Separation of Ownership from Control and Acquiring Firm Performance: The Case of Family Ownership in Canada

Abstract:   This study investigates the relationship between ownership structure and acquiring firm performance. A large proportion of Canadian public companies have controlling shareholders (families) that often exercise control over voting rights while holding a small fraction of the cash flow rights. This is achieved through the concurrent use of dual class voting shares and stock pyramids. Many suggest that these ownership structures involve larger agency costs than those imposed by dispersed ownership structures and that they distort corporate decisions with respect to investment choices such as acquisitions. We find that average acquiring firm announcement period abnormal returns for our sample of 327 Canadian transactions are positive over the 1998–2002 period. Cash deals, acquisitions of unlisted targets and cross‐border deals have a positive impact on value creation. Governance mechanisms (outside block‐holders, unrelated directors and small board size) also have a positive influence on the acquiring firm performance. Further, the positive abnormal returns are greater for family firms. We do not find that separation of ownership and control has a negative impact on performance. These results suggest that, contrary to other jurisdictions offering poor minority shareholder protection or poor corporate governance, separation of control and ownership is not viewed as leading to value destroying mergers and acquisitions, i.e., market participants do not perceive families as using M&A to obtain private benefits at the expense of minority shareholders. We do find a non‐monotonic relationship between ownership level and acquiring firm abnormal returns. Ownership of a majority of the cash flow rights has a negative impact on announcement returns. This is consistent with the view that large shareholders may undertake less risky projects as their wealth invested in the firm increases.     

公司所得税对资本结构的影响——基于中国上市公司的实证分析

国外大量的经验研究表明,税收是影响公司资本结构的重要因素。而我国具有自身特有的制度与经济背景,通过对我国上市公司财务数据进行检验,可以为我国税收是否影响公司资本结构,以及影响程度的大小提供实证方面的证据,并为进一步改善税收经济调节作用提供思路。     

Insider Ownership,Subsidiary Cash Holdings,and Economic Consequences: Evidence from Listed Chinese Companies

ABSTRACT

Using a large sample of listed Chinese companies, we investigate how the equity ownership of business group insiders affects subsidiary cash holdings. We find that ownership by the largest shareholders and senior managers in the listed parent firm is negatively related to its subsidiaries’ cash holdings, whereas there is a positive relationship with minority equity in subsidiaries. We also find that the market places a more significant value discount on listed firms whose cash holdings are more located in the affiliated subsidiaries. Our evidence demonstrates how cash policy inside business groups is influenced by insider ownership, and it reveals to what extent cash allocated in subsidiaries may suffer from losses in efficiency.     

Board Independence,Ownership Structure and Performance: Evidence from Real Estate Investment Trusts

For Real Estate Investment Trusts (REITs), mandatory distribution of income limits free cash flow. But, restrictions on source of income and asset structure result in widely dispersed stock ownership, which makes external monitoring through the takeover market less likely. As such, alternative monitoring mechanisms, including external directors, must be in place to discourage deviant managerial behavior. Using a simultaneous equation system, we conclude that while independent directors enhance REIT performance, the effect is weak. Higher CEO stock ownership and control through tenure and chairmanship of the board reduce the representation by outside directors, and adversely affect REIT performance. Institutional ownership or blockownership fails to serve as alternate disciplining mechanism to (inadequate) monitoring by outside board members, although their presence seems to enhance performance.     

The Effects of Ownership Structure and Intragroup Loans on Leverage: Evidence from Family Firms in Chile

This article examines the effects of family control and pyramidal ownership on firms’ capital structure decisions. After studying a sample of listed family and nonfamily firms in Chile, we find that families take a conservative approach to debt and financial risk exposure. We test the hypothesis that family firms restrict the use of debt in order to avoid the monitoring role of creditors, which could limit their enjoyment of the private benefits of control. In keeping with this hypothesis, we find a U-shaped relationship between leverage and the degree of pyramidal ownership that is more pronounced among family firms than nonfamily firms. We do not find any evidence that is consistent with the hypothesis that family-controlled firms have low leverage ratios due to their access to internal capital markets. In fact, conversely, we find that listed family firms provide more loans to related companies than comparable nonfamily firms.     

债权治理对企业投资效率的作用研究——来自中国上市公司的经验证据

本文使用中国上市公司面板数据研究了紧缩货币政策下债权治理对企业投资效率的影响,结果表明,由于存在“预算软约束”,我国债权治理效果整体呈现不确定性,不能显著抑制上市企业的非效率投资。其深层次原因在于债权各构成部分的有效性不一致:商业信用的治理作用显著,但银行贷款、企业债券的治理作用不明显;短期债权的治理作用显著,而长期债权不明显。进一步研究发现,紧缩货币政策下债权治理效果均得到增强。因此,可通过加速资本市场法制建设、发展企业债券市场和推动银行业改革、规范货币操作以提高我国债权治理有效性。     

上市公司股权结构与经营绩效的实证分析

股权结构与公司经营绩效之间的关系一直是国内外学者在理论和实践上争论的问题。股权结构是决定公司治理结构的基础,而公司治理效率的高低最终表现在公司经营绩效上。从股权所有制构成和股权集中度两个方面对我国上市公司的股权结构与经营绩效的实证分析表明,股权结构与经营绩效之间存在非常密切的内在联系。     

Ownership Structure, Firm Performance and Top Executive Change: An Analysis of UK Firms

The results of this paper reveal a significantly negative relationship between the equity stake owned by a senior executive and the likelihood that this executive will be removed from office. We also establish the existence of a strong positive relationship between poor company performance and the likelihood that the top managers responsible will be forced out of their firms; this forced departure only tends to occur when the managers' stake in the firm is less than 1%; as the level of ownership rises, managers become increasingly entrenched in their posts. The stock market reaction to management change is greatest (a) when the departure is unexpected and (b) when the dismissed executive owns more than 5% of the equity of his company. This study also examines the influence of other aspects of ownership structure and board composition upon the likelihood of a top executive dismissal.     

信息透明度对资本配置效率的影响——来自中国制造业上市公司的经验证据

以2001~2012年沪深两市A股制造业上市公司为研究样本,借鉴Wurgler的资源配置效率估算模型,从盈余管理角度探讨了中国现实制度背景下信息透明度对资本配置效率的影响。实证结果表明,无论是在行业层面还是公司层面,信息透明度与资本配置效率均呈显著的正相关关系,其中以修正的DD模型衡量的盈余管理解释力度最强。进一步采用深交所信息披露考评结果作为稳健性检验的替代指标,结论依然不变。可见,改善上市公司盈余质量,提高信息透明度,是正确引导证券市场资本有效配置的关键。     

“掏空”与所有权安排——来自我国上市公司大股东资金占用的经验证据

本文以我国A股上市公司 2 0 0 0— 2 0 0 3年的关联交易数据为基础 ,对所有权结构与控股股东的掏空 (Tun neling)行为之间的关系进行了实证分析。结果表明 ,控股股东占用的上市公司资金与第一大股东持股比例之间存在先上升后下降的非线性关系 ,但与其他股东的持股比例则表现出严格的负相关关系。另外 ,控股股东的控制方式以及产权性质也对其资金占用行为具有重要影响。其中 ,通过控股公司控制上市公司的控股股东占用的资金低于通过企业集团控制的上市公司 ,国有企业控制的公司的控股股东占用的资金高于非国有企业控制的上市公司。     

上市公司股东不可撤销表决权委托研究——问题、挑战与监管

表决权是上市公司股东参与管理决策的重要方式。证券监管实践表明,不可撤销表决权委托既有规避股份限售和减持规则的动机,也有出于增强控制权转让交易中博弈弹性的考虑。表决权委托并非一项简单的债权债务法律关系,其合规性及对证券市场的影响需引起足够的重视。为规范上市公司股东不可撤销的表决权委托,本文建议:在信息披露监管方面,重点关注表决权委托对权益变动、控制权稳定性、投资者保护的影响;在制度规范方面,发布表决权委托示范协议指引等规则,明确表决权委托的关键要素和监管要求。     

Large Shareholder Entrenchment and Performance: Empirical Evidence from Canada

Abstract:  Recent empirical evidence indicates that the largest publicly traded companies throughout the world have concentrated ownership. This is the case in Canada where voting rights are often concentrated in the hands of large shareholders, mostly wealthy families. Such concentrated ownership structures can generate specific agency problems, such as large shareholders expropriating wealth from minority shareholders. These costs are aggravated when large shareholders don't bear the full costs of their decisions because of the presence of mechanisms (dual class voting shares, pyramids) which lead to voting rights being greater than the cash flow rights (separation). We assess the impact of separation on various performance metrics while controlling for situations when the large shareholder has (1) the opportunity to expropriate (high free cash flows in the firm) and (2) the incentive to expropriate (low cash flow rights). We also control for when the large shareholder has the power to expropriate (high voting rights, outright control and insider management) and for the presence of family ownership. The results support our hypotheses and indicate that firm performance is lower when large shareholders have both the incentives and the opportunity to expropriate minority shareholders.     

Leverage and investment under a state-owned bank lending environment: Evidence from China

This study examines the relations between leverage and investment in China's listed firms, where corporate debt is principally provided by state-owned banks. We obtain three major findings. First, there is a negative relation between leverage and investment. Second, the negative relation between leverage and investment is weaker in firms with low growth opportunities and poor operating performance than in firms with high growth opportunities and good operating performance. Third, the negative relation between leverage and investment is weaker in firms with a higher level of state shareholding than in firms with a lower level of state shareholding. Overall, our results are consistent with the hypothesis that the state-owned banks in China impose fewer restrictions on the capital expenditures of low growth and poorly performing firms and also firms with greater state ownership. This creates an overinvestment bias in these firms.     

Ownership Structure as a Determinant of Firm Value: Evidence from Newly Privatized Czech Firms

Using a sample of 988 newly privatized Czech firms, with part of the ownership structure exogenously determined prior to voucher privatization, we find that share values are positively related with the ownership stakes of foreigners, insiders, and restituents. While the findings for foreigners and insiders can be attributed to their superior ability to identify more profitable firms, we interpret the findings on restituents as evidence of the beneficial effect of blockholdings. On the other hand, we find that the ownership of the fund with the largest stake is not significantly related with share value, suggesting that the value of external blocks depends on the identity of the owner. However, when the fund is also the largest blockholder in the firm, it has an adverse effect on share value. The negative effect of the dominant block owned by a fund is mitigated when a bank sponsors the fund. Although funds are legally separated from their sponsoring institutions, bank‐sponsored funds may nevertheless have inherited a better access to the innards of these firms, and may be in a better position to monitor them.     

The Level and Stability of Institutional Ownership and Firm Performance: Evidence from Taiwan

The purpose of this paper is to investigate the influence of shareholding stability of institutional investors on firm performance. We analyze 647 sample companies listed in the Taiwan Stock Exchange from 2005 to 2009 using the coefficient of variance of institutional holding proportion as the measure for ownership stability. The empirical results show that increasing stability of institutional holdings is related to better firm performance. The low-risk and younger firms with higher CEO incentive compensation, larger insider holdings, and higher growth usually have better performance. Furthermore, when the long-term institutional shareholdings, particularly of foreign institutions, are higher, the firm performance is better.     

Ownership and the Value of Political Connections: Evidence from China

Research has found that political connectedness can have both positive and negative effects on firm value. To resolve these mixed findings, we investigate the impact of political ties conditional on ownership for a sample of Chinese firms over the period 1999–2006. We find that private firms with politically connected managers have a higher value and obtain more government subsidies than those without connected managers, whereas local state‐owned enterprises with connected managers have a lower value and employ more surplus labour than those without connected managers. Our results indicate that the effect of political ties is subject to firm ownership.     

The Effect of Family Control on Firm Value and Performance: Evidence from Continental Europe

We investigate the relation between ownership structure and firm performance in Continental Europe, using data from 675 publicly traded corporations in 11 countries. Although family‐controlled corporations exhibit larger separation between control and cash‐flow rights, our results do not support the hypothesis that family control hampers firm performance. Valuation and operating performance are significantly higher in founder‐controlled corporations and in corporations controlled by descendants who sit on the board as non‐executive directors. When a descendant takes the position of CEO, family‐controlled companies are not statistically distinguishable from non‐family firms in terms of valuation and performance.     

信贷资本配置效率与产权结构——基于中国商业银行的实证分析

商业银行所有权安排是影响信贷资本配置质量的基本变量.由于理论背景不同,对银行产权与信贷配置效率的关系出现了截然相反的两种观点.在理论分析信贷配置的所有权效应基础上,本文选取中国16家资产规模最大的商业银行的数据,对中国1990年代以来国有产权的信贷配置效率进行实证分析,结果表明,在国有银行制度下,中国的信贷资本具有正的但较低的配置效率,银行国有产权比重过高使信贷配置效率未能达到最佳状态.     

基于效率评价和信息披露的上市公司内部控制研究

本文通过分析效率评价和信息披露对上市公司内部控制体系建设的重要性,同时考虑目前内部控制效率评价体系中存在的局限性和信息披露工作中的不合理性,分别就效率评价和信息披露两方面提出了改进的综合评价模型和优化方向,以期达到促进上市公司内控体系建设的根本目的。