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Article: An empirical study on the relationship between ownership and performance in a family-based corporate environment

TitleAn empirical study on the relationship between ownership and performance in a family-based corporate environment
Authors
Issue Date2005
PublisherGreenwood Publishing Group Inc. The Journal's web site is located at http://w4.stern.nyu.edu/ross/research.cfm?doc_id=1746
Citation
Journal Of Accounting, Auditing And Finance, 2005, v. 20 n. 2, p. 121-146 How to Cite?
AbstractThis study examines the relationship between family ownership and firm performance in a family-based corporate environment in which managerial ownership is used as a proxy for family ownership. The relationship is in cubic form with a pattern of "entrenchment-alignment-entrenchment," which is the reverse of that found in earlier U.S. and U.K. studies. This confirms that research based on U.S. and U.K. evidence is not applicable to East-Asian corporations due to the differences in ownership concentration. Taking the endogeneity issue into consideration, the simultaneous equations regression analysis confirms that in a family-owned corporate structure, ownership affects performance and not vice versa. The wide range of alignment in the nonmonotonic relationship supports the classical "convergence of interest" hypothesis. However, at a very high level of ownership, the entrenchment effect becomes dominant. This indicates that if the family form of ownership can be controlled and made use of appropriately, firm performance can be optimized due to convergence of interest. It also follows that a company with high ownership concentration should pay even more attention to improving corporate governance practices in order to enhance its performance.
Persistent Identifierhttp://hdl.handle.net/10722/177963
ISSN
2015 SCImago Journal Rankings: 0.471
SSRN
References

 

DC FieldValueLanguage
dc.contributor.authorNg, CYMen_US
dc.date.accessioned2012-12-19T09:41:00Z-
dc.date.available2012-12-19T09:41:00Z-
dc.date.issued2005en_US
dc.identifier.citationJournal Of Accounting, Auditing And Finance, 2005, v. 20 n. 2, p. 121-146en_US
dc.identifier.issn0148-558Xen_US
dc.identifier.urihttp://hdl.handle.net/10722/177963-
dc.description.abstractThis study examines the relationship between family ownership and firm performance in a family-based corporate environment in which managerial ownership is used as a proxy for family ownership. The relationship is in cubic form with a pattern of "entrenchment-alignment-entrenchment," which is the reverse of that found in earlier U.S. and U.K. studies. This confirms that research based on U.S. and U.K. evidence is not applicable to East-Asian corporations due to the differences in ownership concentration. Taking the endogeneity issue into consideration, the simultaneous equations regression analysis confirms that in a family-owned corporate structure, ownership affects performance and not vice versa. The wide range of alignment in the nonmonotonic relationship supports the classical "convergence of interest" hypothesis. However, at a very high level of ownership, the entrenchment effect becomes dominant. This indicates that if the family form of ownership can be controlled and made use of appropriately, firm performance can be optimized due to convergence of interest. It also follows that a company with high ownership concentration should pay even more attention to improving corporate governance practices in order to enhance its performance.en_US
dc.languageengen_US
dc.publisherGreenwood Publishing Group Inc. The Journal's web site is located at http://w4.stern.nyu.edu/ross/research.cfm?doc_id=1746en_US
dc.relation.ispartofJournal of Accounting, Auditing and Financeen_US
dc.titleAn empirical study on the relationship between ownership and performance in a family-based corporate environmenten_US
dc.typeArticleen_US
dc.identifier.emailNg, CYM: chring@hkucc.hku.hken_US
dc.identifier.authorityNg, CYM=rp01087en_US
dc.description.naturelink_to_subscribed_fulltexten_US
dc.identifier.scopuseid_2-s2.0-33645687902en_US
dc.relation.referenceshttp://www.scopus.com/mlt/select.url?eid=2-s2.0-33645687902&selection=ref&src=s&origin=recordpageen_US
dc.identifier.volume20en_US
dc.identifier.issue2en_US
dc.identifier.spage121en_US
dc.identifier.epage146en_US
dc.publisher.placeUnited Statesen_US
dc.identifier.ssrn1508218-
dc.identifier.scopusauthoridNg, CYM=15035998200en_US

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