Expropriation of minority shareholders

evidence from East Asia
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World Bank, Financial Operations Vice Presidency, Financial Economics Unit , Washington, DC (1818 H St., NW, Washington 20433)
Stock ownership -- East Asia., Minority stockholders -- East Asia., Corporations -- East

Places

East

StatementStijn Claessens ... [et al.].
SeriesPolicy research working paper ;, 2088, Policy research working papers ;, 2088.
ContributionsClaessens, Stijn.
Classifications
LC ClassificationsHG3881.5.W57 P63 no. 2088
The Physical Object
Pagination33 p. ;
ID Numbers
Open LibraryOL6891599M
LC Control Number00551902

This suggests the expropriation of minority shareholders by controlling shareholders. The risk of expropriation is the chief principal-agent problem for large publicly traded corporations. As many East Asian countries plunged into economic decline, the structure of concentrated ownership and associated corporate governance, along with weak.

Expropriation of Minority Shareholders: Evidence from East Asia Stijn Claessens, Simeon Djankov, Joseph Fan, and Larry Lang 1. Introduction As many East Asian countries have plunged into a period of economic decline, policy advisers have pointed to the ownership concentration structure.

"Expropriation of Minority Shareholders or Social Dividend. Beware of Good Expropriation of minority shareholders book Citizens" published on 30 Jul by Edward Elgar by: 1. shareholders and Tobin’s Q for companies listed on the Stockholm Stock Exchange between Tobin’s Q, which is the market value of a company’s Expropriation of minority shareholders book divided by the book value of its assets, has often been used as proxy for minority expropriation.

They interpret the finding as evidence. CiteSeerX - Document Details (Isaac Councill, Lee Giles, Pradeep Teregowda): We examine the evidence on expropriation of minority shareholders by the controlling shareholder in publicly traded companies in nine East Asian countries.

Higher cash-flow rights are associated with higher market valuation. In contrast, higher control rights have an insignificant or negative effect on corporate. The main problem for minority shareholders is expropriation or privatisation by the controlling shareholders through related party transactions.

While in the case of listed companies there are many rather complicated provisions in 1 Ibid., para (a)-(b). minority shareholders’ expropriation in East Asian corporations. We find large differences in the concentration of cash-flow and control rights across the nine East Asian countries.

Japanese and Taiwanese firms have the least concentrated ownership, on average only () and () percent of the total cash-flow (control) rights. One aspect of agency theory suggests that dominant shareholders use the firm’s assets for their personal benefits and 1thus expropriate minority shareholders (tunneling).

Accordingly, this paper aims to examine the effect of capital structure and cash holding decisions on minority shareholders' expropriation for short and long periods.

CONTROLLING TY SHAREHOLDERS: IS THERE EXPROPRIATION. AN EMPIRICAL ANALYSIS OF THE STOCK PRICE PERFOR- MANCE OF EUROPEAN COMPANIES* JOSÉ GUEDES** AND GILBERTO LOUREIRO*** M any European corporations feature a dominant shareholder with a degree of control over man-agement well in excess of his cash-flow rights.

Expropriation of minority shareholders means that A. minority shareholders must sell their shares upon dmeand B. minority sharholders cannot own shares in foreign firms C. minority sharholders do not recieve dividends.

minority shareholders are adversely affected by the actions of. Estimating the expropriation of minority shareholders: Results from a new empirical approach. The European Journal of Finance: Vol. 12, No. 5, pp. CiteSeerX - Document Details (Isaac Councill, Lee Giles, Pradeep Teregowda): We examine the degree of expropriation of minority shareholders for 2, corporations in nine East Asian countries indistinguishing control from cash-flow rights and various types of ultimate owners, including family, state, widely-held corporations and widely-held financial institutions.

We conclude that the risk of expropriation is the major principal-agent problem for public corporations in East Asia.

Suggested Citation: Suggested Citation Claessens, Stijn and Fan, Po Hung Joseph P. and Djankov, Simeon and Lang, Hsien Ping Larry, On Expropriation of Minority Shareholders: Evidence from East Asia (December 9, ).

The authors examine evidence of the expropriation of minority shareholders for 2, corporations in nine East Asian countries in They distinguish control from cash-flow rights.

They also distinguish between various types of ultimate owners, including family, state, widely held corporations, and widely held financial institutions. This paper studies the payout policy of Italian firms controlled by large majority shareholders (controlled firms).

The paper reports that a firm's share of dividends in total payout (dividends plus repurchases) is negatively related to the size of the cash flow stake of the firm's controlling shareholder and positively associated with the wedge between the controlling shareholder's control.

Another variable that is often suggested as measure of potential minority shareholders' expropriation is the wedge between a controlling shareholder's control rights and cash flow rights (e.g., Claessens, Djankov, Fan, & Lang, ; Faccio et al., ). A shareholder's control rights in a firm are defined as the fraction of the firm's voting.

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Incentives for the Expropriation of Minority Shareholders 28 2. Constraints on the Expropriation of Minority Shareholders 30 impact that ‘law on the books’ has in reality depends on a wide range of factors.

Human behavior is not only shaped by formal rules, but also by informal rules. Furthermore, the extent. In Malaysia, expropriation of minority shareholder’s right by majority shareholders often occur particularly in related party transaction, and nowadays, this issue is still debated in mass media.

Thus, this study conducted to gain a deeper knowledge and understanding of the expropriation of minority shareholders’ rights in Malaysia. The rule was not applied, for example, if a minority shareholder complained to the court about action by the company for which more than a simple majority was needed, as in Edwards v Halliwell [] 2 All ERwhich is a trade union case, but the principle is applicable to companies.

"Controlling vs. Minority Shareholders: is There Expropriation. An Empirical Analysis of the Stock Price Performance of European Companies," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol.

5(1), pages Findings The results suggest that the presence of more debts in capital structure is positively associated with minority shareholders' expropriation, whereas a negative association has been found.

A minority shareholder should be cautious when beginning this process, as it is expensive and time consuming, but it is one of the most significant protections in place to defend minority shareholders against potentially-problematic company leadership.

A majority of these are minority shareholders who, left on their own accord, have little competitive advantage against controlling shareholders and their nominated corporate insiders. This study examines the protection of minority shareholders in public listed companies in Thailand by conducting a survey on a sample of minority shareholders.

Details Expropriation of minority shareholders FB2

1 Expropriation of Minority Shareholders: Evidence from East Asia Stijn Claessens*, Simeon Djankov* ∧, Joseph P. Fan**, and Larry H.

Lang*** * World Bank ** Hong Kong University of Science and Technology *** The University of ChicagoWe thank seminar participants at the World Bank, the Federation of Thai Industries in Bangkok, the Korean Development Institute in Seoul, and.

shareholder structures in order to preserve these private benefits. Third, we find a puzzling and significant underperformance of dual-class share IPOs, which can be explained by ex ante unanticipated expropriation of minority shareholders due to poor investor protection in.

Research manifests the cost decides on if large shareholders expropriate minority shareholders and minority shareholders protect their rights actively and therefore provides ways to degrade lower normal cost of minority shareholder’s protecting right and expropriation earning of large shareholders to enhance protection of minority shareholder.

Previous research indicates that corporate social responsibility (CSR) can benefit firms by satisfying the needs of different stakeholders. In this study, however, we provide a caution against this notion that CSR has a dark side.

We argue that the political protections and the image of legitimacy that CSR brings can facilitate and protect large shareholders who expropriate. We also suggest. COVID Resources.

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The findings of this study would be useful for the policy-makers and regulators such as Securities Commission Malaysia and Minority Shareholder Watchdog Group to assess the expropriation. On the other hand, there may be a contest between shareholders themselves where, for example, a minority group of shareholders disagree with a decision made at a general meeting by a majority vote.

Here the question is whether the law should give recognition to the position of minority shareholders. Originality/value – We focus on the effects of corporate governance restructuring on executive compensation and controlling shareholders’ tunneling in the Chinese context, and we also investigate whether these effects are stronger with the involvement of state ownership.

We empirically address the issues between executive compensation and expropriation of minority shareholders.Get this from a library!

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Expropriation of minority shareholders: evidence from East Asia. [Stijn Claessens;] -- March In nine East Asian countries, higher cash-flow rights are associated with a higher market valuation and higher control rights with a lower valuation, especially when cash-flow rights are.This book investigates and concludes, for Indian business groups, that concentrated-inside ownership provides opportunities for the expropriation of minority shareholders.

While more concentrated direct ownership of controlling families results in a higher market value of equity, indirect ownership obtained through cross-holding provides.