thailand

Abstract

This study examines the effect of managerial ownership on firm value in capital markets where outside governance mechanisms to discipline managers are weak or non-existent. We hypothesize that strong market forces in the U.S. confound the effect of managerial ownership on firm value, i.e., the convergence of interest argument. We test the hypothesis using data from 112 firms from Singapore Stock Exchange and 205 firms from the Stock Exchange of Thailand prior to the Asian financial crisis in 1997 when the market forces were weak, yet the investor protection was sufficient to prevent outright appropriation from management. For ease of comparison, we use methodologies from studies done on the U.S. sample firms during the same study period as ours. We find that, both in Singapore and Thailand, firm value is a function of managerial ownership, and the relation is of the famous inverted U-shaped. Moreover, the relation is robust under different model specifications. The results from Thai sample, with weaker market forces than in Singapore, lend support to many agency cost hypotheses advanced in the U.S. Our results provide useful implication for investors in emerging and frontier markets where outside governance mechanisms are yet to be fully developed.

Mekanisme Good Corporate Governance Terhadap Nilai Perusahaan Barang Baku Di Indonesia

“…Kepemilikan manajerial berpotensi menyetarakan kepentingan kedua belah pihak serta menumbuhkan motivasi manajemen untuk meningkatkan kinerjanya karena dengan adanya keterlibatan dalam kepemilikan saham, manajer dapat merasakan langsung hasil dari kinerjanya baik itu menguntungkan atau merugikan. Hasil dari penelitian ini didukung oleh Ramadhani & Mismiwati (2019), Suparlan (2019), dan Polwitoon & Tawatnuntachai (2020).…”

Pengaruh Kinerja Keuangan, Kebijakan Dividen, Dan Kepemilikan Manajerial Terhadap Nilai Perusahaan

“…Apabila perusahaan mempunyai kepemilikan manajerial yang semakin meningkat dapat membantu calon pemegang saham untuk menjadi tolak ukur dalam menanam modal karena pihak manajemen dengan pemegang saham mempunyai tujuan yang sama (Lestari et al, 2021). Penelitian Polwitoon & Tawatnuntachai (2020), Lestari et al (2021 yang menunjukkan hasil yaitu kepemiIikan manajeriaI berpengaruhIterhadap niIai perusahaan. H3: KepemiIikan manajerial berpengaruhiterhadap niIai perusahaan.…”

“…HasiI peneIitian ini sejaIan Polwitoon & Tawatnuntachai (2020), Lestari et al (2021) mengemukakan yaitu kepemiIikan manajeriaI berpengaruh terhadap niIai perusahaan. Tetapi hasiI berbeda dengan Marhaeningtyas & Hartono (2020), Lumbantoruan et al (2021) yang mengemukakan yakni kepemilikan manajerial tidakiberpengaruhiterhadap niIai perusahaan.…”