Ownership Structure, Board Structure and Corporate Diversification
RPS #99-83 (FA)
Posted: 6 Feb 2000
Date Written: October 1999
This study investigates the impact of ownership structure and board structure on corporate diversification. However, unlike previous studies that have focused on managerial ownership and ownership by institutional blockholders, this study also examines the impact of government ownership and limit on foreign shareholding on corporate diversification. We use data from an environment where significant government ownership and foreign shareholding limits are present for publicly-held firms. The study sample comprises 164 firms listed on the Singapore Stock Exchange (SES) Mainboard and Second Board (SESDAQ).
Overall, the results show that ownership structure affects corporate diversification. Two of the ownership variables, blockholder and government ownership, are significantly related to diversification. However, while blockholders generally reduce diversification, diversification is greater when the government is the blockholder. There is no evidence that the outside directors or the separation of the CEO and chairperson roles affect corporate diversification.
JEL Classification: G32, G31, D23
Suggested Citation: Suggested Citation