Ownership Concentration and Firm Valuation in a Typical Frontier Market

Afro-Asian Journal of Finance and Accounting, Forthcoming

Posted: 4 Apr 2019

See all articles by Nam Tran

Nam Tran

University of Economics Ho Chi Minh City

Dat Chi Le

Univesity of Economics, Ho Chi Minh City - School of Finance

Date Written: May 10, 2018

Abstract

This study investigates the valuation effect of concentrated ownership in a typical frontier market. Using an extensive sample of Vietnamese publicly listed firms, we find that the valuation effect is inconclusive before combined equity holdings reach a certain threshold beyond which market valuation increases exponentially with ownership. The latter log-linear effect can be interpreted as a more profound dominance of the monitoring incentives of large shareholders over the potential expropriation of minority shareholders at higher levels of concentration. Our finding reconciles the seemingly conflicting results of previous studies and contributes to understanding corporate governance practices in frontier markets.

Keywords: ownership concentration, market valuation, piecewise linear regression, frontier markets, Vietnam

JEL Classification: G30, G32, G34

Suggested Citation

Tran, Nam and Le, Dat Chi, Ownership Concentration and Firm Valuation in a Typical Frontier Market (May 10, 2018). Afro-Asian Journal of Finance and Accounting, Forthcoming, Available at SSRN: https://ssrn.com/abstract=3176655

Nam Tran (Contact Author)

University of Economics Ho Chi Minh City ( email )

279 Nguyen Tri Phuong Street, Ward 5, District 10
Ho Chi Minh City, 700000
Vietnam

Dat Chi Le

Univesity of Economics, Ho Chi Minh City - School of Finance ( email )

279 Nguyen Tri Phuong, District 10
Ho Chi Minh
Vietnam

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