Publication

Agency Conflicts, Controlling Owner Proximity, and Firm Value: An Analysis of Dual-Class Firms in the United States

Hoi, C-K. & Robin, A., Mar-2010, In : Corporate Governance - An International Review. 18, 2, p. 124-135 12 p.

Research output: Contribution to journalArticleAcademicpeer-review

APA

Hoi, C-K., & Robin, A. (2010). Agency Conflicts, Controlling Owner Proximity, and Firm Value: An Analysis of Dual-Class Firms in the United States. Corporate Governance - An International Review, 18(2), 124-135. https://doi.org/10.1111/j.1467-8683.2010.00783.x

Author

Hoi, Chun-Keung ; Robin, Ashok. / Agency Conflicts, Controlling Owner Proximity, and Firm Value : An Analysis of Dual-Class Firms in the United States. In: Corporate Governance - An International Review. 2010 ; Vol. 18, No. 2. pp. 124-135.

Harvard

Hoi, C-K & Robin, A 2010, 'Agency Conflicts, Controlling Owner Proximity, and Firm Value: An Analysis of Dual-Class Firms in the United States', Corporate Governance - An International Review, vol. 18, no. 2, pp. 124-135. https://doi.org/10.1111/j.1467-8683.2010.00783.x

Standard

Agency Conflicts, Controlling Owner Proximity, and Firm Value : An Analysis of Dual-Class Firms in the United States. / Hoi, Chun-Keung; Robin, Ashok.

In: Corporate Governance - An International Review, Vol. 18, No. 2, 03.2010, p. 124-135.

Research output: Contribution to journalArticleAcademicpeer-review

Vancouver

Hoi C-K, Robin A. Agency Conflicts, Controlling Owner Proximity, and Firm Value: An Analysis of Dual-Class Firms in the United States. Corporate Governance - An International Review. 2010 Mar;18(2):124-135. https://doi.org/10.1111/j.1467-8683.2010.00783.x


BibTeX

@article{fd8aa378f8db4e7089aee5f3c491122d,
title = "Agency Conflicts, Controlling Owner Proximity, and Firm Value: An Analysis of Dual-Class Firms in the United States",
abstract = "Manuscript Type:EmpiricalResearch Question/Issue:The study seeks to understand whether the proximity of the largest shareholder (controller) to the locus of management - whether the controller is a top executive, a board member, or an outsider - determines the value of US dual-class firms.Research Findings/Insights:Using a sample of 209 US dual class firms from the year 2000 and a corresponding control sample of single-class firms, we run cross-sectional regressions to determine the effect of the controller on firm value. We present robust evidence that dual-class firm value is negatively related to controller proximity. Dual-class structure overall is unrelated to firm value, because despite its negative effects with high proximity controllers there appear to be benefits when controller proximity is low (when the largest shareholder is an outsider).Theoretical/Academic Implications:Ownership structure is a widely studied subject but most studies focus on insider ownership. More nuanced aspects of ownership such as controller proximity are needed in empirical studies and theoretical models. These nuances could help us better understand the interplay between the incentive of various parties (e.g., managers, large shareholders) and the opportunity available for extraction of private benefits.Practitioner/Policy Implications:A practitioner implication is that shareholder of high-proximity dual-class firms must seek additional control mechanisms to curb agency costs. A policy implication is that investor protection (laws and institutional structure protecting shareholders) works only to a limited extent - it curbs overt acts of expropriation, but cannot eliminate acts engineered by insiders.",
keywords = "Corporate Governance, Governance Environments, Agency Theory, Shareholder Value, Blockholder Ownership, CROSS-COUNTRY ANALYSIS, VOTING-RIGHTS, COMMON-STOCK, CLASS RECAPITALIZATIONS, CORPORATE GOVERNANCE, INVESTOR PROTECTION, EQUITY OWNERSHIP, PERFORMANCE, SHAREHOLDERS, IMPACT",
author = "Chun-Keung Hoi and Ashok Robin",
year = "2010",
month = "3",
doi = "10.1111/j.1467-8683.2010.00783.x",
language = "English",
volume = "18",
pages = "124--135",
journal = "Corporate Governance - An International Review",
issn = "0964-8410",
publisher = "Wiley",
number = "2",

}

RIS

TY - JOUR

T1 - Agency Conflicts, Controlling Owner Proximity, and Firm Value

T2 - An Analysis of Dual-Class Firms in the United States

AU - Hoi, Chun-Keung

AU - Robin, Ashok

PY - 2010/3

Y1 - 2010/3

N2 - Manuscript Type:EmpiricalResearch Question/Issue:The study seeks to understand whether the proximity of the largest shareholder (controller) to the locus of management - whether the controller is a top executive, a board member, or an outsider - determines the value of US dual-class firms.Research Findings/Insights:Using a sample of 209 US dual class firms from the year 2000 and a corresponding control sample of single-class firms, we run cross-sectional regressions to determine the effect of the controller on firm value. We present robust evidence that dual-class firm value is negatively related to controller proximity. Dual-class structure overall is unrelated to firm value, because despite its negative effects with high proximity controllers there appear to be benefits when controller proximity is low (when the largest shareholder is an outsider).Theoretical/Academic Implications:Ownership structure is a widely studied subject but most studies focus on insider ownership. More nuanced aspects of ownership such as controller proximity are needed in empirical studies and theoretical models. These nuances could help us better understand the interplay between the incentive of various parties (e.g., managers, large shareholders) and the opportunity available for extraction of private benefits.Practitioner/Policy Implications:A practitioner implication is that shareholder of high-proximity dual-class firms must seek additional control mechanisms to curb agency costs. A policy implication is that investor protection (laws and institutional structure protecting shareholders) works only to a limited extent - it curbs overt acts of expropriation, but cannot eliminate acts engineered by insiders.

AB - Manuscript Type:EmpiricalResearch Question/Issue:The study seeks to understand whether the proximity of the largest shareholder (controller) to the locus of management - whether the controller is a top executive, a board member, or an outsider - determines the value of US dual-class firms.Research Findings/Insights:Using a sample of 209 US dual class firms from the year 2000 and a corresponding control sample of single-class firms, we run cross-sectional regressions to determine the effect of the controller on firm value. We present robust evidence that dual-class firm value is negatively related to controller proximity. Dual-class structure overall is unrelated to firm value, because despite its negative effects with high proximity controllers there appear to be benefits when controller proximity is low (when the largest shareholder is an outsider).Theoretical/Academic Implications:Ownership structure is a widely studied subject but most studies focus on insider ownership. More nuanced aspects of ownership such as controller proximity are needed in empirical studies and theoretical models. These nuances could help us better understand the interplay between the incentive of various parties (e.g., managers, large shareholders) and the opportunity available for extraction of private benefits.Practitioner/Policy Implications:A practitioner implication is that shareholder of high-proximity dual-class firms must seek additional control mechanisms to curb agency costs. A policy implication is that investor protection (laws and institutional structure protecting shareholders) works only to a limited extent - it curbs overt acts of expropriation, but cannot eliminate acts engineered by insiders.

KW - Corporate Governance

KW - Governance Environments

KW - Agency Theory

KW - Shareholder Value

KW - Blockholder Ownership

KW - CROSS-COUNTRY ANALYSIS

KW - VOTING-RIGHTS

KW - COMMON-STOCK

KW - CLASS RECAPITALIZATIONS

KW - CORPORATE GOVERNANCE

KW - INVESTOR PROTECTION

KW - EQUITY OWNERSHIP

KW - PERFORMANCE

KW - SHAREHOLDERS

KW - IMPACT

U2 - 10.1111/j.1467-8683.2010.00783.x

DO - 10.1111/j.1467-8683.2010.00783.x

M3 - Article

VL - 18

SP - 124

EP - 135

JO - Corporate Governance - An International Review

JF - Corporate Governance - An International Review

SN - 0964-8410

IS - 2

ER -

ID: 66168157