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Managerial concentration, ownership concentration, and firm value: Evidence from Spanish SMEs

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Abstract

Various corporate governance theories indicate that governance in small and medium-sized enterprises (SMEs) differs to that of larger corporations due to the ownership-management function within the organizational structure. This article provides empirical evidence of enhanced firm value in a sample of listed SMEs resulting from certain corporate governance mechanisms related to managerial and ownership concentration. The empirical analysis conducted in this paper is based on a panel data set consisting of 108 small and medium-sized public firms on the Spanish alternative stock exchange over a time frame of five years (2015-2019). The results suggest that CEO duality, the controlling shareholders, and the second largest shareholders all improve firm value. Conversely, the ratio of independent directors has a negative impact on firm value. These findings are robust to alternative model specifications such as dynamic panel estimators (Generalized Method of Moments -GMM-) and instrumental variable methods. Overall, we show that the governance configuration of listed SMEs can mitigate several of the central issues, such as agency problems, that large corporations face.

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  • Rodríguez-Valencia, Leslie & Lamothe Fernández, Prosper, 2023. "Managerial concentration, ownership concentration, and firm value: Evidence from Spanish SMEs," Small Business International Review, Asociación Española de Contabilidad y Administración de Empresas - AECA, vol. 7(1), pages 541-541, March.
    • Handle: RePEc:aaz:sbir01:v:7:y:2023:i:1:p:e541
    DOI: 10.26784/sbir.v7i1.541
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    1. Hacini, Ishaq & Mohammedi, Khadra & Dahou, Khadra, 2022. "Determinants of the capital structure of small and medium enterprises: Empirical evidence in the public works and hydraulics sector from Algeria," Small Business International Review, Asociación Española de Contabilidad y Administración de Empresas - AECA, vol. 6(1), pages 408-408, February.
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      More about this item

      Keywords

      firm value; managerial concentration; ownership concentration; corporate governance; alternative stock exchange;
      All these keywords.

      JEL classification:

      • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
      • 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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