When Blockholders Leave Feet First: Do Ownership and Control Affect Firm Value?

2013 ◽  
Author(s):  
Bang Dang Nguyen ◽  
Kasper Meisner Nielsen
Keyword(s):  
Firm Value ◽  
And Control

scholarly journals The Benefits of Conservative Accounting to Shareholders: Evidence from the Financial Crisis

2013 ◽  
Vol 27 (2) ◽  
pp. 319-346 ◽  
Author(s):  
Bill Francis ◽  
Iftekhar Hasan ◽  
Qiang Wu
Keyword(s):  
Financial Crisis ◽  
Firm Value ◽  
Governance Mechanism ◽  
Current Crisis ◽  
Stock Performance ◽  
Conservative Accounting ◽  
Alternative Measures ◽  
Recent Financial Crisis ◽  
And Control ◽  
Jel Classifications

SYNOPSIS Using the recent financial crisis as a natural quasi-experiment we test whether, and to what extent, conservative accounting affects shareholder value. We find that there is a significantly positive and economically meaningful relation between conservatism and firm stock performance during the current crisis. The result holds for alternative measures of conservatism and is validated in a series of robustness checks. We further find that the relation between conservatism and firm value is more pronounced for firms with weaker corporate governance or higher information asymmetry. Overall, our paper complements LaFond and Watts (2008) by providing empirical evidence to their argument that conservatism is an efficient governance mechanism to mitigate information risk and control for agency problems, and that shareholders benefit from it. JEL Classifications: M41; M48; G01.

scholarly journals The use of corporate derivatives: Effects on firm value in the Italian market

2021 ◽  
Vol 19 (1) ◽  
pp. 55-68
Author(s):  
Alberto Tron ◽  
Federico Colantoni
Keyword(s):  
Corporate Governance ◽  
Firm Value ◽  
Control Variable ◽  
Governance Mechanisms ◽  
Financial Firms ◽  
Corporate Governance Mechanisms ◽  
Italian Market ◽  
Effect Regression ◽  
And Control ◽  
The Impact

It is an empirical question whether the use of derivatives hedging among firms actually contributes to enhancing firm performances. Despite the increasing use of derivatives by non-financial firms, existing literature still debates about their effect, especially in countries with peculiar corporate governance mechanisms. By using a sample of non-financial Italian firms listed from 2007 to 2018, this paper investigates if the use of several types (currency, interest rate, and commodity) of financial derivatives can affect the value of a company. For measuring the impact of the derivatives and in order to address any possible endogeneity problem, besides using the conventional methodologies applied by previous literature (fixed-effect regression models and system GMM estimators), we run a random forest model, a machine learning technique not yet applied before in this field, and calculate the relative importance of each independent and control variable. Differently from other European countries, findings show that the use of derivatives does not affect the firm value in the Italian market. Therefore, our results confirm the role of corporate governance mechanisms on the relationship between firm value and the use of derivatives and that their impact is country-specific.

scholarly journals Managerial Investment And Firm Value: Statistical Investigation Of Their Relationship

2011 ◽  
Vol 4 (9) ◽  
Author(s):  
Paraschos Maniatis ◽  
Nicolas Gioulbaxiotis
Keyword(s):  
Firm Value ◽  
Statistical Investigation ◽  
Statistical Evidence ◽  
Microeconomic Theory ◽  
Font Size ◽  
Large Corporation ◽  
Firm Structure ◽  
The Creation ◽  
And Control ◽  
Alternative Theories

<p class="MsoNormal" style="text-align: justify; margin: 0in 38.7pt 0pt 0.5in;"><span style="font-size: 10pt; mso-ansi-language: EN-US;"><span style="font-family: Times New Roman;">In the modern neoclassical microeconomic theory, as it is build on Walrasian, Hicksian, and partly- and eclectically- on Marshallian lines, the firm does not exist but as a necessary entity in the framework of the prices formation. No evidence and explanation is given on the creation and functioning of the firm and the changes in the firm structure. In this study we shall try to outline the way that the prevailing microeconomic theory faces the firm. Then we shall present some alternative/complementary considerations on the nature of the management of the firm, pertaining to the ownership and control relations in the firm, namely in what measure the managers in the modern large corporation act for themselves and not to the interest of the shareholders. A statistical investigation follows, referring to the measure in which these alternative theories are supported by available statistical evidence.<span style="mso-spacerun: yes;">&nbsp;&nbsp;&nbsp; </span></span></span></p>

Optimal Information Asymmetry, Control Environment, and Investment in Firm-Specific Human Capital

2014 ◽  
Vol 90 (3) ◽  
pp. 917-939
Author(s):  
Neil Brisley ◽  
Alan V. Douglas
Keyword(s):  
Human Capital ◽  
Firm Value ◽  
Control Environment ◽  
Mutual Benefit ◽  
Private Benefits ◽  
Incentive Effects ◽  
Optimal Information ◽  
Specific Human Capital ◽  
And Control ◽  
Jel Classifications

ABSTRACT When future operations are expected to provide information rents, managers concerned with being replaced can entrench themselves with value-increasing firm-specific human capital (SHC). In motivating SHC investment, the firm trades off the incentive effects of an ex ante commitment to asymmetric information against the costs of compensation rents and private benefits. Firm value, therefore, is affected by (1) the accuracy with which the board observes and interprets information, and (2) the strength of the control environment restricting the manager's ability to benefit from concealing and diverting firm value. It is optimal to maintain a partially informed board to the mutual benefit of shareholders and managers, and for firms in a stricter control environment to maintain a more informed board. Due to the indirect effect on SHC, regulations that strengthen control adversely affect firm value unless the information and control environments are sufficiently biased toward managerial preferences. JEL Classifications: G30; G38; M12; M48.

scholarly journals Corporate governance, control type, and performance: the New Zealand story

2008 ◽  
Vol 5 (2) ◽  
pp. 24-35 ◽  
Author(s):  
Jianguo Chen ◽  
Dar-Hsin Chen ◽  
Ping He
Keyword(s):  
Corporate Governance ◽  
New Zealand ◽  
Ownership Structure ◽  
Firm Value ◽  
Profit Maximization ◽  
Management Control ◽  
Complex Nature ◽  
Corporate Managers ◽  
And Performance ◽  
And Control

This study investigates the ownership structure of New Zealand non-financial companies in terms of both ownership and management control and examines the effect of ownership structure on corporate governance and firms’ performance. The Berle and Mean’s hypothesis of separation of ownership and control does not find support in New Zealand. Further analysis tests the proposition that the diffusion of corporate ownership has allowed corporate managers to pursue goals other than profit maximization. The findings do provide evidence of a non-monotonic relation between managerial shareholdings and firm performance. This result indicates the complex nature of the relationship between ownership structure and firm value.

scholarly journals The effect of Delaware law on firm value: Evidence from poison pill adoptions

2010 ◽  
Vol 6 (2) ◽  
pp. 53-69
Author(s):  
Terry L. Campbell IIa ◽  
Raj Varma
Keyword(s):  
Corporate Governance ◽  
Firm Value ◽  
Corporate Law ◽  
Best Interest ◽  
Role Of The State ◽  
Poison Pill ◽  
Poison Pills ◽  
And Control ◽  
To Receive

As the leading location for firm incorporations and corporate law, Delaware occupies a unique place in corporate governance and control. In this paper, we provide fresh evidence on whether Delaware’s dominance arises from its takeover laws being in the best interest of shareholders versus managers by investigating the role of the state in which a firm is incorporated on the firm’s adoption of a poison pill. Our results indicate that announcements of adoptions of poison pills by Delaware firms are associated with returns not significantly different from those for non-Delaware firms. Moreover, Delaware firms that adopt poison pills are no more likely to receive a takeover bid, be successfully acquired, or receive better merger terms than non-Delaware firms. Overall, it appears that Delaware law, with regards to takeovers, promotes an environment consistent with a “race to the middle” philosophy, neutral to management and shareholders.

scholarly journals FAMILY CONTROL, BIAYA KEAGENAN DAN RISIKO KEUANGAN TERHADAP NILAI PERUSAHAAN

2021 ◽  
Vol 5 (1) ◽  
pp. 11-18
Author(s):  
Hilda Mary
Keyword(s):  
Firm Value ◽  
Financial Risk ◽  
Sampling Method ◽  
Control Agency ◽  
Control Variable ◽  
Agency Cost ◽  
Family Control ◽  
Company Value ◽  
Independent Variable ◽  
And Control

The effect of family control, agency cost and financial risk on firm value in company listed on the IDX. Three independent variable this research is family control, agency cost and financial risk and dependendt variabel is company value, and control variable is propability. The sample of this research consisted 100 companies, and technique using rendom sampling method. The result this research indicate that family control has a negative and significant effect on firm value. Agency cost and financial risk do not effect the firm value. And probability has a positive and significant effect on firm value

scholarly journals Shareholders’ coalitions and control contestability: The case of Italian voting trust agreements

2007 ◽  
Vol 4 (4) ◽  
pp. 30-35 ◽  
Author(s):  
Gianfranco Gianfrate ◽  
Laura Zanetti
Keyword(s):  
Event Study ◽  
Ownership Structure ◽  
General Result ◽  
Firm Value ◽  
Abnormal Returns ◽  
Ownership Structures ◽  
The World ◽  
Large Shareholders ◽  
Effect Hypothesis ◽  
And Control

Since ownership structures characterized by the presence of multiple large shareholders are extremely common around the world, the effects of having such a controlling structure are receiving increasing attention in literature. More than one third of Italian listed companies are controlled by coalitions of shareholders bound together by agreements called “voting trusts” which represent an interesting opportunity to study the consequences of having multiple large shareholders who share the control of firms. We perform an event-study on voting trust announcements (2004-2006), showing significant abnormal returns in both the event day and the following day. The sign of this cumulative reaction is negative for announcements of new/renewed trusts and positive in the cases of trust terminations. These findings are consistent with the “entrenchment effect” hypothesis linking the ownership structure and the firm value. As a general result, the presence of multiple large shareholders tied within a voting trust, by curbing the company’s contestability is reflected in a lower valuation of the firm

Blockholder ownership: Effects on firm value in market and control based governance systems

2006 ◽  
Vol 12 (2) ◽  
pp. 246-269 ◽  
Author(s):  
Steen Thomsen ◽  
Torben Pedersen ◽  
Hans Kurt Kvist
Keyword(s):  
Firm Value ◽  
Governance Systems ◽  
And Control

scholarly journals Carbon Emissions Disclosure as Mechanism to Increase Environmental Performance and Control of Idiosyncratic Risk: How They Impact Firm Value

2020 ◽  
Vol 4 (2) ◽  
pp. 227
Author(s):  
Fransiskus Eduardus Daromes ◽  
Suwandi Ng ◽  
Novita Wijaya
Keyword(s):  
Carbon Emissions ◽  
Environmental Performance ◽  
Firm Value ◽  
Research Study ◽  
Stock Exchange ◽  
Idiosyncratic Risk ◽  
Mediating Role ◽  
High Profile ◽  
And Control

This research attempts to investigate the predictive effect of carbon emissions disclosure on firm value both directly and through environmental performance and idiosyncratic risk. With data collected from all non-financial high-profile companies listed on the Indonesia Stock Exchange and testing through path analysis, findings reveal that carbon emissions disclosure has a positive significant effect on environmental performance, but not on idiosyncratic risk and firm value. Further statistics testing showed that both idiosyncratic risk and environmental performance have a positive and significant effect on firm value. We also used Sobel testing to test mediation role of environmental performance and idiosyncratic risk on the effect of carbon emissions disclosure on firm value. The results show that environmental performance plays a mediating role whereas idiosyncratic risk does not. The implications of this research study are discussed from both theoretical and managerial perspectives.

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