IDEAS home Printed from https://ideas.repec.org/a/usm/journl/aamjaf00201_85-113.html
   My bibliography  Save this article

Expropriation of Minority Interests and Corporate Diversification in Malaysia

Author

Listed:
  • Zuaini Ishak

    (Faculty of Accountancy, Universiti Utara Malaysia, 06010 UUM, Sintok, Kedah)

  • Christopher Napier

    (School of Management, Royal Holloway, University of London, Egham, Surrey, TW20 OEX, United Kingdom)

Abstract

This study provides evidence on ownership structures and corporate diversification by analysing 355 public listed companies (PLCs) in Malaysia. The majority of the companies in the sample have an ultimate controlling owner, particularly an individual or family. As controlling owners have on average, rights of control over a greater percentage of shares in any given company than their rights to participate in the cash flows from that company, controlling owners may have an incentive to expropriate minority interests through methods such as inefficient corporate diversification. The risk of such expropriation would be expected to be reflected in the value of highly diversified companies. The results of the research provide no evidence to support the argument that diversification reduces the value of companies. However, the finding is consistent with the argument that high control rights of controlling owner might encourage expropriation of minority interests through corporate diversification strategies. Thus, corporate diversification in Malaysia is perceived as a mixed blessing strategy.

Suggested Citation

  • Zuaini Ishak & Christopher Napier, 2006. "Expropriation of Minority Interests and Corporate Diversification in Malaysia," Asian Academy of Management Journal of Accounting and Finance (AAMJAF), Penerbit Universiti Sains Malaysia, vol. 2(1), pages 85-113.
    • Handle: RePEc:usm:journl:aamjaf00201_85-113
    as

    Download full text from publisher

    File URL: http://web.usm.my/journal/aamjaf/vol2-1/2-1-5.pdf
    Download Restriction: no
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Gyan, Alex Kwaku & Brahmana, Rayenda & Bakri, Abdul Karim, 2017. "Diversification strategy, efficiency, and firm performance: Insight from emerging market," Research in International Business and Finance, Elsevier, vol. 42(C), pages 1103-1114.
    2. Ng Sin Huei, 2014. "How Does Group Affiliation Affect The Diversification Performance Of Family-Controlled Firms In Malaysia? – A Governance Perspective," Asian Academy of Management Journal of Accounting and Finance (AAMJAF), Penerbit Universiti Sains Malaysia, vol. 10(2), pages 81-115.
    3. Erik P. M. Vermeulen, 2013. "Beneficial Ownership and Control: A Comparative Study - Disclosure, Information and Enforcement," OECD Corporate Governance Working Papers 7, OECD Publishing.
    4. HAILU, Aregu Asmare & TASSEW, Abel Worku, 2018. "The Impact Of Investment Diversification On Financial Performance Of Commercial Banks In Ethiopia," Studii Financiare (Financial Studies), Centre of Financial and Monetary Research "Victor Slavescu", vol. 22(3), pages 41-55, September.
    5. Liew, Chee Yoong & Devi, S.Susela, 2020. "Independent Directors’ Tenure, Expropriation, Related Party Transactions, and Firm Value: The Role of Ownership Concentration in Malaysian Publicly Listed Corporations," MPRA Paper 99705, University Library of Munich, Germany.
    6. Chee Yoong Liew & YoungKyung Ko & Bee Lian Song & Saraniah Thechina Murthy, 2022. "Directors’ compensation, ownership concentration and the value of the firm: evidence from an emerging market," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 49(1), pages 155-188, March.
    7. Liew, Chee Yoong & Ko, Young Kyung & Song, Bee Lian & Murthy, Saraniah Thechina, 2019. "Directors’ remuneration, expropriation and firm performance in Malaysia: evidence from non-executive directors’ service duration within the remuneration committee," MPRA Paper 99703, University Library of Munich, Germany.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:usm:journl:aamjaf00201_85-113. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Journal Division, Penerbit Universiti Sains Malaysia (email available below). General contact details of provider: https://edirc.repec.org/data/aammmea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.