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Parent control and ownership monitoring in publicly listed subsidiaries in Japan

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  • Sakawa, Hideaki
  • Watanabel, Naoki

Abstract

Although agency theory implies that greater parent ownership can help mitigate agency conflict, principal–principal conflicts could arise among controlling and other minority shareholders. This study investigates corporate governance in publicly listed subsidiary firms after the establishment of small-cap markets, which is a unique setting in Japan. The results show that parent control has a negative relationship to dividend payout and firm profitability. However, parent control enhances sales growth, which is not consistent with parent control exploitation. Foreign shareholders moderate the conflict between parent firms and other shareholders related to dividends and firm profitability.

Suggested Citation

  • Sakawa, Hideaki & Watanabel, Naoki, 2018. "Parent control and ownership monitoring in publicly listed subsidiaries in Japan," Research in International Business and Finance, Elsevier, vol. 45(C), pages 7-14.
    • Handle: RePEc:eee:riibaf:v:45:y:2018:i:c:p:7-14
    DOI: 10.1016/j.ribaf.2017.07.127
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    5. Hideaki Sakawa & Naoki Watanabel, 2021. "Family Control and Corporate Innovation in Stakeholder-Oriented Corporate Governance," Sustainability, MDPI, vol. 13(9), pages 1-13, April.
    6. Tomeczek, Artur F., 2022. "The evolution of Japanese keiretsu networks: A review and text network analysis of their perceptions in economics," Japan and the World Economy, Elsevier, vol. 62(C).
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    8. Naoki Watanabel & Shohei Yamauchi & Hideaki Sakawa, 2022. "The Board Structure and Performance in IPO Firms: Evidence from Stakeholder-Oriented Corporate Governance," Sustainability, MDPI, vol. 14(13), pages 1-15, July.
    9. Yamada, Akihiro & Sakurai, Yuuta & Ishida, Ryo, 2020. "Influence of geographic distribution on real activities manipulation within consolidated companies: Evidence from Japan," Research in International Business and Finance, Elsevier, vol. 54(C).
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    More about this item

    Keywords

    Corporate governance; Agency theory; Parent control; Principal–principal conflicts; Japan;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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