Ownership Structure, Corporate Governance, and Firm Value: Evidence from the East Asian Financial Crisis

Posted: 19 Nov 2003

See all articles by Karl V. Lins

Karl V. Lins

University of Utah - Department of Finance

Michael L. Lemmon

University of Utah - Department of Finance

Multiple version iconThere are 2 versions of this paper

Abstract

We use a sample of 800 firms in eight East Asian countries to study the effect of ownership structure on value during the region's financial crisis. The crisis negatively impacted firms' investment opportunities, raising the incentives of controlling shareholders to expropriate minority investors. Crisis period stock returns of firms in which managers have high levels of control rights, but have separated their control and cash flow ownership, are 10-20 percentage points lower than those of other firms. The evidence is consistent with the view that ownership structure plays an important role in determining whether insiders expropriate minority shareholders.

Suggested Citation

Lins, Karl V. and Lemmon, Michael L., Ownership Structure, Corporate Governance, and Firm Value: Evidence from the East Asian Financial Crisis. Journal of Finance, Vol. 58, pp. 1445-1468, August 2003. Available at SSRN: https://ssrn.com/abstract=424749

Karl V. Lins

University of Utah - Department of Finance ( email )

David Eccles School of Business
Salt Lake City, UT 84112
United States
801-585-3171 (Phone)
801-581-7214 (Fax)

Michael L. Lemmon (Contact Author)

University of Utah - Department of Finance ( email )

David Eccles School of Business
Salt Lake City, UT 84112
United States
801-585-5210 (Phone)
801-581-7214 (Fax)

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