Managerial concentration, ownership concentration, and firm value: Evidence from Spanish SMEs

Leslie Rodríguez-Valencia () and Prosper Lamothe Fernández ()
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Leslie Rodríguez-Valencia: Universidad Autónoma de Madrid, https://orcid.org/0000-0001-8158-8413
Prosper Lamothe Fernández: Universidad Autónoma de Madrid, https://orcid.org/0000-0001-8939-2618

Small Business International Review, 2023, vol. 7, issue 1, e541

Abstract: Various corporate governance theories indicate that governance in small and medium-sized enterprises (SMEs) differs to that of larger corporations due to the ownership-management function within the organizational structure. This article provides empirical evidence of enhanced firm value in a sample of listed SMEs resulting from certain corporate governance mechanisms related to managerial and ownership concentration. The empirical analysis conducted in this paper is based on a panel data set consisting of 108 small and medium-sized public firms on the Spanish alternative stock exchange over a time frame of five years (2015-2019). The results suggest that CEO duality, the controlling shareholders, and the second largest shareholders all improve firm value. Conversely, the ratio of independent directors has a negative impact on firm value. These findings are robust to alternative model specifications such as dynamic panel estimators (Generalized Method of Moments -GMM-) and instrumental variable methods. Overall, we show that the governance configuration of listed SMEs can mitigate several of the central issues, such as agency problems, that large corporations face.

Keywords: firm value; managerial concentration; ownership concentration; corporate governance; alternative stock exchange (search for similar items in EconPapers)
JEL-codes: G15 G32 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:aaz:sbir01:v:7:y:2023:i:1:p:e541

DOI: 10.26784/sbir.v7i1.541

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