Controlling ownership and firm performance in Taiwan: The role of external competition and internal governance

Anlin Chen, Lanfeng Kao and Cheng-Shou Lu

Pacific-Basin Finance Journal, 2014, vol. 29, issue C, 219-238

Abstract: This study examines the relationship between controlling ownership and firm performance in Taiwan. We focus on whether external competition and internal governance alleviate the adverse impact of controlling ownership on firm performance and whether external governance dominates internal governance. We find that the relationship between controlling ownership and firm performance is inverted U-shaped. Firm performance increases with controlling ownership at a low ownership level but decreases with controlling ownership at a high ownership level. The negative effect of controlling ownership on firm performance at a high level of controlling ownership exists when external competition or internal governance is weak but disappears when external competition or internal governance is strong. Moreover, external competition is more effective and subsumes internal governance in mitigating the negative effect of controlling ownership on firm performance.

Keywords: Corporate governance; Entrenchment; External governance; Internal governance; Product market competition (search for similar items in EconPapers)
JEL-codes: G34 G35 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0927538X14000547
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:pacfin:v:29:y:2014:i:c:p:219-238

DOI: 10.1016/j.pacfin.2014.04.007

Access Statistics for this article

Pacific-Basin Finance Journal is currently edited by K. Chan and S. Ghon Rhee

More articles in Pacific-Basin Finance Journal from Elsevier
Bibliographic data for series maintained by Catherine Liu ().