Ownership Effects on Unrelated Diversification: An Institutions' Perspective

Détails

ID Serval
serval:BIB_FDF8E8AB8A3D
Type
Partie de livre
Sous-type
Chapitre: chapitre ou section
Collection
Publications
Titre
Ownership Effects on Unrelated Diversification: An Institutions' Perspective
Titre du livre
Finance and Strategy
Auteur(s)
Kavadis N., Castaner X.
Editeur
Emerald Group Publishing Limited
Lieu d'édition
Bingley, UK
ISSN
0742-3322
Statut éditorial
Publié
Date de publication
2014
Editeur scientifique
Villalonga B.
Volume
31
Série
Advances in Strategic Management
Pages
253-288
Langue
anglais
Résumé
Purpose
To show that differences in the extent to which firms engage in unrelated diversification can be attributed to differences in ownership structure.
Methodology/approach
We draw on longitudinal data and use a panel analysis specification to test our hypotheses.
Findings
We find that unrelated diversification destroys value; pressure-sensitive Anglo-American owners in a firm’s equity reduce unrelated diversification, whereas pressure-resistant domestic owners increase unrelated diversification; the greater the firm’s free cash flow, the greater the negative effect of pressure-sensitive Anglo-American owners on unrelated diversification.
Research limitations/implications
We contribute to corporate governance and strategy research by bringing in owners’ institutional origin as a shaper of owner preferences in particular with regards to unrelated diversification. Future research may expand our investigation to more than one home institutional context, and theorize on institutional origin effects beyond the dichotomy between Anglo-American and non-Anglo-American (not oriented toward shareholder value maximization) owners.
Practical implications
Policy makers, financial analysts, owners, and managers may want to reflect about the implications of ownership structure, as well as promoting or joining corporations with particular ownership configurations.
Social implications
A shareholder value-destroying strategy, such as unrelated diversification has adverse consequences for society at large, in terms of opportunity costs, that is, resources could be allocated to value-creating activities instead. Promoting an ownership configuration that creates value should contribute to social welfare.
Originality/value
Owners may not be exclusively driven by shareholder value maximization, but can be influenced by normative beliefs (biases) stemming from the institutional context they originate from.
Mots-clé
Corporate governance, Corporate strategy, Institutions, Ownership structure, Unrelated diversification, Value creation
Web of science
Création de la notice
25/02/2014 14:53
Dernière modification de la notice
20/08/2019 16:28
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