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Parent control and ownership monitoring in publicly listed subsidiaries in Japan

Hideaki Sakawa () and Naoki Watanabel

Research in International Business and Finance, 2018, vol. 45, issue C, 7-14

Abstract: Although agency theory implies that greater parent ownership can help mitigate agency conflict, principal–principal conflicts could arise among controlling and other minority shareholders. This study investigates corporate governance in publicly listed subsidiary firms after the establishment of small-cap markets, which is a unique setting in Japan. The results show that parent control has a negative relationship to dividend payout and firm profitability. However, parent control enhances sales growth, which is not consistent with parent control exploitation. Foreign shareholders moderate the conflict between parent firms and other shareholders related to dividends and firm profitability.

Keywords: Corporate governance; Agency theory; Parent control; Principal–principal conflicts; Japan (search for similar items in EconPapers)
JEL-codes: G30 G32 (search for similar items in EconPapers)
Date: 2018
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DOI: 10.1016/j.ribaf.2017.07.127

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