Do Multiple Large Shareholders Play a Corporate Governance Role? Evidence from East Asia

Abstract

We examine the governance role of multiple large shareholder structures (MLSS) to determine their valuation effects in a sample of 1,252 publicly traded firms from nine East Asian economies. We find that the presence, number, and size of multiple large shareholders are associated with a significant valuation premium. Our results also show that the identity of MLSS influences corporate value, and that the valuation effects of MLSS are more pronounced in firms with greater agency costs. Our results imply that MLSS play a valuable monitoring role in curbing the diversion of corporate resources.

Keywords: Corporate governance, Multiple large shareholders, Corporate valuation

JEL Classification: G32, G34