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The separation of ownership and management in Taiwan's public companies: An empirical study

Author

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  • Liu, Yunshi
  • Ahlstrom, David
  • Yeh, Kuang S.

Abstract

Since Berle and Means [(1933). The Modern Corporation and Private Property. New York: Macmillan] raised the issue of separation of ownership and control some 70 years ago, corporate governance remains one of the most popular research topics in disciplines ranging from law and economics to management. With the increasing importance of larger firms in the private sector of developing countries the evolution of firm governance structure is a key research topic in management and international business studies. By analyzing how the relationships between public companies' CEOs and controlling families change, this research assesses if there is increased separation of ownership and management in public firms domiciled in Taiwan consistent with normative governance practice in the West. To accomplish this, the manuscript identifies and examines five key relationships between CEOs and firms' controlling families, employing data on 159 Taiwan public corporations. The study generally examines whether nonfamily-related professional CEOs increase in Taiwanese firms after they go public. The results proved consistent with the hypotheses. Most public companies in Taiwan are still controlled by families, yet the CEO position has been shifting towards nontraditional, professional relationships, albeit somewhat tentatively. Privately held firms, in contrast, were not hiring more unrelated CEOs. This suggests that firm governance in Taiwan is being influenced by the institutional pressure of the initial public offering in spite of cultural proclivities that might militate against such a reduction of family control over their firms.

Suggested Citation

  • Liu, Yunshi & Ahlstrom, David & Yeh, Kuang S., 2006. "The separation of ownership and management in Taiwan's public companies: An empirical study," International Business Review, Elsevier, vol. 15(4), pages 415-435, August.
  • Handle: RePEc:eee:iburev:v:15:y:2006:i:4:p:415-435
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    References listed on IDEAS

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    Cited by:

    1. Yunshi Liu & Yi-Jung Chen & Linda C. Wang, 2017. "Family business, innovation and organizational slack in Taiwan," Asia Pacific Journal of Management, Springer, vol. 34(1), pages 193-213, March.
    2. Shu-Yuan Chen & Jin Feng Uen & Chih-Chan Chen, 2016. "Implementing high performance HR practices in Asia: HR practice consistency, employee roles, and performance," Asia Pacific Journal of Management, Springer, vol. 33(4), pages 937-958, December.
    3. Yan Li & David Ahlstrom, 2016. "Emotional stability: A new construct and its implications for individual behavior in organizations," Asia Pacific Journal of Management, Springer, vol. 33(1), pages 1-28, March.
    4. Paul McGuinness & Kevin Lam & João Vieito, 2015. "Gender and other major board characteristics in China: Explaining corporate dividend policy and governance," Asia Pacific Journal of Management, Springer, vol. 32(4), pages 989-1038, December.
    5. Fang Cooke & Debi Saini, 2015. "From legalism to strategic HRM in India? Grievance management in transition," Asia Pacific Journal of Management, Springer, vol. 32(3), pages 619-643, September.
    6. Michael N. Young & Mike W. Peng & David Ahlstrom & Garry D. Bruton & Yi Jiang, 2008. "Corporate Governance in Emerging Economies: A Review of the Principal-Principal Perspective," Journal of Management Studies, Wiley Blackwell, vol. 45(1), pages 196-220, January.
    7. Ahlstrom, David & Levitas, Edward & Hitt, Michael A. & Dacin, M. Tina & Zhu, Hong, 2014. "The three faces of China: Strategic alliance partner selection in three ethnic Chinese economies," Journal of World Business, Elsevier, vol. 49(4), pages 572-585.
    8. Jing Zhang & Justin Tan & Poh Wong, 2015. "When does investment in political ties improve firm performance? The contingent effect of innovation activities," Asia Pacific Journal of Management, Springer, vol. 32(2), pages 363-387, June.
    9. Keasey, Kevin & McGuinness, Paul B., 2008. "Firm value and its relation to equity retention levels, forecast earnings disclosures and underpricing in initial public offerings in Hong Kong," International Business Review, Elsevier, vol. 17(6), pages 642-662, December.
    10. A. Ashwin & Rishikesha Krishnan & Rejie George, 2015. "Family firms in India: family involvement, innovation and agency and stewardship behaviors," Asia Pacific Journal of Management, Springer, vol. 32(4), pages 869-900, December.
    11. repec:kap:asiapa:v:35:y:2018:i:1:d:10.1007_s10490-017-9516-1 is not listed on IDEAS
    12. Shou-Min Tsao & Guang-Zheng Chen, 2012. "The impact of internationalization on performance and innovation: The moderating effects of ownership concentration," Asia Pacific Journal of Management, Springer, vol. 29(3), pages 617-642, September.
    13. Guillamon-Saorin, Encarna & Sousa, Carlos M.P., 2010. "Press release disclosures in Spain and the UK," International Business Review, Elsevier, vol. 19(1), pages 1-15, February.
    14. Hung, Shih-Chang & Whittington, Richard, 2011. "Agency in national innovation systems: Institutional entrepreneurship and the professionalization of Taiwanese IT," Research Policy, Elsevier, vol. 40(4), pages 526-538, May.
    15. Lau, Chung-Ming & Fan, Dennis K.K. & Young, Michael N. & Wu, Shukun, 2007. "Corporate governance effectiveness during institutional transition," International Business Review, Elsevier, vol. 16(4), pages 425-448, August.
    16. repec:kap:asiapa:v:34:y:2017:i:4:d:10.1007_s10490-017-9509-0 is not listed on IDEAS
    17. Hüttenbrink, Alexander & Oehmichen, Jana & Rapp, Marc Steffen & Wolff, Michael, 2014. "Pay-for-performance – Does one size fit all? A multi-country study of Europe and the United States," International Business Review, Elsevier, vol. 23(6), pages 1179-1192.
    18. Yunshi Liu & Linda Wang & Li Zhao & David Ahlstrom, 2013. "Board turnover in Taiwan’s public firms: An empirical study," Asia Pacific Journal of Management, Springer, vol. 30(4), pages 1059-1086, December.

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