Search Results (19)

The overvaluation of merger and acquisition (M&A) assets can lead to a decline in the performance of listed firms, an increase in the risk of goodwill impairment, and harm to the rights of minority shareholders, as well as to the sustainable development of firms. Based on stakeholder theory, this article constructs models to examine the impact of environmental, social, and governance (ESG) practices on the valuation of related party M&A assets and conducts an empirical analysis. We find that ESG practices significantly inhibit the overvaluation of related party M&A assets, and the digital economy can enhance this negative relationship. Mechanism analysis shows that this negative relationship is mediated through setting up stock performance compensation, reducing performance commitment growth rate, selecting reputable asset appraisal institutions and financial advisors, increasing analyst following and social media discussions, and reducing agency costs. Heterogeneity analysis shows that the inhibitory effect of ESG practices on the overvaluation of related party M&A assets is more obvious in non-horizontal M&A and non-state-owned enterprises. Furthermore, ESG practices can alleviate the stock price crash risk by reducing the overvaluation of related party M&A assets. The research conclusions provide a reference for ESG practices to better serve M&A activities and alleviate asset overvaluation in the digital economy era. Full article

As environmental, social, and governance (ESG) concerns increasingly shape corporate behavior, understanding their financial implications remains critical. This study investigates the impact of ESG performance on shareholder value, focusing on the mediating role of dividend policy. A multi-period difference-in-differences (DID) approach is applied to panel data from Chinese A-share listed firms between 2011 and 2022 to address endogeneity and establish causal inference. The empirical findings indicate that strong ESG performance significantly enhances shareholder value and that dividend policy is a credible transmission mechanism by signaling financial stability and governance quality. Heterogeneity analysis reveals that the magnitude of the ESG effect is further shaped by firm size, profitability, and ownership concentration, with larger, more profitable, and less concentrated firms benefiting more. Industry-level analysis reveals stronger ESG effects in capital- and technology-intensive sectors, with comparatively minor effects in labor-intensive industries. These results extend the literature by clarifying how ESG translates into financial value and by identifying contextual conditions that amplify or attenuate its impact. The findings also offer practical insights for aligning ESG strategies with financial policies and tailoring sustainability regulation to organizational and industry-specific dynamics. Full article

This study examines the impact of twin agency problems (political corruption and minority shareholders’ expropriation) on corporate debt management policies across a large number of countries. Our results show that in more corrupt countries, managers are more likely to shield liquid assets from potential political extraction by maintaining a higher level of leverage. This effect is magnified by the protection of shareholders’ rights. We further show that twin agency problems influence not only the level of debt in capital structures but also other aspects of debt management, including debt maturity, deviation from optimal leverage, capital structure stability, and the leverage speed of adjustments. The findings are robust due to their inclusion of different measures of corruption and a wide range of firm-level and country-level characteristics. Our study has implications for policymakers, as we show that the improvement of the country-level institutional environment and, particularly, addressing corruption can lead to more effective debt management by firms, ultimately resulting in higher firm values. Full article

This article examines the impact of ownership structure and dividend payouts on idiosyncratic risk and market liquidity using agency, signaling, and bankruptcy theories from an emerging market perspective. The evidence shows that family firms dominate and have concentrated ownership, and dividend payouts are lower among family firms than their counterparts. The idiosyncratic risk is high among firms with higher family ownership concentration. The family ownership concentration and control positively influence the (firm) risk, dividends positively affect the market liquidity, and risk relates negatively to the market liquidity, supporting the entrenchment of the minority shareholders’ proposition that a significant payout leads to a decrease in information asymmetry and a lower level of risk. The study further supports the proposition that information asymmetries are central to elucidating the dynamics of dividend payouts and their effects on firm risk and market liquidity. The evidence confirms that family ownership concentration affects policy decisions, especially ownership control. The paper’s originality lies in factoring ownership concentration when analyzing how payouts affect firm risk and market liquidity from an emerging markets perspective where controlling shareholders enjoy substantial private benefits, whereas minority shareholders have limited protection. Full article

As enterprises face increasing competitive pressures, financial crises can significantly impact on their capital operations, potentially leading to operational difficulties and, ultimately, market exclusion. Consequently, many enterprises have begun to utilize financial early-warning systems to guide and control risks. Currently, there is neither a universal nor comprehensive enterprise financial risk management model in China, nor a unified classification standard for enterprise financial risk management levels. This article takes financial data on A-share listed companies in 2020 as the data sample, including those with special treatment (represented by ST) or non-ST status. We establish an independent indicator system within the framework of profitability, solvency, operational capability, development potential, shareholders’ retained earnings, cash flow, and asset growth. The model is constructed employing the factor–logistic fusion algorithm. The factor part addresses the issue of collinearity among risk indicators, and the logistic part presents the results in probabilistic form, enhancing the interpretability of the model. The prediction accuracy of this model exceeds 89%. Finally, by applying the principles of interval estimation theory to statistical hypothesis testing, we categorize the risk levels into Grade A, representing significant risk; Grade B, representing moderate risk; Grade C, representing minor risk; and Grade D, representing no risk. This article aims to provide a comprehensive definition of a universal financial risk management early-warning model applicable to all enterprises in China. Full article

Previous studies have overlooked hidden ownership in their analysis, which could result in biased findings. This research utilizes unique data sources to uncover hidden ownership patterns and employs ordinary least square regression to investigate the relationship between hidden ownership and firm performance. The findings indicate that hidden ownership affects a firm’s performance, but not in the same manner as previously thought. Firms with hidden ownership actually perform better than those without. These results contradict the belief that hidden ownership leads to wealth expropriation from minority shareholders and negatively impacts a firm’s performance. The study also remains robust after accounting for potential endogeneity using an instrumental variable approach. The findings provide policy implications and contribute to the ownership and firm performance literatures. Full article

Based on China’s newly established Securities Investor Services Center (CSISC), a minority shareholder protection mechanism, we investigated how the CSISC shareholder influences the ESG performance of listed companies. Using a difference-in-differences analysis for a sample of Chinese listed companies during 2013–2017, we found that the pilot reform of CSISC shareholding has a positive influence on the ESG performance of listed companies. We also found that this effect exists in large companies and in companies in non-high-polluting industries. Besides, analysts’ attention, external auditing quality, institutional shareholding, and highly-developed market intermediary and legal systems can strengthen the effect of CSISC shareholding on corporate ESG performance. Our findings inspire regulators in emerging markets to establish suitable mechanisms to protect minority shareholder rights in the long run. Full article

The era of big data has changed the traditional data science based on mathematical statistics, and promoted the innovation of data analysis methods. This paper takes China state-holding holding enterprises as the research object, uses game theory as the method, uses top management team (TMT) knowledge hiding degree as the background to construct a minority shareholder governance information database, and discusses the feasibility of using minority shareholders’ active governance to break through and increase earnings management costs. The findings indicate, firstly, by optimizing enterprise information disclosure and reducing TMT knowledge hiding, the cost of minority shareholders’ participation in governance can be reduced and the enthusiasm of minority shareholders’ participation in governance can be promoted. Secondly, the presence of minority shareholders actively engaged in corporate governance can discourage two kinds of earnings management practices of managers in China state-holding enterprises. Finally, for the companies with weak state-holding and unannounced dividend policy, the active governance of minority shareholders has a more prominent restraining effect on the two types of earnings management. With an eye on strengthening the corporate micro-governance mechanism, this paper provides guidance for minority shareholders to strengthen their participation in the governance of China’s state-holding enterprises. Full article

This study aims to examine whether family control has a positive effect on earnings management of manufacturing companies and whether leverage weakens the positive effect of family control on earnings management. This study uses panel data for the 2015–2019 observation year. The research population consists of companies listed on the Indonesian capital market. Sample selection was performed with a purposive sampling approach using certain criteria, namely: the company was not delisted during the observation period; the company has complete research data; and that the company is included in the criteria for family companies. The sample of the study consists of 84 companies with a total of 419 observations. We use panel data regression to prove our hypotheses. The findings of our research show that family control has a positive effect on earnings management and leverage weakens the positive effect of family control on earnings management. Additional tests confirm the main test. The implications of our research are expected to be input for determining regulations and policies related to restrictions on majority shareholders to protect minority shareholders. Full article

Privatization has played an important role in national economic reform in Vietnam. However, unlike other transitional countries in Central and Eastern Europe, Vietnam has chosen a partial and gradual privatization where the government still holds significant ownership in most privatized firms. Whether partial privatization can enhance privatized firms’ performance or full privatization should have been implemented is a critical question that needs to be answered. This paper utilizes semiparametric regressions to study the relationship between residual state ownership and firm performance. The results indicate an inverted U relationship between state ownership and firm performance. We show that the performance of privatized firms improves with an increase in the level of state ownership until around 40%, after which the effect of state ownership on firm performance tends to decline. This demonstrates that in a transitional context, relinquishing governmental control via privatization can significantly benefit privatized firm performance. However, further reduction of state ownership may decrease the performance of privatized firms. Overall, the study contributes significantly to the growing body of evidence on the nonlinear effects of state ownership. This suggests that in the transitional context of Vietnam, due to weak corporate governance and limited protection of minority shareholders, there could be a temporary optimal position where state and private investors hold balanced ownership to simultaneously supervise operations and promote the performance of privatized firms. Full article

This article aims to show how the globalized securities market in general and a transnational legal business structure named variable interest entity (VIE) in particular has challenged our conventional understanding of “foreignness” as a geographical concept in cross-border capital flow and ushers in a new type of foreign investment which I call “offshore domesticated foreign finance” (ODFF). By performing a case study on Alibaba—one of the world’s leading VIE-structured Internet companies—and mapping out the company’s fund-raising history and personnel appointment mechanism with the help of company releases and news reports, this article shows how ODFF makes a company de jure foreign-incorporated and -owned but de facto China-based and Chinese-controlled. This article also demonstrates that ODFF’s primary function is to allow China-based Internet firms to tap into international financial markets while helping Chinese entrepreneurs and managers—despite their minority shareholdings—to control the company. These findings shed light on how financial globalization has transformed the cross-border capital movement and corporate governance. Full article

With the restructuring of the power system, household-level end users are becoming more prominent participants by integrating renewable energy sources and smart devices and becoming flexible prosumers. The use of microgrids is a way of aggregating local end users into a single entity and catering for the consumption needs of shareholders. Various microgrid architectures are the result of the local energy community following different decarbonisation strategies and are frequently not optimised in terms of size, technology or other influential factors for energy systems. This paper discusses the operational and planning aspects of three different microgrid setups, looking at them as individual market participants within a local electricity market. This kind of implementation enables mutual trade between microgrids without additional charges, where they can provide flexibility and balance for one another. The developed models take into account multiple uncertainties arising from photovoltaic production, day-ahead electricity prices and electricity load. A total number of nine case studies and sensitivity analyses are presented, from daily operation to the annual planning perspective. The systematic study of different microgrid setups, operational principles/goals and cooperation mechanisms provides a clear understanding of operational and planning benefits: the electrification strategy of decarbonising microgrids outperforms gas and hydrogen technologies by a significant margin. The value of coupling different types of multi-energy microgrids, with the goal of joint market participation, was not proven to be better on a yearly level compared to the operation of same technology-type microgrids. Additional analyses focus on introducing distribution and transmission fees to an MG cooperation model and allow us to come to the conclusion of there being a minor impact on the overall operation. Full article

The role of family owners in the internal control environment is characterized by contradictory theoretical arguments i.e., entrenchment and alignment behavior. Therefore, the objective of this study is to investigate the behavior exhibited by family owners concerning the internal control environment in an underdeveloped regulatory setting. The study collected both primary and secondary data to use a multivariate regression research design to investigate the impact of family owners and CEOs on the internal control quality and disclosure of enterprises. The results of the current study demonstrated that family owners and family CEO have a negative impact on the internal control quality and disclosure, which validates the entrenchment behavior exhibited by family owners in the Pakistani setting. The results of the current study imply that policymakers should promote strict policy initiatives regarding the effectiveness of internal controls and their reporting so that companies are compelled to have better engagement in internal control practices for the protection of minority shareholders. Full article

The purpose of the study is to highlight the most significant legal gaps in the mechanism under study, find doctrinally relevant ways to overcome them casually in law enforcement, and propose options for generally filling the gaps in rulemaking. It is equally important to test the effectiveness of the analogy as a means to combat legal gaps. The methodological framework was formed by general (analysis, synthesis, abstraction, and concretization) and specific (comparative, formal, and technical legal) scientific research methods. The positive role of analogy as a method of combating legal uncertainty and the formation of legislative innovations was confirmed. The conclusion was made about the absence of a formal need for additional legislative authorization for Limited Liability Companies’ members to create a conditional or individualized withdrawal procedure. Backed by the legal analogy, the necessity to extend the freedom-of-contract doctrine in determining the fair value of a withdrawing shareholder’s share was argued. The achievements provided the basis for specific practical proposals to enhance existing Russian legislation and harmonize corporate relationships, which should improve Russia’s business climate. Full article

This study investigates the effect of corporate governance reforms protecting minority shareholders on the firm value measured by Tobin’s Q. Using the difference-in-differences estimation and a large international sample from 65 countries for the period 2005–2018, the results show that the firm values increase more in the reform countries than non-reform countries relative to pre-reform levels. This positive effect changes for firms with high and low levels of debt. Moreover, the values after reforms increase more for firms located in civil countries and in countries with rule-based reform approaches and low debt enforcement because the reforms strengthening minority shareholder protection are more efficient in those countries. The evidence is robust to accounting-based performance as well. Full article