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Article: Ownership structure and financial constraints: Evidence from a structural estimation

TitleOwnership structure and financial constraints: Evidence from a structural estimation
Authors
KeywordsOwnership structure
Insider excess control rights
Financial constraints
Issue Date2011
PublisherElsevier. The Journal's web site is located at http://www.sciencedirect.com/science/journal/0304405X
Citation
Journal of Financial Economics, 2011, v. 102 n. 2, p. 416-431 How to Cite?
AbstractThis article examines the impact of the divergence between corporate insiders' control rights and cash-flow rights on firms' external finance constraints via generalized method of moments estimation of an investment Euler equation. Using a large sample of U.S. firms during the 1994–2002 period, we find that the shadow value of external funds is significantly higher for companies with a wider insider control-ownership divergence, suggesting that companies whose corporate insiders have larger excess control rights are more financially constrained. The effect of insider excess control rights on external finance constraints is more pronounced for firms with higher degrees of informational opacity and for firms with financial misreporting, and is moderated by institutional ownership. The results show that the agency problems associated with the control-ownership divergence can have a real impact on corporate financial and investment outcomes.
Persistent Identifierhttp://hdl.handle.net/10722/192338
ISSN
2015 Impact Factor: 3.541
2015 SCImago Journal Rankings: 9.920
SSRN
ISI Accession Number ID

 

DC FieldValueLanguage
dc.contributor.authorLin, Cen_US
dc.contributor.authorMa, Yen_US
dc.contributor.authorXuan, Yen_US
dc.date.accessioned2013-10-24T01:50:01Z-
dc.date.available2013-10-24T01:50:01Z-
dc.date.issued2011en_US
dc.identifier.citationJournal of Financial Economics, 2011, v. 102 n. 2, p. 416-431en_US
dc.identifier.issn0304-405Xen_US
dc.identifier.urihttp://hdl.handle.net/10722/192338-
dc.description.abstractThis article examines the impact of the divergence between corporate insiders' control rights and cash-flow rights on firms' external finance constraints via generalized method of moments estimation of an investment Euler equation. Using a large sample of U.S. firms during the 1994–2002 period, we find that the shadow value of external funds is significantly higher for companies with a wider insider control-ownership divergence, suggesting that companies whose corporate insiders have larger excess control rights are more financially constrained. The effect of insider excess control rights on external finance constraints is more pronounced for firms with higher degrees of informational opacity and for firms with financial misreporting, and is moderated by institutional ownership. The results show that the agency problems associated with the control-ownership divergence can have a real impact on corporate financial and investment outcomes.-
dc.languageengen_US
dc.publisherElsevier. The Journal's web site is located at http://www.sciencedirect.com/science/journal/0304405X-
dc.relation.ispartofJournal of Financial Economicsen_US
dc.rightsCreative Commons: Attribution 3.0 Hong Kong License-
dc.rightsNOTICE: this is the author’s version of a work that was accepted for publication in Journal of Financial Economics. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in PUBLICATION, [VOL 102, ISSUE 2, (2011)] DOI 10.1016/j.jfineco.2011.06.001-
dc.subjectOwnership structure-
dc.subjectInsider excess control rights-
dc.subjectFinancial constraints-
dc.titleOwnership structure and financial constraints: Evidence from a structural estimationen_US
dc.typeArticleen_US
dc.description.naturepostprint-
dc.identifier.doi10.1016/j.jfineco.2011.06.001en_US
dc.identifier.scopuseid_2-s2.0-80052751003en_US
dc.identifier.volume102en_US
dc.identifier.issue2en_US
dc.identifier.spage416en_US
dc.identifier.epage431en_US
dc.identifier.isiWOS:000295393600009-
dc.identifier.ssrn1590748-

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