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Influential ownership and capital structure

Author

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  • Salla Pöyry

    (Department of Finance and Statistics, HANKEN School of Economics, Helsinki, Finland)

  • Benjamin Maury

    (Department of Finance and Statistics, HANKEN School of Economics, Helsinki, Finland)

Abstract

This paper explores the relation between ownership structures and capital structures in Russia-an economy with a state-run banking sector, weak corporate governance, and highly concentrated ownership. We find that firms with the state as controlling shareholder have significantly higher leverage than firms controlled by domestic private controlling shareholders other than oligarchs. Both firms controlled by the state or oligarchs finance their growth with more debt than other firms. Profitability is negatively related to leverage across all types of controlling owners, indicating a preference for internal funding over debt. The results indicate that firms with owners that have political influence or ties to large financial groups enjoy better access to debt. Copyright © 2009 John Wiley & Sons, Ltd.

Suggested Citation

  • Salla Pöyry & Benjamin Maury, 2010. "Influential ownership and capital structure," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 31(5), pages 311-324.
    • Handle: RePEc:wly:mgtdec:v:31:y:2010:i:5:p:311-324
    DOI: 10.1002/mde.1477
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    References listed on IDEAS

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    2. Ashraf, Dawood & Rizwan, Muhammad Suhail & Azmat, Saad, 2018. "The Role of Ownership and Governance Mechanism in Sukuk Financing by Malaysian Firms: An Application of A Double Selection Model," Working Papers 2018-2, The Islamic Research and Teaching Institute (IRTI).
    3. Namazi, Mohammad & Shokrolahi, Ahmad & Sadeghzadeh Maharluie, Mohammad, 2016. "Detecting and ranking cash flow risk factors via artificial neural networks technique," Journal of Business Research, Elsevier, vol. 69(5), pages 1801-1806.
    4. Gholamhossein Mahdavi & Mohammad Sadeghzadeh Maharluie & Ahmad Shokrolahi, 2017. "The Use of Artificial Neural Networks for Quantifying the Relative Importance of the Firms' Performance Determinants," International Journal of Economics and Financial Issues, Econjournals, vol. 7(3), pages 119-127.
    5. Ashraf, Dawood & Rizwan, Muhammad Suhail & Azmat, Saad, 2021. "Not one but three decisions in sukuk issuance: Understanding the role of ownership and governance," Pacific-Basin Finance Journal, Elsevier, vol. 69(C).
    6. Demid Chernenko, 2019. "Capital structure and oligarch ownership," Economic Change and Restructuring, Springer, vol. 52(4), pages 383-411, November.
    7. Siti Nur Aqilah Ab Wahab & Nur Ainna Ramli, 2014. "The Determinants of Capital Structure: An Empirical Investigation of Malaysian Listed Government Linked Companies," International Journal of Economics and Financial Issues, Econjournals, vol. 4(4), pages 930-945.
    8. Berezinets, Irina & Ilina, Yulia & Muravyev, Alexander, 2011. "CEO and Board Characteristics as Determinants of Private Benefits of Control: Evidence from the Russian Stock Exchange," IZA Discussion Papers 6256, Institute of Labor Economics (IZA).

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