Does State Ownership Hurt or Help Minority Shareholders?

We argue that state ownership is a crucial policy instrument for alleviating what is perhaps the most important principal-principal (PP) agency problem around the globe: private benefits of control (PBC). Our results illustrate that states reduce PBC in the companies in which they acquire controlling ownership positions. We also examine how legal and political institutions influence the extent to which states accomplish this goal. Anti-self-dealing legal regulations make states more effective in their efforts to constrain PBC, while political constraints make them less effective. Regimes with high state capacity appear not to prioritize PBC reduction. We test and corroborate these ideas in a sample of 1,354 control transactions across 54 countries

The impact of stakeholders’ temporal orientaton on short- and long-term IPO outcomes: A meta-analysis

An initial public offering (IPO) represents a unique milestone in the lifecycle of a firm. Yet, our understanding of the IPO phenomenon remains incomplete and marked by mixed findings. Using meta-analytical techniques on a sample of 123 empirical studies, we examine the factors that influence the short-term outcomes (i.e., underpricing and proceeds) and the long-term outcomes (i.e., financial performance and risk) of IPO firms. Our efforts yield few significant results for antecedents that prior research had proposed as effective signals of IPO firm quality, and we thus conclude that signaling theory is limited in its ability to capture the IPO process. Our findings, however, provide preliminary support for our contention that stakeholders influence short-term IPO outcomes depending on their temporal orientation. We also find strong support for our prediction that the IPO has consequences for long-term firm development. While high underpricing positively affects long-term firm performance, it also heightens long-term firm risk. Large proceeds result in higher long-term firm performance and lower firm risk, but they come at the expense of a higher percentage of equity being traded during the IPO

State ownership, political ideology, and firm performance around the world

It is often taken as a stylized fact that state ownership harms the financial performance of firms. Yet we show that this relationship varies greatly across national contexts. We argue that the political ideology of the government, both independently and in conjunction with political institutions (state capacity and political constraint), affects this relationship. We test our hypotheses using meta-analytical techniques on an international sample spanning 53 years and 131 countries. Our research sheds further light on the state ownership – firm performance relationship by highlighting the role of the political ideology of the government, and its interactions with political institutions

The impact of stakeholders’ temporal orientaton on short- and long-term IPO outcomes : A meta-analysis

International audienceAn initial public offering (IPO) represents a unique milestone in the lifecycle of a firm. Yet, our understanding of the IPO phenomenon remains incomplete and marked by mixed findings. Using meta-analytical techniques on a sample of 123 empirical studies, we examine the factors that influence the short-term outcomes (i.e., underpricing and proceeds) and the long-term outcomes (i.e., financial performance and risk) of IPO firms. Our efforts yield few significant results for antecedents that prior research had proposed as effective signals of IPO firm quality, and we thus conclude that signaling theory is limited in its ability to capture the IPO process. Our findings, however, provide preliminary support for our contention that stakeholders influence short-term IPO outcomes depending on their temporal orientation. We also find strong support for our prediction that the IPO has consequences for long-term firm development. While high underpricing positively affects long-term firm performance, it also heightens long-term firm risk. Large proceeds result in higher long-term firm performance and lower firm risk, but they come at the expense of a higher percentage of equity being traded during the IPO.<br/

Are all private benefits of control ineffective?: principal‐principal benefits, external governance quality, and firm performance

Private benefits of control (PBC) are benefits that controlling shareholders consume, but that are not shared with minority shareholders. Research focusing on the value protection role of corporate governance typically frames PBC as principal–principal (PP) agency costs, and interprets them as a form of minority shareholder expropriation that decreases firm performance. Taking a value creation perspective of corporate governance, however, we propose a more nuanced role for PBC. Specifically, we see them also as PP agency benefits that compensate controlling shareholders for their monitoring and advisory services, which can increase firm performance. Since both PP costs and benefits affect firm performance, we theorize that PBC enhance firm performance at a diminishing rate. Furthermore, we show that the effect of PBC on firm performance is more positive when country‐level external governance mechanisms are strong

The impact of stakeholders’ temporal orientaton on short- and long-term IPO outcomes : A meta-analysis

International audienceAn initial public offering (IPO) represents a unique milestone in the lifecycle of a firm. Yet, our understanding of the IPO phenomenon remains incomplete and marked by mixed findings. Using meta-analytical techniques on a sample of 123 empirical studies, we examine the factors that influence the short-term outcomes (i.e., underpricing and proceeds) and the long-term outcomes (i.e., financial performance and risk) of IPO firms. Our efforts yield few significant results for antecedents that prior research had proposed as effective signals of IPO firm quality, and we thus conclude that signaling theory is limited in its ability to capture the IPO process. Our findings, however, provide preliminary support for our contention that stakeholders influence short-term IPO outcomes depending on their temporal orientation. We also find strong support for our prediction that the IPO has consequences for long-term firm development. While high underpricing positively affects long-term firm performance, it also heightens long-term firm risk. Large proceeds result in higher long-term firm performance and lower firm risk, but they come at the expense of a higher percentage of equity being traded during the IPO.<br/

State Ownership and Political Connections

The influence of the state on firms in the global economy is alive and well. States have become dominant owners of companies in many countries around the world. Firms have also increasingly established political connections to access resources and improve their competitive positions. Nonetheless, our understanding of how state ownership and political connections affect firm performance remains limited and marked by conflicting findings. Using meta-analytical techniques on a sample of 210 studies spanning 139 countries, we examine two key research questions: (a) How do state ownership and political connections affect firm strategies and financial performance? and (b) How does firm-level strategic decision making mediate the relationships between state ownership, political connections, and firm financial performance? Our findings show that state ownership has a small negative effect on firm financial performance and that political connections have no direct consequences for performance. However, we find evidence that both state ownership and political connections have a profound effect on the strategies firms pursue, such as financial leverage, R&amp;D intensity, and internationalization, and that these strategies play a mediating role in the state ownership–firm performance relationship. We conclude with some suggestions for fruitful future research in further connecting these two important and timely research fields