Equity ownership structure and corporate performance using industry-adjusted measures

The ownership structure of a publicly held Corporation is one of the internal mechanisms of corporate governance. Insider ownership is one of the internal controlling mechanisms that could theoretically reduce agency costs. Earlier researcher has investigated the effects of insider ownership on firm performance. But we have attempted to add few more dimensions to it. Firstly, earlier studies did not attempt to study this relationship after the implementation of revised corporate governance code in 2006 in India and after the changes in the disclosures of insider ownership as per the clause 49 of the listing agreement. Secondly, earlier studies did not take into account the time lag for the studies on Indian markets. We have attempted time lag studies using panel data on the Indian Markets using MBVR ratio as a performance measure. The result shows that corporate performance is significantly influenced by insider ownership. Hence corporate governance issues needs to be dealt with great care.Â

Ownership structure is considered to be the most influential component in corporate govern-ance; it is also closely related to firm performance. The current research analyzes the effect of ownership structure (both insider ownership board and managerial ownership, blockholder ownership and institutional ownership concentration pressure-insensitive and pres-sure-sensitive) on firm performance (industry adjusted return on asset/IAROA) based on its life cycle. Life cycle is incorporated into the research to examine whether the effect of own-ership structure on firm performance differs at each stage of the life cycle. The current re-search uses imbalanced panel data consisting of 695 observations of sample firms from the manufacturing, IT, and multimedia firms during the 2005-2010 period. The results show that: (1) insider ownership has a significantly non-linear influence on IAROA, indicated by a U-shaped curve (2) blockholders have a significantly positive effect on IAROA in firms at the mature stage; on the contrary, the effect is significantly negative in firms at the growth stage (3) institutional ownership concentration has a significantly negative effect on IAROA across the samples and a significantly positive effect on firms at the mature stage, and (4) pressure-insensitive and pressure- sensitive institutional ownerships have a positive and sig-nificant effect on IAROA in firms at the mature stage; on the contrary, the effect is negative and significant in firms at the growth stage.

The aims of this study was to obtain empirical evidence of how ownership structure ie institutional and managerial ownership affect firm performance. The study also examine the moderating role of tax avoidance on the effect of institutional and managerial ownerships on firm performance. A model was developed and tested using sample of 58 manufactured companies from 2012 to 2014, which is listed on Indonesian Stock Exchange. Data were collected and analyzed using least square regression and moderated regression analisys. The result showed that institutional ownership and managerial oenrrship affect firm performance. This study also showed that tax avoidance moderates the effect of both institutional and managerial ownership on firm performance.Keywords: Institutional Ownership, managerial ownership, tax avoidance, firm performance

The current study aims at providing empirical evidence concerning the relationship between the ownership structure and performance of the shareholding companies listed on the Amman Stock Exchange (ASE). To measure the ownership structure, used institutional and block holders ownership. The performance is measured by using Tobin's Q (TQ). This study also used a moderating variable which is board independence. To achieve the objectives of the study, this study used the panel data method to analyze data for a sample of 180 companies listed on Amman Stock Exchange (ASE) for the period from 2009 to 2017. The findings show that the ownership structure mechanisms have a significant influence on firm performance measure by (TQ). So, institutional ownership shows a significant positive relationship with (TQ), however, the findings show block holders ownership have a significant negative relationship with (TQ). On another hand, the moderating effect of board independence has a significant positive on the relationship between block holders ownership and (TQ) and has a significant negative on the relationship between institutional ownership and (TQ). The findings of this study confirm empirical research continuing to find a new performance measurement to gain a real form of firm performance. Therefore, the evidence of this study provides empirical evidence to stakeholders, managers and interested parties to support them for its decision.

Ownership Breadth, Institutional Ownership, and Firm Performance

The aims of the research are: (1) to find out the structure of stock ownership at the public companies in Indonesia, (2) to analyze effects of stock ownership structure by insider ownership and institutional investor on debt policy and dividend policy at the public companies in Indonesia, (3) to obtain empirical evidences that control mechanism through stock ownership by the insider ownership and the institutional investor will decrease the problems of agency, which then minimizes the cost of agency,(4)to fain out simultaneous relation between the insider ownership, the institutional investor, the debt policy, and the dividend policy. The samples of the research which included 70 manufacturing companies registered at the Jakarta Stock Exchange. The samples were taken by using a purposive sampling technique. The hypotheses were then tested by means of a simultaneous analysis of Two Stage Least Square. The results of the research show that (1) the insider ownership has a significant effect on the debt policy and, there is a substitution or negative causal relation between the insider ownership and debt policy; (2) the institutional investor has a significant effect on the debt policy, and there is a substitution or negative causal relation between the institutional investor and the debt policy. (3)the institutional investor has a negative effect on the insider ownership, (4)the dividend policy does not have a significant effect on the institutional investor, (5) there is a substitution relation between the debt policy and the dividend policy.

PurposeTaking hints from the lacunas in the field of ownership structure and corporate social responsibility (CSR) performance of the firms in India, especially when the moderating effect of certain corporate governance mechanism comes into play, this study aims to attempt to fulfill the gap by exploring the ownership structure of the firm (i.e. foreign ownership, institutional ownership and government ownership) and the CSR performance of the firm, when moderated by board independence of the firm. In an additional analysis, the study explores the non-linear effect of foreign ownership structure on the CSR performance in the Indian context.Design/methodology/approachThe study incorporates a strongly balanced panel data set of 280 non-financial National Stock Exchange 500 listed firms for the study period of 2013–2019. The study uses both static and Arellano–Bond dynamic panel model under generalized method of moments (GMMs) framework to establish the relationship between the studied variables.FindingsThe study acknowledges a positive impact of the foreign investors in the CSR performance of Indian firms with a higher proportion of independent directors on the board. The study further finds a contrarian role of government ownership in Indian context among the sampled firms. The study also in its extended analysis finds a non-linear inverted U-shaped relationship between foreign ownership (FO) and the CSR performance, which shows that FO positively impacts the CSR performance until a threshold level of 34% after which the curve starts declining.Practical implicationsOne of the major implications this study provides for the corporate policymakers is that the firms with a string penchant for philanthropic activities such as CSR should be concerned with attracting more foreign investors in their shareholding. Also, a higher proportion of independent directors on the board boost the engagement of the firm in CSR works.Originality/valueThe moderating effect of board independence in the ownership structure–CSR relationship attempted by this study is a rare attempt in a developing economy, such as India, and offers a fresh dimension to the study. Also, the non-linearity relationship between FO and the CSR performance and the threshold level providing the twofold effect of the variables is an innovative research attempt, especially in regard to a developing country like India.

This paper investigates the impact of capital structure on firm performance using a sample of 3,122 observations of 446 non-financial listed companies on the Vietnam stock market during 2011-2017. Using firm performance measures, namely ROE and Tobin Q, we examined if higher leveraged firms are more efficient or less in their performance. We employed the fixed effect model to prove that there is an inverse U-shaped relationship between leverage and ROE, and then we can find a preferred capital structure for Vietnam non-financial firms. To deal with endogeneity problem of the leverage variable, we employ two stage least squares (2SLS) regression with instrument variable estimators, which helps us strengthen the above results. Keywords Capital structure, firm performance, leverage, efficiency, instrument variable estimator, agency cost theory References [1] J. Abor, The effect of capital structure on profitability: an empirical analysis of listed firms in Ghana, Journal of Risk Finance. 6 (2005) 438-447.[2] M. Baker, J. Wurgler, The Determinants of Capital Structure: Capital Market-Oriented versus Bank-Oriented Institutions, Journal of Financial and Quantitative Analysis. 43 (2002) 59-92.[3] A.N. Berger, E. Bonaccorsi di Patti, Capital structure and firm performance: A new approach to testing agency theory and an application to the banking industry, Journal of Banking and Finance. 30 (2006) 1065-1102.[4] J. Berk, P. DeMarzo, J. Harford, Fundamentals of Corporate Finance, second edition, Prentice Hall, 2012.[5] A.A. Berle, G.C. Means, The Modern Corporation and Private Property, New York: The Macmillan Company, 1932.[6] V. Dawar, Agency theory, capital structure and firm performance: Some Indian evidence. Managerial Finance. 40(12) (2014) Số trang.[7] T.H.V. Duong, A study of the factors affecting the capital structure of the companies listed on Vietnam stock market, Doctoral thesis - National Economics University, 2014.[8] S.J. Grossman, O.D. Hart, Corporate financial structure and managerial incentives, In M. J.J., The economics of information and uncertainy, University of Chicago Press, 1982.[9] M. Jensen, Agency cost of free cash flow, corporate finance and takeovers, American Economic Review Papers and Proceedings. 76 (1986) 323-329.[10] J.C. Jensen, W.H. Meckling, Theory of the firm: managerial behavior, agency costs and ownership structure. Journal of Financial Economics. 3 (1976) 305-360.[11] A. Kraus, R.H. Litzenberger, A State-Preference Model of Optimal Financial Leverage, Journal of Finance. Tập (1973) 911-922.[12] D. Margaritis, M. Psillaki, Capital structure and firm efficiency, Journal of Business Finance and Accounting. 34 (2007) 1447-1469.[13] D. Margaritis, M. Psillaki, Capital structure, equity ownership and firm performance, Journal of Banking and Finance. 34 (2010) 621-632.[14] F. Modigliani, M. Miller, The cost of capital, corporation finance, and the theory of investment, American Economic Review. 48 (1958) 655-669.[15] F. Modigliani, M. Miller, Corporate income taxes and the cost of capital: A correction, American economic Review. Tập (1963) 433-443.[16] S.C. Myer, Determinants of corporate borrowing, Journal of Financial Economics. Tập (1977) 147-175.[17] S.C. Myers, N.S. Majluf, Corporate Financing and Investment Decisions When firms have information that investors do not have, Journal of financial economics. 13 (1984) 187-221.[18] B. Seetanah, K. Seetah, K. Appadu, K. Padachi, Capital structure and firm performance: evidence from an emerging economy, The Business and Management Review. 4 (2014) 185-196.[19] S. Titman, R. Wessels, The determinants of capital structure choice. Journal of Finance. 43(1) (1988) 1-19.[20] L. Weill, Leverage and Corporate Performance: Does Institutional Environment matter? Small Business Economics. 30 (2008) 251-265.[21] J. Williams, Perquisites, risk and capital structure, Journal of Finance. 42 (1987) 29-49.[22] R. Zeitun, M.M. Haq, Debt maturity, financial crisis and corporate performance in GCC countries: a dynamic-GMM approach, Afro-Asian J. Finance and Accounting. 5 (2015) 231-247.

The credibility of audit quality adds value and assure investors that the investment in the company is secured. However, institutional and block-holder can affect audit quality positively or negatively. The study investigates the effect of institutional and block-holder ownership on audit quality of listed manufacturing firms in Nigeria. Logistic regression model was employed to analyze the data and test the hypotheses. Data were extracted from published audited annual reports and accounts of 32 firms that represent the sample size of the study out of the total of 59 firms. The results show that institutional ownership has negative and significant effect on audit quality while block-holder ownership has positive and significant effect on audit quality. This implies that institutional ownership reduces audit quality while block-holder ownership influences audit quality positively. The study conclude that both institutional and block-holder ownership affect audit quality and recommends that the proportion of shares acquired by institutions should be reviewed downward and that of block-holder ownership should be increased. This will encourage both institutional and block-holder ownership to put in their best to effectively monitor the quality of audit thereby give assurance and confidence to other forms of ownership in the manufacturing firms that their investments is secured.

Purpose : The study was carried out to produce empirical evidence to examine the relationship among corporate governance (CG) parameters, ownership structure, and corporate performance.Methodology : CG parameters included board size, CEO duality, board meetings attended, board busyness, and audit committee size and its independence. The ownership of the structure was determined by insider, foreign, and institutional ownership. A sample of 500 NSE-listed firms was selected for the study. Data analysis was conducted using STATA 17 and SPSS 25. Before conducting the regression analysis, the study undertook a series of diagnostic tests to ensure the reliability, robustness, and validity of both the dataset and the econometric models employed.Findings : The findings indicated that CG variables and ownership structure had a positive impact on firm performance. To elaborate, CEO duality ; board meetings attended ; board busyness ; audit committee size ; and insider, foreign, and institutional ownership were found to have a positive impact on performance. However, neither board size nor audit committee independence established any influence.Practical Implications : Companies may adapt their governance structures and diversity initiatives to enhance their competitive advantage and long-term sustainability. This study emphasized the importance of enhancing corporate governance (CG) and strengthening laws to achieve better firm performance in emerging markets. Additionally, the interests of insiders, as well as those of foreign and institutional investors, must be aligned with the company to support long-term wealth creation.Originality : Instead of utilizing the standard system found in the literature, we relied on a single-measure structure that incorporated a variety of CG parameters and ownership.

EUGENE FAMA and Michael Jensen's treatment of the "Separation of Ownership and Control" is both insightful and informative. It deepens our understanding of corporate control, and the analysis of residual claimants usefully extends the economics of internal organization to include partnerships, mutuals, nonprofits, and the like. The basic argument is this: specialized governance structures arise in response to the efficiency needs of each type of organization. This is an important argument and one with which I broadly concur. They couple this, however, with a strong suggestion that these structures have reached a high degree of refinement-on which account there is not now, if indeed there ever has been, an organization control problem with which scholars and others are legitimately concerned. On this point I have grave doubts. My discussion of the paper addresses three issues: What is the relation, if any, of the hierarchical organization of the firm to economic performance? What relation, if any, does residual claimant status have to the composition and character of the board of directors? And is there now or has there ever been a corporate control problem? I deal with each of these issues in order.

PurposeThe main purpose of this paper is to examine the determinants and interrelations between corporate ownership structure and corporate performance.Design/methodology/approachThe ownership of institutional investors are classified into government institutional ownership, financial institutional ownership, securities investment trust funds ownership, incorporated companies ownership, and other institutional ownership, so as to facilitate a detailed study. Ten‐year (1994‐2003) panel data of 569 Taiwanese listed companies are examined. Furthermore, this study applies the F‐test, LM‐test and Hausman test to determine the best statistical method (ordinary least squares method, fix effects model or random effects method).FindingsThe results show an inverse “U‐shaped” relationship between insider ownership and corporate performance. Government institutional ownership and incorporated companies ownership are found to have a significant negative correlation with corporate performance. However, securities investment trust funds and corporate performance are positively correlated.Practical implicationsThese findings provide Taiwanese listed companies with a insights on how to improve their corporate control mechanisms. These results can also serve as a useful reference for companies and the academics concerning future competitive strategies and decision making.Originality/valueThis study further incorporates the ratio of mortgaged/pledged shares of directors and supervisors and different institutional ownership to analyze how the mechanisms of corporate governance function in Taiwan's industries, and whether these mechanisms can effectively lower agency problems to enhance corporate performance.

The study aims to investigate the moderating role of accounting conservatism in the relation between ownership structure and firm performance of Gulf Cooperation Council (GCC) firms. The sample of the study consisted of 215 firms from six GCC countries during the period 2013–2015. Ownership structure was determined through three dimensions: ownership concentration, managerial ownership, and institutional ownership. As for performance, it was measured by two variables: return on assets (ROA) and Tobin's Q. The study used A panel regression and concluded that accounting conservatism plays a positive role in reducing the negative impact of ownership concentration on firm performance and consolidate the positive role of managerial and institutional ownerships in firm performance. The increase of accounting conservatism in the financial reports of GCC firms reduced asymmetrical information and the intensity of agency problems, besides providing credibility to investors in financial reports.

The aim of this comparative study between the French and American markets, characterized by a different ownership structure is to examine the relationship between managerial ownership, the board of directors, the equity-based compensation and corporate performance. Regardless of the selected sample, we found on the one hand, a non-linear relationship between managerial ownership and firm performance and on the other hand, in the case of managerial entrenchment board of directors is a substitute for managerial ownership to solve the agency problem. In addition, stock-based compensation is non-linear function with managerial ownership, contrary to previous studies that assume a monotonous or non-significant relationship. The hypothesis of endogeneity is valid only in the American case. This result leads us to believe that the U.S. CEO has a preference to hold a large percentage of shares of firms that generate a good performance to neutralize capital market monitoring. Our study is exclusive in terms of the effect of managerial ownership on corporate performance in terms of comparison between two markets, characterized by a difference in ownership structure. We determine the impact of equity compensation on the one hand, the managerial ownership where all the studies assume either a monotone or neutral relationship between these two variables and on the other hand, the effect of board in the alignment or managerial entrenchment cases.

PurposeThis paper investigates the role of board independence in determining the relationship between firm ownership and auditor choice.Design/methodology/approachThe research uses a logistic regression to test the direct and indirect effects of ownership structure on the decision to hire a high-quality (Big 4) audit firm. The sample consists of 207 non-financial firms listed on the Gulf Cooperation Council (GCC) countries stock markets between 2009 and 2016.FindingsEmpirical findings show that family ownership is associated with a negative and significant coefficient suggesting that an increase in family ownership decreases the likelihood that the firm will employ a Big 4 auditor. This finding suggests that family owners are reluctant to impose external monitoring. Furthermore, we find a positive relationship between institutional ownership and auditor choice supporting the conjecture that institutional investors are more likely to choose a Big 4 auditor. The results also reveal that the effects of family and institutional ownership on auditor choice are partially mediated by independent directors.Practical implicationsThis study has important implications for GCC economies whose policymakers and regulators may need to address the conflict between controlling and non-controlling shareholders. It provides guidance for firms in the construction and implementation of their own corporate governance policies. Furthermore, the study findings may be useful to investors, assisting them in making better informed decisions and aids other interested parties in gaining a better understanding of the role played by ownership structure in the quality of auditors. Finally, the paper highlights the importance of the composition of the board of directors in increasing the likelihood of hiring a high-quality audit firm.Originality/valueThe main contribution of the present paper is to examine the board composition as a potential mediating variable between ownership structure and auditor choice. Moreover, it highlights the issue of improving governance mechanisms.