Is Concentrated Management Ownership Value Increasing or Decreasing? Evidence in Hong Kong, China During the Asian Financial Crisis

47 Pages Posted: 9 May 2007

See all articles by Sidney Leung

Sidney Leung

City University of Hong Kong (CityUHK) - Department of Accountancy

Bertrand Horwitz

SUNY at Binghamton - School of Management

Date Written: 2007

Abstract

This study evaluates the effects of concentrated management (board director) ownership on changes of firm performance (value and ROA) following the Asian Financial Crisis (1997-98), a shock period when corporate governance structures are of greater concern and strongly tested. Our results show that Hong Kong firms with higher concentrated management ownership had less negative returns (better market performance) and smaller decreases in returns on assets (better accounting performance) during the Crisis. We also find more ownership by non-executive directors is value increasing and no evidence that their proportion improves performance. The results are consistent with the convergence of interests theory between controlling and minority shareholders at concentrated levels of management ownership leading to value increases.

Keywords: Corporate governance, firm performance, management ownership, financial crisis

JEL Classification: G34, G12, G15, G32, G38

Suggested Citation

Leung, Sidney and Horwitz, Bertrand, Is Concentrated Management Ownership Value Increasing or Decreasing? Evidence in Hong Kong, China During the Asian Financial Crisis (2007). Available at SSRN: https://ssrn.com/abstract=984403 or http://dx.doi.org/10.2139/ssrn.984403

Sidney Leung (Contact Author)

City University of Hong Kong (CityUHK) - Department of Accountancy ( email )

83 Tat Chee Avenue
Kowloon
Hong Kong
China
+852 2788-7924 (Phone)
+852 2788-7944 (Fax)

Bertrand Horwitz

SUNY at Binghamton - School of Management ( email )

P.O. Box 6015
Binghamton, NY 13902-6015
United States

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