The Managerial Control Types of Conglomerates and Firm Performance

Hsiang-Tsai Chiang and Mei-Chih Lin

International Journal of Financial Research, 2011, vol. 2, issue 2, 2-15

Abstract: This paper investigated the relationship among board leadership structure, shareholder rights, the divergence of responsibilities, and firm performance under a variety of conglomerate-controlling behaviors. Results revealed a negative correlation among chief executive officer (CEO) duality and deviations from stock-control rights, earnings-distribution rights, seat-control rights, and stock-control rights on a single family-controlled company¡¯s performance. The ratio of shares held by directors and independent directors significantly correlated with the level of company performance. This may explain the relationship of current board composition in Taiwanese-listed companies¡¯ structure and the phenomenon of business performance. The manager-controlled type is common in Taiwan¡¯s electronics industry. We determined that, apart from the significant positive correlation between the numbers of independent directors and company performance, the remaining outcomes of the primary variables were not significant. This illustrates that the controller of the company is the professional manager. The correlation between the structure of the board of directors and company performance was found to be minimally significant. However, independent directors were still found to act as important oversight mechanisms.

Keywords: Conglomerate; Control type; Board leadership structure; Independent directors; Firm performance (search for similar items in EconPapers)
Date: 2011
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Persistent link: https://EconPapers.repec.org/RePEc:jfr:ijfr11:v:2:y:2011:i:2:p:2-15

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