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In East Asian economies, about 2/3 listed firms are controlled by family shareholders. In the US and West European, the proportions of family firms are about 33% and 44%, respectively. Thus, family-controlled listed firms are common in almost every nation. In Taiwan, nearly 70% of listed firms are family-controlled. Many previous studies have pointed out that family firms are playing an important role in global economic activities. The equity structures and management ideas of family firms are different from those of common firms. For instance, family members possess decisive equities and will usually take positions of directors or top managers. They may usually view their firms as an asset inherited from forefathers, and they should pass it on to their next generations. The impact of these differences on firm¡¦s financial decisions has become a main research focus in recent years. Previous studies of family firms mainly placed the focus on the impact of family factors on corporate performance, but this study would attempt to investigate the impact of family factors on debt decisions from the perspectives of debt-financing decision and cost of debt-financing. First of all, this study probed into whether family and non-family firms have differences debt-financing decisions. Empirical findings indicated that family firms have a lower debt ratio and a 0.2813% lower cost of debt than non-family firms. A further comparison on the factors of debt decisions showed that the difference in the impact of family and non-family firms on debt levels lies in mainly three aspects, including depreciation tax shield, operational risk, and firm size. In the aspect of cost of debt-financing, family firms are relatively more sensitive to firm size, debt ratio, and credit risk. Previous studies that applied the agent theory to investigate debt decisions focused more on the problems of debt agency problem and seldom used the inter-relationship between equity agency problem and debt agency problem to discuss the impact of equity agency problem on debt decisions. The problems of equity agency of family firms encompass the traditional equity agency between the manager and shareholders and core equity agency between controlling shareholders and external shareholders. Besides, family ownership and management can reduce the problems of traditional equity agency, and controlling shareholders using the pyramid structure of equities and cross-holding to enhance control right will increase the problems of core equity agency. Thus, based on the problems of equity agency problem, the family factors can be divided into family ownership, enhancement of control, and family management to investigate the respective impact on debt-financing decisions. In the aspect of debt-financing, it was empirically discovered that higher family ownership would lead to a closer relationship between firm value and the wealth of family shareholders. Debt financing would be avoided to reduce financial risks and maintain the wealth of family shareholders. A positive correlation existed between debt ratio and the difference between family control and family ownership, implying when the difference between family control and family ownership is higher, the problems of core equity agency between controlling shareholders and small shareholders will be more serious, and the company will be inclined to adopt debt-financing to acquire long-term capitals. The estimate coefficient of the effect of family management on debt ratio is not significance. Thus, whether the CEO is taken by a family member will not affect debt-financing decisions. In the analysis of control level, when the control level is low, firms are inclined to adopt debt-financing decisions to reduce the effect of equity dilution. On the contrary, when the control level is high, in order to avoid the loss of control benefit caused by debt monitoring, firms will be inclined to avoid debts. As a result, control and debt ratio are in an inverted U-shaped relationship. In addition, for family firms, the maintenance of control and risk control are important factors affecting their debt-financing decision. In the aspect of cost of debt, family ownership can reduce the cost of debt-financing. If the non-linear relationship of family ownership is considered, the impact of family ownership on the cost of debt-financing is non-linear and in an inverted U shape. The maximum value is 8.64%. When the family ownership exceeds 17.9%, the effect of family ownership on the cost of debt financing is negative. As the minimum family ownership was defined as 10% in this study, and the average family ownership among the samples was 21%, it could be inferred that higher family ownership would lead to a lower cost of debt-financing. In a comparison with Anderson et al. (2003), it was discovered that the average family ownership has negative influence on the cost of debt, but for the family firms in the US, higher family ownership would reduce its negative influence on cost of debt, and for domestic family firms, higher family ownership would increase its negative influence on the cost of debt. The Control-enhancing mechanisms will increase core equity problem and cost of debt, and the relationship between control enhancement and cost of debt are not in a non-linear relationship. Creditors conceive that their mortgage will be more secured if family members take the position of CEO. Thus, family CEO can reduce the cost of debt-financing.

This dissertation comprises of three related essays in regard of puzzling negative book equity phenomenon among U.S. public firms. In essay 1, I present the evidence that there is an increasing trend of negative book equity firms over the past 50 years, from 0.3% up to over 5% among publicly traded firms in US. In contrast to previous research which generally classify these firms as distressed firms with highly likelihood of bankruptcy, I propose a new method to separate Healthy Negative Book Equity Firms (HNBEF) from relatively more distressed negative book equity firms. The results show that HNBEF have much higher net income and interest coverage ratio, they survive longer, and pay more dividends. More interestingly, these firms are often actively increase share repurchases and debt issuance. These facts, combined with their strong profitability, indicate that managers of these firms are actively increasing their leverage and choose to be negative book equity firms. To explain the existence of HNBEF, in essay 2, I investigate several possible reasons that may contribute to the extreme leverage of these firms. I find that HNBEF are substantially undervalued by their book assets as stated on the balance sheet. In addition, the value of intangible assets, especially those off-balance sheet intangible assets, is positively related to the probability of becoming HNBEF. Moreover, I find that characteristics of intangible assets and firms also play important role on existence of HNBEF. Specifically, I find that both liquidity and redeployability of intangible assets are positively related with the probability of becoming HNBEF. Also, firms associated with closer borrower-lender relationship are more likely to become HNBEF. To investigate if the aggressive capital structure adopted by HNBEF is optimal, in essay 3, I performed several tests to analyze how these firms differ from other firms in terms of operating performance, corporate governance and firm value. My research finds that compared to firms from same industry and with similar size, managers of HNBEF invest more heavily in their own firms, and HNBEF have better corporate governance. In addition, HNBEF are associated with better operating performance and higher value.

Abstract Since the Asian financial crisis in 1997, several researches for the East Asian have found that concentration of ownership higher than other areas and weak corporate governance have been important reasons of financing crisis. Therefore, the study adopts the method developed by La Porta, Lopez-de-Silanes and Shleifer (1999), which traces the chain of ownership to find who has the most voting rights, identifies their ultimate control patterns, finds the controlling shareholders of firm, and then calculates each ultimate owner¡¦s control rights and cash flow rights. We also try to find the relationship between those ways of controlling shareholders to the voting rights, cash flow rights, and the degree of control rights deviating from cash flow rights. In Addition, we regress to the Proxy Q on controlling shareholders¡¦ control rights deviating from cash flow rights, then examine the evidence on expropriation of minority shareholders. This paper investigates whether the board construction on corporate governance mechanism effectively discharge its monitoring function and mitigate central agency problem. The research data are collected from the publications of those companies that stocks are openly traded on the Taiwan Stock Market between 2000 and 2003 April. There are 183 validated observations which are obtained. Empirical result suggests¡G 1. The high concentration of ownership is more common in Taiwan publicly listed companies and those firms are typically controlled by families. 2. The controlling shareholders typically have power over firms significantly in excess of their cash flow rights because they through the use of pyramids, cross-holdings, paper company and participation in management. And the condition of family control company is the worst. 3. The more the controlling shareholders¡¦ cash flow rights, the better performance of the firm. 4. For Taiwan publicly listed companies, the corporate governance mechanism could not effectively discharge its monitoring function and mitigate central agency problem.

Kiekvienos įmonės savininkas yra suinteresuotas kuo didesniu savo turto augimu, o jei įmonės vadovas yra ne savininkas, o samdytas direktorius profesionalas, tuomet savininkui natūraliai kyla klausimas, ar jis pakankamai gerai valdo įmonę ir maksimaliai didina jos vertę. Tam, kad nustatyti, kurie yra geresni įmonių vadovai (vadovai-savininkai ar vadovai-profesionalai), buvo atliktas tyrimas, kurio tikslas: įvertinti ir nustatyti atstovavimo problemos įtaką įmonių finansiniams rodikliams, labiausiai didinantiems įmonės vertę. I dalyje apžvelgiami teoriniai atstovavimo problemos ir įmonių vertės nustatymo aspektai, II dalyje sudaroma tyrimo metodologija, III dalyje atliekamas tyrimas, nustatantis koks vadovų tipas (vadovai-savininkai ar vadovai-profesionalai) sugeba apsiekti geresnius įmonės vertės didinimo rezultatus. Tyrimo metu nustatyta 1) kokie įmonių finansiniai rodikliai geriausiai koreliuoja su įmonės vertės didėjimu, išreikštu per EBIT/CE santykį 2) kad tiek vadovas-savininkai, tiek vadovai-profesionalai vienodai pasiekia įmonės vertę didinančius rodiklius. / The owner of every company is interested is his company wealth maximization, however, if company’s manager is not owner, but hired professional manager, one may question the quality of management and achievement of aim of increasing company’s wealth. In order to determine, which kind of management (directors-owner or directors-professionals) can achieve better results, a following research was done, which aim was: evaluate and determine agency problem’s impact on companies’ financial indexes that drives company’s value the most. In the Ist part of this research we look at the theoretical aspects of agency problem and company value creation, in the IInd part research methodology is done, in the IIIrd part a research is done, that determines which type of managers (manager-owner or manager-professional) manages to drive company’s value more. During research it was determined: 1) which financial indexes correlate better with company value, which is determined as EBIT/CE ratio 2) that manager-owner, as well as manager-professional, both equally are capable of driving company’s value.

Syfte: Syftet med denna studie är att testa sambandet mellan en koncentrerad aktieägarandel och låg utdelning bland aktieföretag på den svenska börsen. Vad som är unikt för just denna studie är att den genomförs på den svenska börsen samt den skattesats som skiljer sig mellan Sverige och exempelvis Finland där tidigare studier av samma karaktär genomförts. Metod: Studien har genomförts med en kvantitativ metod och en deduktiv ansats. Den finansiella data som används i studien har hämtats via databasen ”Retriever”, information om aktieägande har manuellt hämtats från ”Ägarna och makten” (Sundqvist, 2015). Resultat och slutsats: Slutsatsen innefattar en saknad av direkt samband mellan koncentrerat ägande och låg utdelningsnivå vilket besvarar syftet. Vad som kan lyftas fram som en eventuell förklaring är den skattemässiga aspekten gällande utdelning och kapitalvinst. Tidigare forskning som påträffat samband i andra länder har en skattesats som skiljer sig mellan utdelning och kapitalvinst vilket innebär skattemässiga fördelat att välja det ena framför det andra. Detta var en av de aspekter som var av stort intresse innan studien startade. Studiens bidrag: Denna studies teoretiska bidrag påvisar att sambandet mellan ägarkoncentrationen och företagens utdelning inte är självklart på den svenska börsen. Istället finner vi att det är huvudsakligen företagens finansiella nyckeltal som ligger till grund för företagens utdelning. Förslag till vidare forskning: Resultatet av denna studie föder ytterligare nyfikenhet kring möjligheter att forska vidare. Exempel på intressanta ämnen är Agnblads (2001)teori om det utländska ägandets påverkan på det framtida ägandet i Sverige. Även agentteorin och dess olika påverkan på företagen går att fördjupa sig i och studera på den svenska marknaden då ägandet är koncentrerat och en stor del maktfördelning sker. / Aim: The aim of this study is to test the relationship between ownership concentration and dividends in listed Swedish firms. Method: This study has a quantitative method and a deductive approach. The financial data has been collected via the database ”Retriever”, information about the ownership of the companies was manually collected from the book ”Ägarna och makten” (Sundqvist, 2015). Result and conclusions: The result of the study is that dividends may variate due to the independent variables. However, there is not a significant relationship between ownership concentration and dividends. Contribution of the thesis: The contribution of this study provides further information regarding ownership concentration and dividends, we find that the financial ratios of the companies have a larger impact on the dividends than the ownership concentration. Suggestions for future research: The result of this study adds alot of curiosity to the future studies about this subject. Our suggestions to future research is to elaborate Agnblads (2001) theory about foreign ownership and how it might affect companies in Sweden. We also propose to research further about the Agency-theory and which effects it has on the Swedish listed firms since we have a concentrated ownership.

The following dissertation contains two distinct empirical essays which contribute to the overall field of Financial Economics. Chapter 1 titles as “Corporate Lobbying, CEO Political Ideology and Firm Performance”. We investigate the influence of CEO political orientation on corporate lobbying efforts. Specifically, we study whether CEO political ideology, in terms of manager-level campaign donations, determines the choice and amount of firm lobbying involvement and the impact of lobbying on firm value. We find a generous engagement in lobbying efforts by firms with Republican leaning-managers, which lobby a larger number of bills and have higher lobbying expenditures. However, the cost of lobbying offsets the benefit for firms with Republican CEOs. We report higher agency costs of free cash flow, lower Tobin’s Q, and smaller increases in buy and hold abnormal returns following lobbying activities for firms with Republican managers, compared to Democratic and Apolitical rivals. Overall, our results suggest that the effects of lobbying on firm performance vary across firms with different managerial political orientations. Chapter 2 titled as “Corporate Lobbying and Labor Relations: Evidence from Employee” Litigations. We utilize employee litigations and other work-related complaints to examine if lobbying firms are favored in judicial process. We gather 27,794 employee lawsuits (after initial court hearing) between 2000 and 2014 and test the relationship between employee allegations and firms’ lobbying strategies. We find that employee litigations increase the number of labor-related bills in our sample. We document that the increase in employee lawsuits may drive firms into lobbying to change policy proposals. We also find robust evidence that the case outcome is different for lobbying firms compared to non-lobbying rivals, which may protect the shareholder wealth in the long run. Our results present that lobbying activities may make a significant difference in employee allegations. Our findings highlight the benefit of building political capital to obtain a biased outcome in favor of politically-connected firms.

Previous literature have documented that the independent directors play a crucial goal in corporate governance but the research on the firm value and board independence remains inconclusive. In my dissertation, I examine the impact of independent directors' geographic proximity to corporate headquarters on the effectiveness of corporate boards and the motivations of board directors. Using a large sample of directors trading, I show that independent directors who live close to headquarters ("local director") earn higher abnormal returns on their trades than other directors, and that this advantage is stronger in small firms. Further, I find an inverse relationship between the number of local independent directors on the board and firm value. Companies with fewer local independent directors also have higher ROA ratios, lower abnormal CEO compensations, and higher CEO incentive compensations. Collectively, the findings suggest that local independent directors are more informed but less effective monitors. I also provided evidence that firms with a higher proportion of directors' incentive compensation are more likely to manage earnings. Directors are more likely to exercise options in the year following the firms' earnings management being in the top tercile of the sample. The results are robust after controlling for self-selection bias. Taken together, the evidence suggests that director incentive pay is more likely to align directors' interest with the CEO's, rather than to induce the directors to act in the best interest of the shareholders.

Family-owned enterprise is a typical governance structure around the world. In addressing the governance issues in family business, the founding family usually utilizes the direct or indirect ownership structure and also the management design to mitigate the typical agency-principal problem among founding family and the professional managers in family businesses. However, scholars indicate that the majority shareholders, such as the founding family in a family business, will induce the principal-principal agency concern, and also have the possibility to exploit the minority shareholder¡¦s interests in publicly traded family businesses. Thus, the corporate governance today will not only focus on mitigating the typical agency-principal problem, but also the principal-principal agency problem in family businesses. This study tries to examine the role of the internal audit¡¦s independence in addressing the performance issues in publicly traded family businesses in Taiwan. From the agency theory viewpoint, this study try to utilize the questionnaires method to estimate the degree of the internal audit¡¦s independence, and future examine its performance impact in family businesses in Taiwan. This study suggests that the internal audit power, and the internal audit independent execution, can be two kinds of independence indexes in estimating the degree of internal audit¡¦s independence. The results indicate that the internal audit¡¦s independence will generate direct and moderated impact on publicly trade family business¡¦s performance in Taiwan. Specifically, the more independent board of directors a family business has, the better performance that this focal firm behaves. Moreover, the internal audit¡¦s independence will generate positively direct impact on firm performance in a family business. Additionally, the degree of internal audit¡¦s independent execution will moderate the positive impact from independent board of directors and family leadership on firm performance in publicly trade family businesses in Taiwan. This study provides referable values in estimating the internal audit¡¦s independence in publicly trade businesses. And it also provides theoretical and practical implications in addressing governance issues in family businesses in Asia.

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