How concentrated owners improve the performance of Asian firms Filling voids or imposing effective governance?

Marc van Essen (), Pursey P. M. A. R. Heugens, Patricio Duran, Sabrina F. Saleh, Steve Sauerwald, Hans van Oosterhout and En Xie ()
Additional contact information
Marc van Essen: University of South Carolina [Columbia]
Pursey P. M. A. R. Heugens: Erasmus University Rotterdam (The Netherlands, Rotterdam) - EUR
Patricio Duran: SLU - Saint Louis University
Sabrina F. Saleh: University of South Carolina [Columbia]
Steve Sauerwald: UIC - University of Illinois [Chicago] - University of Illinois System
Hans van Oosterhout: Erasmus University Rotterdam (The Netherlands, Rotterdam) - EUR
En Xie: Tongji University

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Abstract: Purpose: The purpose of this study is to investigate how concentrated owners add value to Asian firms. While prior research suggests that relational owners (i.e., business groups, top management team, board, government, banks, families, and corporation) may help firms fill institutional voids, this study proposes that it is transactional owners (i.e., foreign and institutional investors) lacking this ability who contribute most to firm performance. As these owners frequently hail from contexts with well-developed corporate governance traditions, they tend to have experience with the design and implementation of such governance practices. Design/methodology/approach: This study involves a meta-analysis covering 276 studies from 17 Asian countries. Findings: This study shows that transactional owners impose effective governance practices such as separating the chief executive officer (CEO) and Chair roles and assuring board independence. These practices promote decisions benefiting all shareholders, such as preventing diversification and financial over-leveraging. Originality/value: This study contributes to the comparative corporate governance literature by showing that implementing internal governance practices helps improve firm performance in Asia. It also contributes to the owner identity literature by opening the black box of how transactional and relational owners differentially affect firms' strategic behavior. Overall, this study yields a more nuanced understanding of what transactional owners contribute to Asian firms.

Keywords: Meta-analysis; Concentrated ownership; Relational owners; Transactional owners (search for similar items in EconPapers)
Date: 2020-04-15
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Published in Multinational Business Review, 2020, 28 (1), pp.39 - 63. ⟨10.1108/MBR-07-2019-0078⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-05656784

DOI: 10.1108/MBR-07-2019-0078

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