Strong or Weak Owners? The Effects of Ownership on Corporate Governance Noncompliance

59 Pages Posted: 8 Sep 2009 Last revised: 31 May 2012

See all articles by Luiz Ricardo Kabbach-Castro

Luiz Ricardo Kabbach-Castro

Universidade de São Paulo (USP); Universidad de Navarra

Rafel Crespí-Cladera

Universitat Illes Balears (UIB), Dep. Economia i Empresa

Ruth V. Aguilera

Northeastern University - Department of International Business and Strategy

Date Written: May 25, 2012

Abstract

Using detailed data on non-compliance behavior, collected from the annual reports of the largest 130 publicly listed firms, in the U.K., Germany and Spain in 2007, we show that greater ownership concentration at a focal firm creates a potential agency problem between majority and minority shareholders that does not fit into the traditional regulatory enactments. It is because regulatory provisions generate negative byproducts such as exacerbated compliance costs or under monitoring of managerial behavior. Therefore, differences in the amount of equity from families, corporate owners, and active and passive institutional investors, determine their influence on the board of directors when deciding on managerial monitoring strategies

Keywords: corporate governance codes, signalling theory, comparative study

JEL Classification: G30, G38, G39

Suggested Citation

Kabbach-Castro, Luiz Ricardo and Crespi-Cladera, Rafel and Aguilera, Ruth V., Strong or Weak Owners? The Effects of Ownership on Corporate Governance Noncompliance (May 25, 2012). Available at SSRN: https://ssrn.com/abstract=1469531 or http://dx.doi.org/10.2139/ssrn.1469531

Luiz Ricardo Kabbach-Castro (Contact Author)

Universidade de São Paulo (USP) ( email )

Brazil
+551633738642 (Phone)
+551633739425 (Fax)

HOME PAGE: http://www.ceef.prod.eesc.usp.br

Universidad de Navarra ( email )

Campus Universitario
Pamplona, Navarra 31009
Spain
683623704 (Phone)

Rafel Crespi-Cladera

Universitat Illes Balears (UIB), Dep. Economia i Empresa ( email )

Crta. de Valldemossa km 7, 5
07071 Palma Mallorca
Spain
+34 971 173273 (Phone)
+34 971 173426 (Fax)

Ruth V. Aguilera

Northeastern University - Department of International Business and Strategy ( email )

Boston, MA 02115
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
282
Abstract Views
1,262
rank
130,489
PlumX Metrics