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How Does Ownership Structure Affect Capital Structure and Firm Value? Recent Evidence from East Asia

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  • Nigel Driffield
  • Sarmistha Pal

Abstract

The present paper examines the effects of ownership structures on capital structure and firm valuation and argues that the effects of separation of control from cash flow rights on capital structure and firm value also depend on the separation of control from management as well as legal rules and enforcement defining investors’ protection. We obtain firm-level panel data 3SLS estimates from four East Asian countries worst affected by the last Crisis. There is evidence that the general wisdom that higher control than cash flow rights may lower firm value may be reversed among owner-managed family firms in the sample countries.

Suggested Citation

  • Nigel Driffield & Sarmistha Pal, 2007. "How Does Ownership Structure Affect Capital Structure and Firm Value? Recent Evidence from East Asia," CEDI Discussion Paper Series 07-04, Centre for Economic Development and Institutions(CEDI), Brunel University.
    • Handle: RePEc:edb:cedidp:07-04
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