The influence of ultimate ownership concentration on leverage

This paper investigates the relationship between ultimate ownership concentration and the extent of leverage in the context of Malaysia. The data of this study include 478 publicly listed firms from2001 to 2012. The results show that ultimate ownership concentration has U-shaped relationship with le...

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Main Authors:	Hong, Kok Chee, Hooy, Chee-Wooi, Ooi, Chai-Aun
Format:	Article
Language:	English
Published:	Penerbit Universiti Kebangsaan Malaysia 2016
Online Access:	http://journalarticle.ukm.my/10810/ http://journalarticle.ukm.my/10810/ http://journalarticle.ukm.my/10810/1/10796-48412-1-PB.pdf

id	ukm-10810
recordtype	eprints
spelling	ukm-108102017-10-11T07:54:38Z http://journalarticle.ukm.my/10810/ The influence of ultimate ownership concentration on leverage Hong, Kok Chee Hooy, Chee-Wooi Ooi, Chai-Aun This paper investigates the relationship between ultimate ownership concentration and the extent of leverage in the context of Malaysia. The data of this study include 478 publicly listed firms from2001 to 2012. The results show that ultimate ownership concentration has U-shaped relationship with leverage, with the turning point being at the ownership concentration of 42%. Based on signalling theory, the results show that a moderate extent of ultimate ownership concentration tends to adopt lower leverage for they have higher incentives to self-monitor managerial opportunistic decision making; by contrast, an ultimate owner who holds excessively high concentration of shareholdings shows self-benefitting behaviour, with the owner tending to adopt higher leverage to sustain the loss of firm value from expropriation. However, higher institutional ownership concentration plays a significant monitoring role over the owner’s opportunistic behaviour through the signalling of lower leverage even when the shareholding of ultimate owner is excessively large. Penerbit Universiti Kebangsaan Malaysia 2016 Article PeerReviewed application/pdf en http://journalarticle.ukm.my/10810/1/10796-48412-1-PB.pdf Hong, Kok Chee and Hooy, Chee-Wooi and Ooi, Chai-Aun (2016) The influence of ultimate ownership concentration on leverage. Jurnal Pengurusan, 47 . pp. 55-65. ISSN 0127-2713 http://ejournal.ukm.my/pengurusan/issue/view/856
repository_type	Digital Repository
institution_category	Local University
institution	Universiti Kebangasaan Malaysia
building	UKM Institutional Repository
collection	Online Access
language	English
description	This paper investigates the relationship between ultimate ownership concentration and the extent of leverage in the context of Malaysia. The data of this study include 478 publicly listed firms from2001 to 2012. The results show that ultimate ownership concentration has U-shaped relationship with leverage, with the turning point being at the ownership concentration of 42%. Based on signalling theory, the results show that a moderate extent of ultimate ownership concentration tends to adopt lower leverage for they have higher incentives to self-monitor managerial opportunistic decision making; by contrast, an ultimate owner who holds excessively high concentration of shareholdings shows self-benefitting behaviour, with the owner tending to adopt higher leverage to sustain the loss of firm value from expropriation. However, higher institutional ownership concentration plays a significant monitoring role over the owner’s opportunistic behaviour through the signalling of lower leverage even when the shareholding of ultimate owner is excessively large.
format	Article
author	Hong, Kok Chee Hooy, Chee-Wooi Ooi, Chai-Aun
spellingShingle	Hong, Kok Chee Hooy, Chee-Wooi Ooi, Chai-Aun The influence of ultimate ownership concentration on leverage
author_facet	Hong, Kok Chee Hooy, Chee-Wooi Ooi, Chai-Aun
author_sort	Hong, Kok Chee
title	The influence of ultimate ownership concentration on leverage
title_short	The influence of ultimate ownership concentration on leverage
title_full	The influence of ultimate ownership concentration on leverage
title_fullStr	The influence of ultimate ownership concentration on leverage
title_full_unstemmed	The influence of ultimate ownership concentration on leverage
title_sort	influence of ultimate ownership concentration on leverage
publisher	Penerbit Universiti Kebangsaan Malaysia
publishDate	2016
url	http://journalarticle.ukm.my/10810/ http://journalarticle.ukm.my/10810/ http://journalarticle.ukm.my/10810/1/10796-48412-1-PB.pdf
first_indexed	2023-09-18T19:58:29Z
last_indexed	2023-09-18T19:58:29Z
_version_	1777406689708867584

The influence of ultimate ownership concentration on leverage

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