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Special issues relating to corporate governance and family control

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Author Info

  • Morck, Randall
  • Yeung, Bernard

Abstract

Control of corporate assets by wealthy families in economies lacking institutional integrity is common. It has negative implications on corporate governance and adverse macroeconomic effects when it extends across a sufficiently large part of the country's corporate sector. The authors consider the reasons why family control and control pyramids predominate in emerging market economies and in some industrial economies. They also discuss the reasons why widely held freestanding firms predominate in the United States. The authors discuss policies that countries might adopt to discourage family control pyramids, but caution that control pyramids are but one feature of an institutionally deficient economy. A concerted effort to improve a country's institutions is needed before diffuse ownership is desirable.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 3406.

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Date of creation: 01 Sep 2004
Date of revision:
Handle: RePEc:wbk:wbrwps:3406

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Related research

Keywords: Small and Medium Size Enterprises; Economic Theory&Research; Small Scale Enterprise; International Terrorism&Counterterrorism; Microfinance; Private Participation in Infrastructure; Microfinance; International Terrorism&Counterterrorism; Economic Theory&Research; Small Scale Enterprise;

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References

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  1. Andrei Shleifer & Daniel Wolfenson, 2000. "Investor Protection and Equity Markets," NBER Working Papers 7974, National Bureau of Economic Research, Inc.
  2. Morck, Randall & Shleifer, Andrei & Vishny, Robert W, 1989. "Alternative Mechanisms for Corporate Control," American Economic Review, American Economic Association, vol. 79(4), pages 842-52, September.
  3. Randall K. Morck & David A. Strangeland & Bernard Yeung, 1998. "Inherited Wealth, Corporate Control and Economic Growth," William Davidson Institute Working Papers Series 209, William Davidson Institute at the University of Michigan.
  4. Rafael La Porta & Florencio Lopez-de-Silanes & Andrei Shleifer, 1998. "Corporate Ownership Around the World," Harvard Institute of Economic Research Working Papers 1840, Harvard - Institute of Economic Research.
  5. Andrei Shleifer & Fausto Panunzi & Mike Burkart, 2002. "Family firms," LSE Research Online Documents on Economics 24926, London School of Economics and Political Science, LSE Library.
    • Mike Burkart & Fausto Panunzi & Andrei Shleifer, 2003. "Family Firms," Journal of Finance, American Finance Association, vol. 58(5), pages 2167-2202, October.
  6. Marianne Bertrand & Paras Mehta & Sendhil Mullainathan, 2000. "Ferreting Out Tunneling: An Application to Indian Business Groups," NBER Working Papers 7952, National Bureau of Economic Research, Inc.
  7. Hall, Bronwyn H., 1993. "Industrial Research During the 1980s: Did the Rate of Return Fall?," Department of Economics, Working Paper Series qt33d879r9, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
  8. McConnell, John J. & Muscarella, Chris J., 1985. "Corporate capital expenditure decisions and the market value of the firm," Journal of Financial Economics, Elsevier, vol. 14(3), pages 399-422, September.
  9. repec:fth:stanho:e-93-10 is not listed on IDEAS
  10. Takeo Hoshi & Anil Kashyap & David Scharfstein, 1989. "Corporate structure, liquidity, and investment: evidence from Japanese industrial groups," Finance and Economics Discussion Series 82, Board of Governors of the Federal Reserve System (U.S.).
  11. Rajan, Raghuram G. & Zingales, Luigi, 2003. "The great reversals: the politics of financial development in the twentieth century," Journal of Financial Economics, Elsevier, vol. 69(1), pages 5-50, July.
  12. Randall Morck, 2003. "Why Some Double Taxation Might Make Sense: The Special Case of Inter-corporate Dividends," NBER Working Papers 9651, National Bureau of Economic Research, Inc.
  13. Chan, Su Han & Martin, John D. & Kensinger, John W., 1990. "Corporate research and development expenditures and share value," Journal of Financial Economics, Elsevier, vol. 26(2), pages 255-276, August.
  14. Landes, David S., 1949. "French Entrepreneurship and Industrial Growth in the Nineteenth Century," The Journal of Economic History, Cambridge University Press, vol. 9(01), pages 45-61, May.
  15. Lins, Karl V., 2003. "Equity Ownership and Firm Value in Emerging Markets," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 38(01), pages 159-184, March.
  16. Marco Becht & J. Bradford DeLong, 2005. "Why Has There Been So Little Block Holding in America?," NBER Chapters, in: A History of Corporate Governance around the World: Family Business Groups to Professional Managers, pages 613-666 National Bureau of Economic Research, Inc.
  17. Stijn Claessens & Simeon Djankov & Joseph P. H. Fan & Larry H. P. Lang, 2002. "Disentangling the Incentive and Entrenchment Effects of Large Shareholdings," Journal of Finance, American Finance Association, vol. 57(6), pages 2741-2771, December.
  18. Randall Morck & Bernard Yeung, 2003. "Family Control and the Rent-Seeking Society," William Davidson Institute Working Papers Series 585, William Davidson Institute at the University of Michigan.
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Citations

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Cited by:
  1. King, Roger & Peng, Winnie Qian, 2013. "The effect of industry characteristics on the control longevity of founding-family firms," Journal of Family Business Strategy, Elsevier, vol. 4(4), pages 281-295.
  2. Irfah Najihah Basir Malan & Norhana Salamudin & Noryati Ahmad, 2013. "Determinants of Firm Affiliation to Pyramid Structure: A Survey from Malaysian Public Listed Firms," Journal of Asian Scientific Research, Asian Economic and Social Society, vol. 3(6), pages 549-569, June.
  3. Ricardo Leal & André Carvalhal-da-Silva, 2005. "Conducción y valor empresarial en Brasil (y Chile)," Research Department Publications 3209, Inter-American Development Bank, Research Department.
  4. Williams, Jonathan & Nguyen, Nghia, 2005. "Financial liberalisation, crisis, and restructuring: A comparative study of bank performance and bank governance in South East Asia," Journal of Banking & Finance, Elsevier, vol. 29(8-9), pages 2119-2154, August.
  5. Hwang, Dar-Yeh & Wu, Wei-Hsiung, 2007. "Financial system reform in Taiwan," Journal of Asian Economics, Elsevier, vol. 18(1), pages 21-41, February.
  6. Ricardo Leal & André Carvalhal-da-Silva, 2005. "Corporate Governance and Value in Brazil (and in Chile)," Research Department Publications 3208, Inter-American Development Bank, Research Department.

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