Equity Ownership and Firm Value in Emerging Markets

2003/03/01 by Karl V. Lins · 1,145 citations
Business, Management and Accounting · Economics, Econometrics and Finance · Mathematics · #Banking stability, regulation, efficiency #Business #Corporate Finance and Governance #Emerging markets #Enterprise value #Equity (law) #Finance #Industrial organization #Mathematics #Private Equity and Venture Capital #Value (mathematics)

paper · doi:10.2307/4126768

published in Journal of Financial and Quantitative Analysis 38(1), 159 (Cambridge University Press)

openalex publication_date 2003/03/01 · openalex created_date 2025/10/10 · openalex updated_date 2026/07/25

Abstract

This paper investigates whether management stock ownership and large non-management blockholder share ownership are related to firm value across a sample of 1433 firms from 18 emerging markets. When a management group's control rights exceed its cash flow rights, I find that firm values are lower. I also find that large non-management control rights blockholdings are positively related to firm value. Both of these effects are significantly more pronounced in countries with low shareholder protection. One interpretation of these results is that external shareholder protection mechanisms play a role in restraining managerial agency costs and that large non-management blockholders can act as a partial substitute for missing institutional governance mechanisms.

Citations

• A Survey of Corporate Governance
• Law and Finance

Cited by

• Investor protection and the value impact of stock liquidity
• The legal environment and corporate valuation: Evidence from cross-border takeovers
• Security token offerings
• Socially responsible firms
• Corporate Governance, Political Connections, and Intra‐Industry Effects: Evidence from Corporate Scandals in China
• Managerial ownership and the disposition effect
• What drives corporate liquidity? An international survey of cash holdings and lines of credit☆

Related

• State Ownership and Corporate Cash Holdings
• Large Shareholders and Corporate Control
• The Impact of Block Ownership on Cash Holdings in Companies Listed on the Tehran Stock Exchange
• Boosting ESG Performance: Overcoming Collusion Among Entrepreneurial Family and Institutional Shareholders
• The role of agency costs and shareholder protection in family firms’ cash-holding decisions