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Ultimate Controller Ownership and Firm Value in Taiwan

Author

Listed:
  • Feng-Li Lin
  • Hai-Ling Lin

Abstract

Using a panel of 242 Taiwanese listed firms during a ten-year period (1997-2006), this study tests whether there is an optimal ratio of ownership ultimate control that maximizes firm value. This work adopts Tobin's q as the proxy for firm value and finds that cash flow rights less than 27.8 percent and control rights between 32.34 percent and 34.03 percent are an optimal level of ownership ultimate control to maximize firm value. This distribution of financing sources propels the nonlinear relationship uncovered in this study and sheds light on legal aspects of Taiwan's system of ownership structure.

Suggested Citation

  • Feng-Li Lin & Hai-Ling Lin, 2013. "Ultimate Controller Ownership and Firm Value in Taiwan," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 49(1), pages 68-81, January.
    • Handle: RePEc:mes:emfitr:v:49:y:2013:i:1:p:68-81
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    Citations

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    Cited by:

    1. Wang, Hui & Shen, Huayu & Tang, Xiaoyi & Wu, Zuofeng & Ma, Shuming, 2021. "Trade policy uncertainty and firm risk taking," Economic Analysis and Policy, Elsevier, vol. 70(C), pages 351-364.
    2. Ruiqi, Wang & Wang, Fangjun & Xu, Luying & Yuan, Changhong, 2017. "R&D expenditures, ultimate ownership and future performance: Evidence from China," Journal of Business Research, Elsevier, vol. 71(C), pages 47-54.
    3. Ming-Feng Hsu & Kehluh Wang, 2014. "The Level and Stability of Institutional Ownership and Firm Performance: Evidence from Taiwan," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 50(2S), pages 159-173, March.
    4. Chai Bin‐Feng & Sultan Sikandar Mirza & Tanveer Ahsan & Ammar Ali Gull & Bakr Al‐Gamrh, 2022. "Institutional environment, the ultimate controller's characteristics and CSR disclosure in China," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(5), pages 1515-1527, July.
    5. Shah, Muhammad Hashim & Xiao, Zuoping & Abdullah, & Quresh, Shakir & Ahmad, Mushtaq, 2020. "Internal pyramid structure, contract enforcement, minority investor protection, and firms’ performance: Evidence from emerging economies," Research in International Business and Finance, Elsevier, vol. 52(C).
    6. Ming-Feng Hsu & Kehluh Wang, 2014. "The Level and Stability of Institutional Ownership and Firm Performance: Evidence from Taiwan," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 50(S2), pages 159-173.
    7. Jing Zhou & On Kit Tam & Wei Lan, 2016. "Solving agency problems in Chinese family firms – A law and finance perspective," Asian Business & Management, Palgrave Macmillan, vol. 15(1), pages 57-82, February.

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