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Ownership Structure, Corporate Governance, and Firm Value: Evidence from the East Asian Financial Crisis


  • Michael L. Lemmon,

  • Karl V. Lins

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    • Lemmon and Lins are at the David Eccles School of Business at the University of Utah. Both authors thank the Center for International Business and Economic Research (CIBER) for providing funding for this project. We are grateful for comments from participants at the Third Annual CIFRA/Davidson Institute Financial Market Development Conference in Hong Kong and a seminar at Duke University. Additionally, we thank Stijn Claessens and Simeon Djankov for providing access to the handbooks used in World Bank East Asia ownership studies, and Rick Green, Simon Johnson, Leora Klapper, Pete Kyle, Todd Mitton, and an anonymous referee for helpful comments.


We use a sample of 800 firms in eight East Asian countries to study the effect of ownership structure on value during the region's financial crisis. The crisis negatively impacted firms' investment opportunities, raising the incentives of controlling shareholders to expropriate minority investors. Crisis period stock returns of firms in which managers have high levels of control rights, but have separated their control and cash flow ownership, are 10–20 percentage points lower than those of other firms. The evidence is consistent with the view that ownership structure plays an important role in determining whether insiders expropriate minority shareholders.

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