Download or read book The Disclosure Effects of Dual Class Ownership Structures written by Surjit Tinaikar and published by . This book was released on 2007 with total page 318 pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation thesis provides evidence that the detachment of control rights from cash flow rights in US and Canadian dual class share firms are associated with lower levels of voluntary disclosure. While prior studies have looked at the effect of ownership concentration on disclosure, this study focuses on one mechanism through which concentrated ownership is achieved and its effect on voluntary disclosure. The evidence is consistent with the explanation that controlling owners use opaqueness in disclosures to conceal private rents. To examine the research question, my study develops a new disclosure index that captures managerial discretionary disclosure decisions with respect to compensation practices. By attempting to address the selection bias that could confound the disclosure predictions, the study also provides empirical insights into which firms choose dual class equity. The within dual class sample analyses employed as an alternative method to mitigate selection biases, reveal that disclosure is decreasing in the largest controlling shareholder's divergence between control rights and cash flow rights. I also find evidence that disclosure levels are decreasing in the premium at which superior voting shares trade relative to inferior voting shares---a proxy for the controlling shareholder's private benefits from control. In addition to the above, I also provide some cross-country analyses. The evidence is largely consistent with a higher rent extraction explanation in weaker regimes. Dual class share firms in weaker regimes disclose lesser information than their stronger regime dual class share counterparts. Based on prior literature, Canada is hypothesized in this study to have weaker regulatory enforcement and thus a weaker investor protection environment. Finally, the study provides direct evidence that separating control rights from cash flow rights enables managers to extract private rents in the form of excess executive compensation.
Download or read book Voluntary Disclosure and Ownership Structure written by Surjit Tinaikar and published by . This book was released on 2010 with total page 55 pages. Available in PDF, EPUB and Kindle. Book excerpt: This study focuses on the association of voluntary compensation disclosure and ownership structure. It provides evidence that the detachment of control and cash flow rights in dual class share firms is associated with lower levels of compensation disclosure. This association is incremental to the level of managerial ownership and family ownership. The study attributes these disclosure results to the political costs of high compensation levels in dual class share firms. Consistent with this explanation, the study finds that managers in dual class share firms earn higher compensation relative to their single class counterparts. To examine the research question, the study develops a new compensation disclosure index that has been unexplored in prior academic literature. An analysis within dual class firms reveals that compensation disclosure is decreasing in managers' voting control but increasing in their cash flow rights. This is consistent with a political cost explanation.
Download or read book Disclosure Practices of Dual Class Firms written by Barry Hettler and published by . This book was released on 2015 with total page 117 pages. Available in PDF, EPUB and Kindle. Book excerpt: Dual class firms have been a topic of increased academic research in recent years. Traditionally the domain of family firms issuing publicly traded stock for the first time, the equity structure is becoming more prevalent through its adoption by high-profile technology firms such as Google, Facebook, and LinkedIn. The purpose of this dissertation, organized into two essays, is to analyze two aspects of a dual class firm's information disclosure not addressed in prior research: voluntary management earnings guidance and textual characteristics of mandatory annual report filings. Management earnings forecasts are an extremely importance source of information for market participants. However, as insider voting rights increase relative to dividend rights, managers become more insulated from market pressures. Essay I predicts that this separation between voting and dividend rights (the "wedge") will result in a lower incidence of guidance, more range forecasts when guidance is provided, and less accurate forecasts. Essay II examines the effect of the wedge on the readability and tone of the management discussion and analysis (MD&A) section of the annual report. Insulation from market pressures resulting from a larger wedge may cause MD&A to be less readable and less optimistic. Alternatively, however, a larger wedge may result in more readable disclosures if management uses readability to self-bond and more optimistic disclosures if strong motivated reasoning effects are present. While failing to discern an effect of the wedge on management forecast practices, this study finds that a larger wedge is associated with more readable and more optimistic filings. This study contributes to the literature by shedding light on the impact of insider ownership on the readability and tone of annual reports and may be useful in the comprehension and interpretation of annual reports by analysts, investors, and regulators.
Download or read book Main Street and Wall Street written by William Zebina Ripley and published by . This book was released on 1927 with total page 380 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book An Assessment of Dual Class Shares in Brazil written by Pedro Matos and published by . This book was released on 2017 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Concentrated Corporate Ownership written by Randall K. Morck and published by University of Chicago Press. This book was released on 2007-12-01 with total page 404 pages. Available in PDF, EPUB and Kindle. Book excerpt: Standard economic models assume that many small investors own firms. This is so in most large U.S. firms, but wealthy individuals or families generally hold controlling blocks in smaller U.S. firms and in all firms in most other countries. Given this, the lack of theoretical and empirical work on tightly held firms is surprising. What corporate governance problems arise in tightly held firms? How do these differ from corporate governance problems in widely held firms? How do control blocks arise and how are they maintained? How does concentrated ownership affect economic growth? How should we regulate tightly held firms? Drawing together leading scholars from law, economics, and finance, this volume examines the economic and legal issues of concentrated ownership and their impact on a shifting global economy.
Download or read book An Analysis of the Reasons for Applying a Dual Class Share Ownership Structure written by Stine Bretlau and published by . This book was released on 2005 with total page 118 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Dual Class Ownership Structure and Insider Entrenchment written by Pavinee Manowan and published by . This book was released on 2010 with total page 250 pages. Available in PDF, EPUB and Kindle. Book excerpt: Abstract: Dual class firms typically have two classes of common stock, one with superior voting rights. In many cases, the holders of superior class are insiders, including directors and executive officers as a group, who have significant control over the firm while holding only a minority equity stake. Consequently, dual class firms face severe agency problems that arise from conflicts of interests between controlling and non-controlling shareholders. The objective of this study is to examine how the divergence between insiders' control rights and cash flow rights, arising from the dual class ownership structure, affects insiders' extraction of private benefits of control. This study focuses on three indicators of entrenchment, namely related party transactions, executive compensation, and CEO turnover-performance sensitivity. A mechanism that insiders of dual class firms use to make inferior class shares more attractive to investors, specifically dividend payout, is also examined. The empirical results provide evidence fairly consistent with entrenchment hypothesis. Although there is no difference in CEO turnover after poor performance between dual class firms and single class firms, dual class firms, relative to single class firms, engage in more related party transactions and have higher proportion of cash compensation to total compensation. Higher dividend payout is also used as a mechanism to compensate inferior class shareholders for entrenchment risk inherent in dual class firms.
Download or read book The Impact of Family Ownership and Dual Class Shares on Takeover Risk written by Martin Holmen and published by . This book was released on 2008 with total page 30 pages. Available in PDF, EPUB and Kindle. Book excerpt: Some studies have provided evidence that dual class shares reduce firm market value. Other studies have shown that dual class shares are more common in countries where the proxies for private benefits of control are low. In this paper we explore whether the negative relation between firm market value and dual class shares can be explained by lower takeover probability. For family controlled firms, we find that both the hazard rate of takeover and firm market value decline with dual class shares and firm leverage. We conclude that families entrench themselves by using dual class shares and by manipulating firm capital structure and this translates into lower firm value.
Download or read book The Economic Structure of Corporate Law written by Frank H. Easterbrook and published by Harvard University Press. This book was released on 1996 with total page 386 pages. Available in PDF, EPUB and Kindle. Book excerpt: This text argues that the rules and practices of corporate law mimic contractual provisions that parties involved in corporate enterprise would reach if they always bargained at zero cost and flawlessly enforced their agreements. It states that corporate l
Download or read book Model Rules of Professional Conduct written by American Bar Association. House of Delegates and published by American Bar Association. This book was released on 2007 with total page 216 pages. Available in PDF, EPUB and Kindle. Book excerpt: The Model Rules of Professional Conduct provides an up-to-date resource for information on legal ethics. Federal, state and local courts in all jurisdictions look to the Rules for guidance in solving lawyer malpractice cases, disciplinary actions, disqualification issues, sanctions questions and much more. In this volume, black-letter Rules of Professional Conduct are followed by numbered Comments that explain each Rule's purpose and provide suggestions for its practical application. The Rules will help you identify proper conduct in a variety of given situations, review those instances where discretionary action is possible, and define the nature of the relationship between you and your clients, colleagues and the courts.
Download or read book ESG and Responsible Institutional Investing Around the World A Critical Review written by Pedro Matos and published by CFA Institute Research Foundation. This book was released on 2020-05-29 with total page 80 pages. Available in PDF, EPUB and Kindle. Book excerpt: This survey examines the vibrant academic literature on environmental, social, and governance (ESG) investing. While there is no consensus on the exact list of ESG issues, responsible investors increasingly assess stocks in their portfolios based on nonfinancial data on environmental impact (e.g., carbon emissions), social impact (e.g., employee satisfaction), and governance attributes (e.g., board structure). The objective is to reduce exposure to investments that pose greater ESG risks or to influence companies to become more sustainable. One active area of research at present involves assessing portfolio risk exposure to climate change. This literature review focuses on institutional investors, which have grown in importance such that they have now become the largest holders of shares in public companies globally. Historically, institutional investors tended to concentrate their ESG efforts mostly on corporate governance (the “G” in ESG). These efforts included seeking to eliminate provisions that restrict shareholder rights and enhance managerial power, such as staggered boards, supermajority rules, golden parachutes, and poison pills. Highlights from this section: · There is no consensus on the exact list of ESG issues and their materiality. · The ESG issue that gets the most attention from institutional investors is climate change, in particular their portfolio companies’ exposure to carbon risk and “stranded assets.” · Investors should be positioning themselves for increased regulation, with the regulatory agenda being more ambitious in the European Union than in the United States. Readers might come away from this survey skeptical about the potential for ESG investing to affect positive change. I prefer to characterize the current state of the literature as having a “healthy dose of skepticism,” with much more remaining to be explored. Here, I hope the reader comes away with a call to action. For the industry practitioner, I believe that the investment industry should strive to achieve positive societal goals. CFA Institute provides an exemplary case in its Future of Finance series (www.cfainstitute.org/research/future-finance). For the academic community, I suggest we ramp up research aimed at tackling some of the open questions around the pressing societal goals of ESG investing. I am optimistic that practitioners and academics will identify meaningful ways to better harness the power of global financial markets for addressing the pressing ESG issues facing our society.
Download or read book Stock Pyramids Cross Ownership and Dual Class Equity written by Lucian A. Bebchuk and published by . This book was released on 2009 with total page 29 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines common arrangements for separating control from cash flow rights: stock pyramids, cross-ownership structures, and dual class equity structures. We describe the ways in which such arrangements enable a controlling shareholder or group to maintain a complete lock on the control of a company while holding less than a majority of the cash flow rights associated with its equity. Next, we analyze the consequences and agency costs of these arrangements. In particular, we show that they have the potential to create very large agency costsᔜosts that are an order of magnitude larger than those associated with controlling shareholders who hold a majority of the cash flow rights in their companies. The agency costs of these structures, we suggest, are also likely to exceed the agency costs of attending highly leveraged capital structures. Finally, we put forward an agenda for research concerning structures separating control from cash flow rights.
Download or read book Research on Professional Responsibility and Ethics in Accounting written by Charles Richard Baker and published by Emerald Group Publishing. This book was released on 2020-10-16 with total page 208 pages. Available in PDF, EPUB and Kindle. Book excerpt: This is a continuing of a long series focusing on professional responsibility and ethics in accounting.
Download or read book Stock Pyramids Cross ownership and Dual Class Equity written by Lucian A. Bebchuk and published by . This book was released on 1999 with total page 34 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines common arrangements for separating control from cash flow rights: stock pyramids, cross-ownership structures, and dual class equity structures. We describe the ways in which such arrangements enable a controlling shareholder or group to maintain a complete lock on the control of a company while holding less than a majority of the cash flow rights associated with its equity. Next, we analyze the consequences and agency costs of these arrangements. In particular, we show that they have the potential to create very large agency costs -- costs that are an order of magnitude larger than those associated with controlling shareholders who hold a majority of the cash flow rights in their companies. The agency costs of these structures, we suggest, are also likely to exceed the agency costs of attending highly leveraged capital structures. Finally, we put forward an agenda for research concerning structures separating control from cash flow rights
Download or read book A History of Corporate Governance around the World written by Randall K. Morck and published by University of Chicago Press. This book was released on 2007-11-01 with total page 700 pages. Available in PDF, EPUB and Kindle. Book excerpt: For many Americans, capitalism is a dynamic engine of prosperity that rewards the bold, the daring, and the hardworking. But to many outside the United States, capitalism seems like an initiative that serves only to concentrate power and wealth in the hands of a few hereditary oligarchies. As A History of Corporate Governance around the World shows, neither conception is wrong. In this volume, some of the brightest minds in the field of economics present new empirical research that suggests that each side of the debate has something to offer the other. Free enterprise and well-developed financial systems are proven to produce growth in those countries that have them. But research also suggests that in some other capitalist countries, arrangements truly do concentrate corporate ownership in the hands of a few wealthy families. A History of Corporate Governance around the World provides historical studies of the patterns of corporate governance in several countries-including the large industrial economies of Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States; larger developing economies like China and India; and alternative models like those of the Netherlands and Sweden.
Download or read book Information Environment and Earnings Management of Dual Class Firms Around the World written by Ting Li and published by . This book was released on 2017 with total page 59 pages. Available in PDF, EPUB and Kindle. Book excerpt: This study examines the information environment and earnings management of dual class firms. Motivated by the pronounced entrenchment phenomenon at dual class firms due to divergence between voting and cash flow rights, we are interested in whether dual class firms adopt corporate disclosure choices that imply greater opacity as well as employ judgment in financing reporting to misguide the outside shareholders about the firm's true performance. Based on a sample of 12,672 firms from 19 countries during 1994-2010, we find that dual class status is associated with poorer information environment and increased accrual-based earnings management, consistent with the notion that managers of dual class firms exhibit incentives to conceal private control benefits from the outside shareholders. Results further suggest that dual class ownership structure weakens the mitigating impact of investor protection on earnings management. Following unification, firms experience an improvement in information environment and a decrease in earnings manipulation.
