Search results for: governance-and-expropriation

Governance and Expropriation

Author : Larry H. P. Lang
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Corporate groups outside the US are often controlled by a complex of ownership links, which typically form a pyramidical structure. The usual practice of expropriation in such groups is to pass bad assets to companies down the pyramid and to pass the proceeds up the pyramid via internal transactions.

Corporate Governance and Expropriation of Minority Shareholders Rights

Author : Marisela Santiago-Castro
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Legal Environment Firm Level Corporate Governance and Expropriation of Minority Shareholders in Asia

Author : Chandrasekhar Krishnamurti
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Claessens, Djankov, and Lang (2000) show that corporate control is substantially enhanced by using pyramid structures and cross-holdings by firms in nine East Asian countries. Claessens, Djankov, Fan, and Lang (1999) (CDFL) provide empirical evidence regarding expropriation arising from the separation of cash flow from voting rights in Asian firms. Their analysis suggests a high degree of expropriation in Indonesia, Philippines and Thailand. We re-examine the problem of expropriation in Asian firms reported by earlier research. We explore firm-level governance-control structure interactions, and control-legal environment interaction for a set of Asian firms for which we are able to obtain relevant data for all the required variables. The major contribution of this paper is that it jointly examines ownership-control structure, firm-level governance and country-level legal protection available to external suppliers of capital. Using post-crisis data, we find a strong country effect in governance. In general, high control firms in countries with weak legal protection have lower firm-level governance scores in general. On the other hand, high control firms, in countries which have a stronger legal protection environment, signal their intention to not expropriate minority shareholders' wealth by voluntarily adopting measures to strengthen their discipline and responsibility scores. Contrary to earlier findings, we do not find a relationship between control-ownership wedge and firm value. Furthermore, we do not find any relation between firm-level governance and firm value as measured by Tobin's Q.

Corporate Governance in Turkey

Author : Betül Batır Güler
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Corporate Governance Corporate and Employment Law and the Costs of Expropriation

Author : Giulio Ecchia
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We set up a model to study how ownership structure, corporate law and employment law interact to set the incentives that influence the decision by the large shareholder or manager effectively controlling the firm to divert resources from minority shareholders and employees. We suggest that agency problems between the controller and other investors and holdup problems between shareholders and employees are connected if the controller bears private costs of 'expropriating' these groups. Corporate law and employment law may therefore sometimes be substitutes; employees may benefit from better corporate law intended to protect minority shareholder, and vice versa. Our model has implications for the domestic and comparative study of corporate governance structure and addresses, among other things, the question whether large shareholders are better able to 'bond' with employees than dispersed ones, or whether the separation of ownership facilitates long-term relationships with labor.

Corporate Governance and the Shareholder Base

Author : Karl Lins
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"This paper uses a sample of 4,410 firms from 29 countries to investigate the relation between corporate governance and the shareholder base. In contrast to previous work, our results strongly support the notion that poor corporate governance, at both the firm and country level, negatively impacts the willingness of foreign investors to hold a firm's equity. Specifically, we find that firms whose managers have sufficiently high control rights that they may reasonably be expected to expropriate minority equity investors attract significantly less U.S. investment, especially in countries with poor external governance. Our findings suggest that the prices U.S. investors are asked to pay for firms with poor governance are not low enough to fully compensate them for expected expropriation or increased estimation risk associated with expected poor disclosure by these firms. Because prior research shows that a smaller shareholder base is associated with a lower firm value, our results are consistent with the notion that the shareholder base represents an important channel through which poor expected corporate governance contributes to a reduction in firm value"--Federal Reserve Board web site.

The Expropriation of Environmental Governance

Author : Kyla Tienhaara
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Recent years have seen an explosive increase in investor-state disputes resolved in international arbitration. This is significant not only in terms of the number of disputes that have arisen and the number of states that have been involved, but also in terms of the novel types of dispute that have emerged. Traditionally, investor-state disputes resulted from straightforward incidences of nationalisation or breach of contract. In contrast, modern disputes frequently revolve around government measures taken to further public policy goals, such as the protection of the environment. This book explores the outcomes of several investor-state disputes over environmental policy. In addition to examining the pleadings of parties and decisions of arbitral tribunals in disputes that have been resolved in arbitration, the influence that investment arbitration has had in negotiated outcomes to conflicts is also explored.

Corporate Governance and State Expropriation Risk

Author : Burcin Col
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Recent studies show that the transfer of corporate governance structure across borders has significant valuation consequences. It is equally important to consider the valuation effect of state expropriation risk as well as its interaction with quality of corporate governance. Using a sample of cross-border acquisitions during 1989-2009, we find that targets, which operate under some degree of state expropriation risk, receive a significantly lower premium. The target shareholders are not fully rewarded for the improvement in firm governance since the benefits of improvement are mitigated under predation. Our results provide evidence for twin-agency theory of Stulz (2005) through cross-border mergers.

The Legitimate Justification of Expropriation

Author : Björn Hoops
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Expropriation Risk Governance Control and Equilibrium Financial Contract

Author : Yeongjae Kang
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