Form versus substance: The effect of ownership structure and corporate governance on firm value in Thailand

J. Thomas Connelly, Piman Limpaphayom and Nandu J. Nagarajan

Journal of Banking & Finance, 2012, vol. 36, issue 6, 1722-1743

Abstract: We examine the relation between the quality of corporate governance practices and firm value for Thai firms, which often have complex ownership structures. We develop a comprehensive measure of corporate governance and show that, in contrast to conventional measures of corporate governance, our measurement, on average, is positively associated with Tobin’s q. Furthermore, we find that q values are lower for firms that exhibit deviations between cash flow rights and voting rights. We also find that the value benefits of complying with “good” corporate governance practices are nullified in the presence of pyramidal ownership structures, raising doubts on the effectiveness of governance measures when ownership structures are not transparent. We conclude that family control of firms through pyramidal ownership structures can allow firms to seemingly comply with preferred governance practices but also use the control to their advantage.

Keywords: Corporate governance; Family ownership; Firm value; Thailand (search for similar items in EconPapers)
JEL-codes: G32 G34 (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (38)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbfina:v:36:y:2012:i:6:p:1722-1743

DOI: 10.1016/j.jbankfin.2012.01.017

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