Meta-analyzing ownership concentration and firm performance in Asia: Towards a more fine-grained understanding
Journal
Asia Pacific journal of management : APJM
ISSN
0217-4561
ISSN-Digital
1572-9958
Type
journal article
Date Issued
2009-09
Author(s)
Abstract
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.
Language
English
HSG Classification
contribution to scientific community
Refereed
Yes
Publisher
Springer Science + Business Media B.V
Publisher place
Dordrecht
Volume
26
Number
3
Start page
481
End page
512
Pages
32
Subject(s)
Eprints ID
244776