We regress leverage on an index of corporate exposure to expropriation by the controlling shareholder - the ratio of his ownership rights O to his control rights C - and on an index of creditor rights. Amongst corporations that can access related party loans, a lower O/C ratio increases leverage...

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 low and control rights are high. This suggests the expropriation of minority shareholders by controlling...

Some East Asian firms diversify to circumvent external factor markets subject to high transaction costs. Other diversify as a means of expropriation by large stockholders. There is evidence that group affiliation is used to complement firm-level diversification in the creation of internal...

This Note reports an analysis of ultimate control in nearly 3,000 publicly traded companies in December 1996-before the financial crisis-in nine East Asian economies: Hong Kong, Indonesia, Japan, the Republic of Korea, Malaysia, the Philippines, Singapore, Taiwan (China), and Thailand. The...

For a sample of successful tender offers, we find that the shareholders of high q bidders gain significantly more than the shareholders of low q bidders. In general, the shareholders of low q targets benefit more from takeovers than the shareholders of high q targets. Typical bidders have...

The free cash flow hypothesis advanced by Jensen (1988) states that managers endowed with free cash flow will invest it in negative net present value (NPV) projects rather than pay it out to shareholders. Jensen defines free cash flow as cash flow left after the firm has invested in all...

Berle and Means focused US analysis of corporate governance on the separation of ownership from control, asserting that US corporations typically have many dispersed shareholders, leaving managers in control. Yet, of the largest 200 US corporations, they had firm evidence of managerial control...

Prior studies, such as Claessens, Djankov, Fan and Lang (2002), suggest that separation between ultimate control and ownership decreases firm value (due to the entrenchment effects of large shareholding). Using a sample of Canadian firms, we find that stocks with a greater deviation between...