Meta-analyzing ownership concentration and firm performance in Asia: Towards a more fine-grained understanding

By Pursey PMAR Heugens, Marc van Essen, H. Oosterhout. 2009

320 citations recorded by the source corpus.

We present a meta-analysis of the relationship between concentrated ownership and firm financial performance in Asia. At the cross-national level of analysis, we find a small but significant positive association between both variables. This finding suggests that in regions with less than perfect legal protection of minority shareholders, ownership concentration is an efficient corporate governance strategy. Yet, a focus on this aggregate effect alone conceals the existence of true heterogeneity in the effect size distribution. We purposefully model this heterogeneity by exploring moderating effects at the levels of owner identity and national institutions. Regarding owner identity, we find that our focal relationship is stronger for foreign than for domestic owners, and that pure “market” investors outperform “stable” or “inside” owners whom are multiply tied to the firm. Regarding institutions, we find that a certain threshold level of institutional development is necessary to make concentrated ownership an effective corporate governance strategy. Yet we also find that strong legal protection of shareholders makes ownership concentration inconsequential and therefore redundant. Finally, in jurisdictions where owners can easily extract private benefits from the corporations they control, the focal relationship becomes weaker, presumably due to minority shareholder expropriation.

Subfields: Accounting

View Paper: https://www.semanticscholar.org/paper/e16a3841628e0d34bfe5e755c113059dd928f466

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Citations in the corpus

The Resilient Family Firm: Stakeholder Outcomes and Institutional Effects (2015, background): “…protection offered to business owners, minority investors, and employees consists of both general and specific degrees of protection (Gilson, 2006; Heugens et al., 2009; van Essen et al., 2013a), rule of law represents the general degree of legal protection offered to all stakeholders (Kaufmann…”
Institutions Behind Family Ownership and Control in Large Firms (2010, background): “Specifically, pyramid firms can gain access to other pyramid firms’ resources (Hoskisson et al., 2003) and share the group’s reputation capital (Chang”
Assessing Managerial Power Theory (2015, methodology): “…in line with other meta-analyses that find that board and ownership structures do not explain a great deal of variance in firm strategy (Deutsch, 2005; van Essen et al., in press) and firm performance (Dalton et al., 1998; Dalton et al., 2003; Heugens et al., 2009; van Essen et al., in press).”
Corporate governance: the impact of director and board structure, ownership structure and corporate control on the performance of listed companies on the Ghana stock exchange (2016, background): “Previous studies examined the relationship between and performance and find positive relation exists between ownership concentration and profitability (Cubin & Leech,1983; Xu and Wang, 1999; Hiraki et al., 2003; Heugens et al., 2009 ).”
Ownership concentration and corporate performance from a dynamic perspective: Does national governance quality matter? (2015, background): “While Singapore is the most representative candidate for the ‘high minority protection and high rule of law’ cluster (Heugens et al., 2009), Vietnam is a typical market in the ‘low minority protection and low rule of law’ group (World Bank, 2006, 2012).”
Asian Business Systems: Institutional Comparison, Clusters, and Implications for Varieties of Capitalism and Business Systems Theory (2013, background): “…of focused studies especially of China (e.g., Huang, 2008; Witt and Redding, 2009; Robins, 2010), but also on other Asian economies individually (e.g., Andriesse and van Westen, 2009; Ritchie, 2009) or viewed as a cluster (e.g., Loveridge, 2006; Heugens et al. , 2009; Steier, 2009; Tipton, 2009).”
Corporate governance and Asian companies (2011, background): “…Washington University) Rakesh Sambharya (Rutgers University) Steen Thomsen (Copenhagen Business School) William Wan (Texas Tech University) Dean Xu (CEIBS) Haibin Yang (City University of Hong Kong) Toru Yoshikawa (Singapore Management University) Xiaoxiang Zhang (Newcastle Business School)”
How does family control influence firm strategy and performance? A meta-analysis of us publicly listed firms (2015, background): “An interesting objective for future research is to determine the “optimal” percentage of family ownership: the tipping point where the benefits of such inside ownership are maximized and the corresponding costs minimized (Heugens et al., 2009; Morck et al., 1988).”
Does family business excel in firm performance? An institution-based view (2012, background): “According to them, diversity of corporate governance practices and varieties of capitalism originate from the diverse institutional configurations in these countries (Carney, Gedajlovic, & Yang, 2009; Hall & Soskice, 2001; Morck & Steier, 2005; Steier, 2009).”