DO MULTIPLE LARGE SHAREHOLDERS PLAY A CORPORATE GOVERNANCE ROLE? EVIDENCE FROM EAST ASIA

Authors


  • We thank an anonymous referee, Narjess Boubakri, Jean-Claude Cosset, Jean-Marie Gagnon, Jayant Kale (the editor), and Oumar Sy for constructive comments on an earlier draft of this article. We also appreciate generous financial support from the Social Sciences and Humanities Research Council of Canada. Omrane Guedhami gratefully acknowledges financial support from the Center for International Business Education and Research at the University of South Carolina.

Abstract

We examine the governance role of multiple large shareholder structures (MLSS) to determine their valuation effects in a sample of 1,252 publicly traded firms from nine East Asian economies. We find that the presence, number, and size of multiple large shareholders are associated with a significant valuation premium. Our results also show that the identity of MLSS influences corporate value and that the valuation effects of MLSS are more pronounced in firms with greater agency costs. Our results imply that MLSS play a valuable monitoring role in curbing the diversion of corporate resources.

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