Financial institutions and the ownership and control of British Industry

This paper shows the growth in the ownership of British equity capital by financial institutions and examines the “control” implications of this development. Various aspects of the ownership versus control debate are highlighted, and data on the control potential of financial institutions are presented. The findings suggest that fund managers had pursued policies of extreme portfolio diversification, using their growing funds to acquire more and more small shareholdings in a greater number of companies rather than concentrating their holdings in a few companies.     

Common ownership,institutional investors,and welfare

This study evaluates the effects of institutional investors' common ownership of firms competing in the same market. Overall, common ownership has two opposing effects: (a) it serves as a device for weakening market competition, and (b) it induces diversification, thereby reducing portfolio risk. We conduct a detailed welfare analysis within which the competition‐softening effects of an increased degree of common ownership is weighted against the associated diversification benefits.     

Agency costs in the banking industry: An examination of ownership behavior,leverage and dividend policies

This paper examines agency theory arguments in the banking industry by analyzing the effect of four variables that proxy for agency costs—earnings volatility, managers' portfolio diversification losses, bank size, and standard deviation of bank equity returns—on the three financial policy variables of managerial stock ownership, leverage, and dividend yield. It is one of the first studies that examines the determination of financial policy variables, in light of agency concerns, in the banking industry. The study examines the largest 104 U.S. banks during the period 1985–1989. Evidence suggests that bank size and a measure of the managers' portfolio diversification opportunity set affect the bank's level of managerial stock ownership, leverage and dividends.     

Network structure,portfolio diversification and systemic risk

We investigate the effect of portfolio diversification on banking systemic risk, where the network effect is incorporated. We analyze three kinds of interbank networks, namely, random networks, small-world networks and scale-free networks. We show that the effect of portfolio diversification on banking systemic risk depends on interbank network structures and shock types. First, systemic risk increases first and then reduces with the increase of the level of portfolio diversification in the case of the individual shock. Second, in the case of the systemic shock, systemic risk reduces with the increases of the level of portfolio diversification. Third, banking systems with scale-free network structures are the most stable, and those with small-world network structures are the most vulnerable.     

The Relationship between Voluntary Disclosure and Independent Directors in the Presence of a Dominant Shareholder

Abstract

Differently from prior studies that examine the role of stand-alone control systems within the relationship between owners and managers, our study investigates the correlation between two control mechanisms – voluntary disclosure and independent directors – in companies characterized by the presence of a dominant shareholder that is supposed to mitigate the classical agency problem. Based on agency theory, we hypothesize that the two mechanisms tend to coexist, since the presence of either one reduces the costs of introducing the other. Two further effects – the reputation and the domino effect – contribute to determine a positive relationship between the two mechanisms. We carried out the empirical analysis on 175 non-financial Italian listed companies, all controlled by a dominant shareholder. Voluntary disclosure is measured through three alternative disclosure indexes. Independent directors are identified not only according to a formal/legal definition, but also through stricter criteria. The empirical test is based on a multivariate analysis controlling for size, residual ownership diffusion, leverage, profitability and labour pressure. Results support our hypothesis and are robust to alternative criteria to identify dominant shareholders. Our study contributes to a better understanding of the relationship between different control mechanisms in particular agency settings.     

The effect of ownership on sustainable development and environmental policy in urban waste management: An explicatory empirical analysis of Italian municipal corporations

This paper investigates the effect of ownership on sustainable development and environmental policy in Italian municipally owned corporations (MOCs) dealing with urban waste management, trying to understand if multiple ownership can generate better performance compared to single ownership and if the presence of private partners could be crucial in this. The research question is answered by analyzing 41 MOCs of the largest Italian cities operating in urban waste management. In this specific sector, public administrations have tried to improve their offer in terms of sustainable development, environmental policy, and efficiency. The paper covers the Italian case study, where urban waste production per capita is higher than the European average figure. The waste cycle management service is operated in Italy at local level through totally publicly owned companies (monoadministration or multiadministration), mixed (public–private) companies, or via a full externalization achieved by means of public tenders. Through a multinomial ordered probit panel, we show that MOCs with multiple owners perform better than those having a single owner and perform much better with the presence of a private partner, confirming those academic findings according to which collaborative arrangements can increase efficiency, do better than public sector bureaucracy, and lower the costs of service provision. The results of this paper can be used by academics, practitioners, and policy makers alike. To the best of our knowledge, this is the only study that applies this perspective to the analysis of the current international waste management scenario with relation to MOCs having multiple ownerships.     

Employee share ownership and investment concentration: which employee shareholders fail to diversify?

Using data from a survey of employees in three UK companies, the article examines concentration of savings in employer shares. It is found that a substantial minority of employees hold most of their savings in employer shares despite the risks. The article examines the distribution and determinants of portfolio concentration. It is found that portfolio concentration is more likely to be found among men, those on higher incomes, and those who are in early middle-age. Regression analysis indicates that organisational commitment and the duration of participation in the share ownership plan also affects the probability of having a concentrated portfolio. There is no clear evidence that those with substantial concentrations of employer shares take active steps to monitor their investments more closely than those with smaller shareholdings.     

Sustainabilty integration in product portfolio for sustainable development: Findings from the industry

Many companies decide which services, products, and technologies to include in their product portfolio using evaluation criteria, which often consider cost, quality, risk, revenue, time, and market position. Incorporating sustainability in the portfolio evaluation criteria could ensure the development of sustainable solutions from the early stages of the product development process, where there is more room for innovation. The aim of this paper is to understand how sustainability can be integrated in the company portfolio development. Semi-structured interviews were performed with experts in the field and representatives from multinational manufacturing companies with operations in Sweden. Main findings from this study include a proposed definition of a sustainability product portfolio concept and suggested portfolio evaluation criteria from an industry perspective. Future research will develop a method to guide manufacturing companies in sustainability integration and implementation in product portfolios.     

Limitations of portfolio diversification through fat tails of the return Distributions: Some empirical evidence

This study investigates the level of risk due to fat tails of the return distribution and the changes of tail fatness (TF) through portfolio diversification. TF is not eliminated through portfolio diversification, and, interestingly, the positive tail has declining fatness until a certain level is reached, while the negative tail has rising fatness. This indicates that fat tails are highly relevant to common factors on systematic risk and that the relevance of common factors is higher for the negative tail compared to the positive tail. In the portfolio diversification effect, the declining fatness of the positive tail further reduces risk, but the rising fatness of the negative tail does not contribute to this effect. The asymmetry between the fatness of the positive and negative tails in the return distribution corresponds to the asymmetry of the trade-off relationship between loss avoidance and profit sacrifice that is expected as a consequence of portfolio diversification. Investors use portfolio diversification to reduce their risk of suffering high losses, but following this strategy means sacrificing high-profit potential. Our study provides empirical confirmation for the practical limitation of portfolio diversification and explains why investors with diversified portfolios suffer high losses from market crashes. An examination of the Northeast Asian stock markets of China, Japan, Korea, and Taiwan show identical results.     

上市公司股权制衡与并购绩效——基于夏普利(Shapley)指数与粗糙集的实证研究

本文利用1998～2009年中国上市公司的数据,以夏普利(Shapley)指数构建公司股权制衡指标,运用粗糙集理论分析了中国上市公司中股权制衡与并购绩效的关系。并购绩效是并购决策的最终体现,公司的并购决策会因为大股东之间的相互制衡而发生变化,进而影响并购后的公司绩效。因此,在评估上市公司的并购绩效时,应该对公司的股权制衡情况给予重点关注。在分析股权制衡与并购绩效的关系时,综合应用粗糙集法与回归分析法,能够得到一个更加稳健和全面的结论,即股权制衡是影响并购绩效的重要正面因素。     

Does VC fund diversification pay off? An empirical investigation of the effects of VC portfolio diversification on fund performance

The paper tests different theories of how diversification by Venture Capital (VC) firms affects fund performance. The Financial Intermediation and the Resource-based Theory suggest that lower financial risk associated with diversification implies a lower return. However, the assumptions of these theories are questionable in the context of venture capital. We test their validity using data on VC portfolio diversification by industry and country using an original dataset of 649 VC funds originating in the United Kingdom over the period 1981–2000. Results show that higher diversification by industry does indeed lower VC fund success rates. Diversification by geographical region, on the contrary, increases returns.     

Is there a diversification “cost” of Shari’ah compliance? Empirical evidence from Malaysian equities

Islamic equity portfolios work with a smaller investment universe given the filtering of non-Shari’ah compliant stocks. It has been theoretically argued that this culminates in suboptimal portfolio diversification, which in turn adversely affects risk-adjusted returns. We offer empirical evidence that such a conceived portfolio diversification “penalty” is far from a foregone conclusion, at least empirically. Our results tend to indicate that Islamic portfolios are not invariably handicapped in terms of portfolio diversification. We also explored dimensions that may account for differences in the relative investment performance between Islamic and conventional portfolios, such as portfolio constraints, short selling and market conditions. We believe this paper is among the first to apply substantial empirical analysis specifically with respect to the portfolio diversification perspective on Islamic equity investments.     

房地产上市公司多元化战略对绩效影响研究

我国房地产行业的竞争日趋激烈,越来越多的房地产企业选择实施多元化战略促进企业经营发展,但我国房地产企业多元化程度与公司绩效的关系仍存在争议.以我国90家房地产上市公司为样本,通过多元回归模型分析企业多元化程度与绩效的关系以及企业历年多元化类型与绩效的关系.研究发现企业多元化短期内与绩效呈显著负相关,但是随着时间的增长多...     

Spillovers and diversification potential of bank equity returns from developed and emerging America

We examine the network spillovers, portfolio allocation characteristics and diversification potential of bank returns from developed and emerging America. We draw our results by applying a directional spillover index, the tail-event driven network (TENET) and nonlinear portfolio optimization methods on bank returns. We find that the spillovers and connectedness among banks from emerging America are noticeably smaller than those among banks from developed America. The largest emerging market spillover transmitters and receivers are the banks from Brazil, followed by the banks from Chile. The largest developed market spillover transmitter is JP Morgan Chase. The connectedness among banks from developed America is dominated by the banks from the USA, relative to those from Canada. The total connectedness of the emerging market banks is more intensified than that of the banks from developed America due to the effect of the COVID-19 pandemic. The portfolio optimization shows that in developed America, the largest banks from the USA are the largest risk contributors to total portfolio risk, whereas the banks from Canada contribute the least risk. In emerging America, the banks from Brazil contribute the most risk to total portfolio risk while the banks from Peru and one bank from Colombia contribute the least risk. The portfolio of banks from emerging America offers greater diversification potential and lower total portfolio allocation risk.     

Non-financial strategy disclosure and environmental,social and governance score: Insight from a configurational approach

Evaluating the determinants of environmental, social and governance (ESG) score is significant for topic for academics and regulators and companies. Despite its importance, little attention has been paid to non-financial strategy disclosure and how to communicate non-financial information. However, in the recent years, attention to the topic has considerably increased as demonstrated, in the European context, by the introduction of the non-financial reporting directive in 2014. Therefore, it is important to analyse how the quantity and quality of disclosure influence the ESG score. To explore this relationship, a configurational analysis aimed at 31 Italian listed companies was studied by fuzzy-set qualitative comparative analysis. The results showed that there were three path types driving the ESG score and that integrated reporting played a highly significant role in promoting a high ESG score. Specifically, we show the importance of assessing the combinations of quality and quantity disclosures for ESG score through configurational thinking. These results provide a first theoretical basis for the effectiveness of disclosure measurements on ESG score, charting the future direction for environmental management studies.     

Do investors still benefit from international diversification with investment constraints?

This paper empirically investigates the potential benefits of international diversification for the U.S. investor with various investment constraints from both long-term and time-rolling perspectives. While the addition of portfolio bounds makes asset allocation more feasible, our findings suggest that adding short-selling and over-weighting constraints reduce but do not completely eliminate the diversification benefits of international investment. The over-time analyses show that diversifying portfolios internationally is still beneficial even though financial markets are becoming more integrated. The out-of-sample test suggests that the Markowitz model does not necessarily realize improved mean–variance efficiency but demonstrates risk reduction. The significant time variation in optimal asset allocation implies the necessity for the fund manager to rebalance international portfolio dynamically.     

Determinants of Traditional Sustainability Reporting Versus Integrated Reporting. An Institutionalist Approach

The aim of this study is to analyze similarities and differences between companies with traditional sustainability reporting (TSR) and those that publish integrated reports. Based on institutional theory we identify potential determinants of integrated reporting (IR) and test their relevance empirically in a sample of 309 companies. Our analysis shows that IR companies are different from TSR companies with regard to several country‐level determinants. In particular, investor and employment protection laws, the intensity of market coordination and ownership concentration, the level of economic, environmental and social development, the degree of national corporate responsibility and the value system of the country of origin proved to be relevant. Based on these results, both implications for practice and future studies are derived. Copyright © 2011 John Wiley & Sons, Ltd and ERP Environment.     

股权结构与经营绩效：来自辽宁上市公司的一组证据

本文以辽宁在沪深证券交易所挂牌的57家上市公司为研究对象，以2001-2003年上市公司的年报数据作为样本，从实证分析角度，分析了辽宁上市公司的股权结构特征，对不同股权结构下公司经营业绩的显着性差异进行了检验，并通过回归分析，检验了辽宁上市公司股权结构、股权类型、公司规模、行业属性等封公司经营绩效的影响，得出了一些有意义结论。     

Form of ownership and risk taking in banking: Some evidence from Massachusetts savings banks

In recent years there has been interest in the impact of the form of ownership on the behavior of financial institutions. In the 1980’s, there was a substantial movement away from mutual ownership to stock ownership in the thrift industry. The effect of this conversion process on risk taking and efficiency has been a matter of concern. The purpose of this paper is to examine the experience of savings banks in Massachusetts. A panel of 115 savings banks is analyzed for the years 1985 through 1993, a period that includes both rapid growth and a subsequent severe cyclical decline in property values. The credit quality of loan portfolios is related to the size of the portfolio, the structure of the portfolio, and the ownership status of the bank. Several models are estimated. In all cases, it was found that the cyclical decline in property values resulted in a decline in the credit quality of loan portfolios with a substantially greater impact on those savings banks that converted from mutual to stock status.     

Mixed ownership reform,political connections,and overinvestment

The study discovers that mixed ownership reform aimed at enhancing the performance and resource allocation efficiency of state-owned enterprises may have unintended consequences in China. When the nature of state-owned control remains unchanged, there is a risk of increased overinvestment due to misaligned interests between state-owned equity representatives and companies. This incentive can be mitigated by introducing nonstate shareholders with political connections. The study employs a double machine learning method to analyze data from state-owned listed companies that introduced nonstate shareholders through stock issuance between 2008 and 2019. The research underscores that modern corporate governance mechanisms are crucial for successful mixed ownership reform.