This investigation is based on the data of the IPO on the OTC market in Taiwan for 1995 to 1999. We demonstrated that firms would use higher offering price to attract institutional investors, and lower offering price to attract small investors. Higher offering price abstracts institutional investors because of higher turnover rate of the IPO stocks. Lower offering price would attract small investors because of higher degree of IPO underpricing. We also show that the firms attracted more institutional investors` ownership would have higher performance.

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Agency theory, proposed by previous studies such as Guidry, Leone, and Rock (1999) and Arya and Huey-Lian (2004), suggests that bonus and other accounting-metric-based compensation can motivate managers to perform well in the short horizon while equity-based compensation, such as restricted shares and stock options, can serve the purpose of aligning the long run interests of shareholders and managers. The empirical evidence, for example Jensen and Murphy (1990), Kaplan (1994), Hall and Liebman (1998), Murphy (1999), Zhou (2000), and Chowdhury and Wang (2009), confirms that incentive compensation is popular in many countries. However, recent studies suggest that the relation between performance and incentive compensation is weak. Shaw and Zhang (2010) find that CEO bonus compensation is less sensitive to poor earnings performance than it is to good earnings performance. Fahlenbrach and Stulz (2011) study the relation between bank performance during the 2008 bank crisis and the bonus and equity-based compensation of bank CEOs. They find that banks with CEOs whose incentives were better aligned with the interests of shareholders performed worse than other banks. This study examines whether ownership structure can explain the differences among compensation structures of chief executive officers (CEOs). In particular, we examine the compensation structure of three distinct groups: family-controlled, institution-controlled, and widely-held firms. We distinguish these three kinds of firms to represent different levels of market imperfection. Compared with family-controlled and institution-controlled firms, widely held firms have dispersed ownership. The most significant weakness of a widely-held ownership structure is the lack of shareholder monitoring due to the unmatched benefit and cost of monitoring for small shareholders. In contrast, a holder of a large block of shares will have the same monitoring costs but the benefits to this shareholder from monitoring management and reducing agency costs would be substantial and larger than the costs of monitoring. Thus the presence of a large shareholder will reduce the agency costs. In addition, large shareholders may be willing to spend time and effort continuously to collect more information on management performance or to estimate the firms investment projects. This behaviour will reduce the problems that arise from information asymmetry and will decrease the waste of free cash flows by managers. Both family-controlled firms and institution-controlled firms have large shareholders. However, whether or not the control shareholders are playing an active monitoring role is still an important issue. From the viewpoint of aligning the interests of managers and shareholders, the family-controlled group is superior to the institution-controlled group. First, institutions are more flexible in moving their ownership from one firm to another depending on performance. If the costs of monitoring are high in comparison to the costs of rebalancing portfolios, institutions will choose to rebalance instead of monitoring. In contrast, a family that controls a firm does not have this flexibility. Second, family-controlled firms generally assign influential positions to family members whose focus is in line with that of the family group. Even though a non family member may be appointed as the manager, the level of monitoring is significant given the high ownership concentration by the family. However, the level of monitoring by a family may not necessarily translate into a reduction of agency costs for minority shareholders. Indeed, previous studies suggest that significant family ownership may lead to agency costs of its own. The family may divert company resources for its own benefit despite the presence of a manager who may or may not be a family member. Essentially, the family and the manager can collude to spend on perks and personal benefits at the expense of minority shareholders. Chourou (2010) suggests that excessive compensation of chief executive officers at some family owned Canadian corporations may be viewed as expropriation of minority rights. Overall, the main objective of this study is to examine whether block-holder monitoring is a substitute to the incentive components of compensation. We propose that as we move from widely-held to institution-controlled the level of monitoring may or may not increase. However, as we move further into higher control, as may be suggested by family ownership, the level of monitoring will increase but this monitoring may not necessarily reduce agency costs. The results show that the institution-controlled firms pay significantly less bonus compensation per dollar of assets than widely-held firms but the differences in equity based compensation are not significant. In addition, the family-controlled corporations offer the lowest performance-based compensation, bonus per dollar of assets, in comparison to the institution-controlled and the widely-held groups. These results indicate that the family-controlled Canadian corporations rely more on monitoring managers than paying them incentive payments in the form of bonus payments. In addition, our results indicate that the institutions which control corporations may be monitoring the managers of these corporations but this monitoring does not significantly reduce the need for the long-term incentive components of compensation. This result suggests that institutions may monitor the short-term performance effectively but they may prefer rebalancing their portfolio rather than monitoring long term performance.

Agency theory, proposed by previous studies such as Guidry, Leone, and Rock (1999) and Arya and Huey-Lian (2004), suggests that bonus and other accounting-metric-based compensation can motivate managers to perform well in the short horizon while equity-based compensation, such as restricted shares and stock options, can serve the purpose of aligning the long run interests of shareholders and managers. The empirical evidence, for example Jensen and Murphy (1990), Kaplan (1994), Hall and Liebman (1998), Murphy (1999), Zhou (2000), and Chowdhury and Wang (2009), confirms that incentive compensation is popular in many countries. However, recent studies suggest that the relation between performance and incentive compensation is weak. Shaw and Zhang (2010) find that CEO bonus compensation is less sensitive to poor earnings performance than it is to good earnings performance. Fahlenbrach and Stulz (2011) study the relation between bank performance during the 2008 bank crisis and the bonus and equity-based compensation of bank CEOs. They find that banks with CEOs whose incentives were better aligned with the interests of shareholders performed worse than other banks. This study examines whether ownership structure can explain the differences among compensation structures of chief executive officers (CEOs). In particular, we examine the compensation structure of three distinct groups: family-controlled, institution-controlled, and widely-held firms. We distinguish these three kinds of firms to represent different levels of market imperfection. Compared with family-controlled and institution-controlled firms, widely held firms have dispersed ownership. The most significant weakness of a widely-held ownership structure is the lack of shareholder monitoring due to the unmatched benefit and cost of monitoring for small shareholders. In contrast, a holder of a large block of shares will have the same monitoring costs but the benefits to this shareholder from monitoring management and reducing agency costs would be substantial and larger than the costs of monitoring. Thus the presence of a large shareholder will reduce the agency costs. In addition, large shareholders may be willing to spend time and effort continuously to collect more information on management performance or to estimate the firms investment projects. This behaviour will reduce the problems that arise from information asymmetry and will decrease the waste of free cash flows by managers. Both family-controlled firms and institution-controlled firms have large shareholders. However, whether or not the control shareholders are playing an active monitoring role is still an important issue. From the viewpoint of aligning the interests of managers and shareholders, the family-controlled group is superior to the institution-controlled group. First, institutions are more flexible in moving their ownership from one firm to another depending on performance. If the costs of monitoring are high in comparison to the costs of rebalancing portfolios, institutions will choose to rebalance instead of monitoring. In contrast, a family that controls a firm does not have this flexibility. Second, family-controlled firms generally assign influential positions to family members whose focus is in line with that of the family group. Even though a non family member may be appointed as the manager, the level of monitoring is significant given the high ownership concentration by the family. However, the level of monitoring by a family may not necessarily translate into a reduction of agency costs for minority shareholders. Indeed, previous studies suggest that significant family ownership may lead to agency costs of its own. The family may divert company resources for its own benefit despite the presence of a manager who may or may not be a family member. Essentially, the family and the manager can collude to spend on perks and personal benefits at the expense of minority shareholders. Chourou (2010) suggests that excessive compensation of chief executive officers at some family owned Canadian corporations may be viewed as expropriation of minority rights. Overall, the main objective of this study is to examine whether block-holder monitoring is a substitute to the incentive components of compensation. We propose that as we move from widely-held to institution-controlled the level of monitoring may or may not increase. However, as we move further into higher control, as may be suggested by family ownership, the level of monitoring will increase but this monitoring may not necessarily reduce agency costs. The results show that the institution-controlled firms pay significantly less bonus compensation per dollar of assets than widely-held firms but the differences in equity based compensation are not significant. In addition, the family-controlled corporations offer the lowest performance-based compensation, bonus per dollar of assets, in comparison to the institution-controlled and the widely-held groups. These results indicate that the family-controlled Canadian corporations rely more on monitoring managers than paying them incentive payments in the form of bonus payments. In addition, our results indicate that the institutions which control corporations may be monitoring the managers of these corporations but this monitoring does not significantly reduce the need for the long-term incentive components of compensation. This result suggests that institutions may monitor the short-term performance effectively but they may prefer rebalancing their portfolio rather than monitoring long term performance.

When a privately-held firm goes public through an IPO ¡]initial public offering¡^, the ownership structure of the IPO firm would change due to external equity financing. The ownership structure is related to the firm performance with respect to the corporate finance theory. Therefore, we agree that the relationship between the ownership structure and IPO long-run performance is worth examining. With respect to the corporate control and agency theory, we investigate the effect of the increase of insider ownership on the performance of IPO firms. We show that the increase of board ownership deteriorates the long-run performance of IPO firms. However, the increase of the institutional ownership improves IPO long-run performance. Basically, the agency theory implies that there exists positive relations between the insider ownership and performance and between the institutional ownership and performance. However, the corporate control theory agrees that the higher the insider ownership, the poorer the performance of the firms. Therefore, our results show that the institutional ownership can mitigate the agency problem while the role of corporate control subsumes the agency problem with respect to the insider ownership.

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The effect of institutional ownership and ownership concentration on the firm’s stock returns and volatility and financial performance has long been an interesting issue in the international business literature. A lot of debate has been going on regarding the relationship between institutional ownership, ownership concentration, returns, volatility and financial performance. The objective of this thesis is to study the effect of institutional ownership and ownership concentration on firm stock returns and financial performance of the listed companies in the Egyptian Stock Exchange. For this purpose, panel data model is employed. The results from the analysis show that institutional ownership has no effect on ex post stock returns as well as ex ante stock returns. On the contrary, institutional ownership represented by top management and individuals have a negative and significant effect on stock volatility, while employee associations have a positive and significant effect. No significant effect is detected on ex ante risk except for employee associations that have negative and significant effect on ex ante risk. In addition, the results show that institutional ownership has no effect on stock liquidity except employee associations and individuals that have a negative and significant effect on stock liquidity. Finally, the results show that institutional ownership represented by companies, holdings and individuals have negative effect on financial performance represented by ROA and ROE. Also, institutional ownership has no effect on debt to equity ratio except banks that have negative and significant effect and employee associations that have positive and significant effect. The results also show that ownership concentration has no effect on ex post stock returns but it has a positive effect on ex ante stock returns. Also, it has no effect on ex post risk but it has a positive effect on ex ante risk. On the other hand, ownership concentration has a negative and significant effect on stock liquidity. Finally, the results show that ownership concentration has no effect on either financial performance represented by ROA and ROE or debt to equity ratio. As such, the thesis makes an important contribution to the literature, since it tests the impact of ownership type and concentration on ex ante returns and volatility of stocks in Egypt, an emerging country that has been ignored in literature. Also, the analysis extends the literature by decomposing institutional ownership to several types. Moreover, it adds two components of volatility, volatility clustering and persistence, testing their effect on ex post and ex ante risk, which is not dealt by previous studies.

I investigate the role of organizational form and ownership structure in corporate governance by examining CEO turnover decision in the property-casualty insurance industry. The likelihoods of turnover and non-routine turnover are significantly and negatively associated to firm performance, and the outside succession dominates when non-routine turnover occurs. Further, the firm's magnitude of turnover-performance sensitivity depends on its quality of the corporate governance mechanisms which are determined by organizational form and ownership structure. The sensitivity of non-routine turnover to firm performance is lower in mutuals than publicly held non-family firms. Non-family-member CEOs in publicly listed family firms have the highest likelihoods of turnover and performance-turnover sensitivity among all types of companies. Manager-owned stock insurance companies have the lowest turnover rate and sensitivity of non-routine turnover to firm performance. Also incoming successors mainly come from the controlling family no matter what the turnover type is. / Business Administration/Risk Management and Insurance

Existing research demonstrates that corporate financing decisions influence the cash-flow rights and control rights of the securities issued by companies differently and that the same corporate capital structures and/or ownership patterns have diverse effects and aims across countries, especially when emerging countries are analysed. The 1research purpose of this investigation is to understand how corporate financing decisions are affected by ownership structure in emerging countries. For this purpose, two game-theoretic models are developed and an empirical test is carried out. The first theoretical model analyses a number of key factors inducing a separation of ownership and control in emerging countries. This model argues that large private benefits of control, extreme risk, low investor protection, inefficient capital markets, and governments sympathetic to incumbent management at the expense of outside investors are factors contributing to create a separation of ownership and control in emerging markets. The second model examines the positive side of network creation through the analysis of the interaction of empathy and economic gains. This model identifies important factors promoting the formation of business groups in emerging countries. The empirical study is a two-fold analysis. Firstly, it tests the effects of well-known determinants of capital structure on debt; secondly, the effects of ownership and control in the financial policies of emerging countries are analysed. To do so, corporate financial data and firm-level data of Mexican publicly traded companies for was gathered. As expected, asset tangibility, company size, profitability and market to book ratio proved to be important firm-specific capital structure determinants, similar to the case of developed countries. Business risk and effective tax rate are key firm-specific capital structure determinants, as emerging markets research has identified. The two factors proposed by this researcher, viz. consolidation and liquidity are significant in the determination of capital structure of the Mexican publicly traded companies. Further, almost two thirds of Mexican publicly traded companies are family controlled. When families are large shareholders, they favour debt financing; whereas when families are the majority controlling shareholder they prefer issue shares, the latter supports the risk management argument proposed by Hagelin et al. (2006) and Céspedes et al. (2010).

Directors' remuneration has long attracted a great deal of attention from financial economists and academics due to its strategic role as a remedy to control agency problems. The key issue is the conflict between directors and shareholders on whether the remuneration is designed to maximise shareholders' value or to favour directors, who run the company on behalf of the investors. However, the conflict can never be detected when the disclosure of remuneration is not transparent. The study was conducted in Malaysia which provides a distinctive research setting different from other developing countries because Malaysia has a disclosure exercise that is still far below best practice as well as a unique Malaysian cultural and institutional environment. Thus, the unusual combination of politics (government) dominated by Malays and business dominated by the minority Chinese provides an interesting background to explore the determinants and consequences of directors' remuneration disclosure. This study's novelty stands on the exploration of ownership structure and board diversity in determining directors' remuneration disclosure, as well as the impact of disclosure towards firm value. The first chapter investigates the association between ownership structure and directors' remuneration disclosure. A significant and negative association is noted between family ownership and remuneration disclosure, suggesting that the traditional family control in Malaysia continue to be dominating outweighing the necessity of public disclosure. Moreover, this study encountered a non-linear relationship between government ownership and remuneration disclosure, indicating that the disclosure of directors' remuneration is positive up to a certain level of government ownership but reduces as government ownership increases. Evidently, directors in government-owned companies are being extra vigilant in disclosing their remuneration due to the political and personal security reasons, particularly post the 12th general election of Malaysia in 2008 that witnessed the government lose its two-thirds majority in parliament for the first time after 40 years. The second chapter examines how board diversity influences disclosure. The study found that only age diversity is significantly and negatively associated with directors' remuneration disclosure, supporting the age stereotype that characterised old directors who are wise and wisdom. Hence, the adverse disclosure behaviour can be explained by their ability to credibly withhold voluntary information and strategically disclose mandatory information on remuneration. Contrary to prior studies, this study found that ethnic diversity does not have a significant influence on directors' remuneration disclosure possibly due to the equal number of Malay and non-Malay directors on board throughout the period under review. Interestingly, cultural convergence is also known to be a contributing factor as both ethnics exercise their belief in determining the level of strategic remuneration disclosure. In line with upper echelon theory, the presence of female directors is found to be an insignificant determinant of remuneration disclosure possibly due to their risk-averse personality in the high-risk disclosure area. The third chapter aims to assess the extent to which directors' remuneration disclosure reflects information that is relevant to firm value. By using Tobin's Q, this chapter shows that directors' remuneration disclosure is value relevant in both financial and non-financial sectors among the FTSE30 companies. The finding implies that the market highly values directors' remuneration disclosure as it signals board transparency and provides a window to overall governance quality of an organisation. This chapter proposes that commitment to directors' remuneration disclosure has potential benefits that outweigh the risk of disclosing within the Malaysian context. Furthermore, this chapter explicitly addresses and justifies the potential endogeneity problem that has been ignored by typical accounting studies. Using the two-stage least squares (2SLS) technique to control for the endogeneity of voluntary remuneration disclosure in assessing its impact on firm value, findings from the robustness analysis carried out suggest that the empirical results reported are robust to potential endogeneity problems. Finally, this study provides two practical implications. First, it provides a disclosure incentive for directors to make better remuneration disclosure in the annual report. Despite that there is evidence of hesitancy to disclose due to the political volatility in Malaysia subsequent to the 12th general election in 2008, the market significantly values directors' remuneration disclosure as it signals good governance practice by the company as well as great reputation portrayed by the board members. More specifically, this study encourages disclosure on directors' remuneration as it positively affects firm value, in both financial and non-financial sectors. Secondly, this study offers essential guidelines for companies in determining the board composition. It suggests that a distinctive personality of each director can be a competitive advantage of a firm when it is properly transformed to make it congruent with the firm's objective, in achieving maximum efficiency of decision-making. While age diversity is found to be significantly associated with directors' remuneration disclosure, the remaining board diversity dimensions such as gender, and ethnicity are also significant in a condition when it is critically analysed using the upper echelon theory within the context of Malaysia. Overall, the study indicates the need to incorporate a diversified composition of the top decision-makers in deciding a strategic remuneration disclosure.