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Can minority state ownership influence firm value? Universal and contingency views of its governance effects

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  • Wu, Hsueh-Liang
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    Abstract

    Drawing on the literature of corporate governance and privatization, this study explores the elusive roles of a specific owner identity, namely, state ownership in its minority. With a sample of 68 Taiwanese companies with 5 to 49% state ownership during 1999-2003, the study examines the value-shaping effects of minority state ownership (MSO) and, furthermore, seeks to establish a contingency perspective suggesting that the internal and external contexts may moderate the influence of MSO on firm value. Using first-order autoregressive models to mitigate the problems of endogeneity, the study shows that the governance effect of MSO associates not only in a curvilinear relationship with firm value but also strengthened by corporate ownership ties and market competition. The non-monotonic performance effect and the context-dependent nature of MSO yield significant implications for government investments in the private sector.

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    Bibliographic Info

    Article provided by Elsevier in its journal Journal of Business Research.

    Volume (Year): 64 (2011)
    Issue (Month): 8 (August)
    Pages: 839-845

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    Handle: RePEc:eee:jbrese:v:64:y:2011:i:8:p:839-845

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    Web page: http://www.elsevier.com/locate/jbusres

    Related research

    Keywords: Corporate governance Privatization Ownership identity Corporate interlocks Market rivalry;

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    Cited by:
    1. Carney, Richard W. & Liu, Wai-Man (Raymond) & Ngo, Phong T. H., 2012. "Responding to Financial Crisis: The Rise of State Ownership and Implications for Firm Performance," MPRA Paper 43600, University Library of Munich, Germany.
    2. Baños-Caballero, Sonia & García-Teruel, Pedro J. & Martínez-Solano, Pedro, 2014. "Working capital management, corporate performance, and financial constraints," Journal of Business Research, Elsevier, vol. 67(3), pages 332-338.

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