Author
Aris Stouraitis
Other affiliations: City University of Hong Kong, INSEAD
Bio: Aris Stouraitis is an academic researcher from Hong Kong Baptist University. The author has contributed to research in topics: Shareholder & Executive compensation. The author has an hindex of 20, co-authored 36 publications receiving 2730 citations. Previous affiliations of Aris Stouraitis include City University of Hong Kong & INSEAD.
Papers
More filters
TL;DR: In this paper, the authors examine a sample of connected transactions between Hong Kong listed companies and their controlling shareholders and find limited evidence that firms undertaking connected transactions trade at discounted valuations prior to the expropriation.
606 citations
TL;DR: In this article, the authors examined a sample of 328 connected transactions between Hong Kong listed companies and their controlling shareholders during 1998-2000 and found that on average, firms earn significant negative excess returns both around the initial announcement of the connected transactions and during the 12-month period following the announcement, and limited evidence that the market anticipates the expropriation by discounting firms that undertake connected transactions.
Abstract: We examine a sample of 328 filings of "connected transactions" between Hong Kong listed companies and their controlling shareholders during 1998-2000. We address three questions: What types of connected transactions are likely to lead to expropriation of minority shareholders? Which firms are more likely to expropriate? Does the market anticipate the expropriation? On average, firms earn significant negative excess returns both around the initial announcement of the connected transactions (from -2.5 per cent for firms making cash payments to directors to -5.9 per cent for firms selling equity stakes to their controlling shareholders) and during the 12-month period following the announcement (from -7.2 per cent for firms acquiring assets from their substantial shareholders to -21.9 per cent for firms selling assets to them). Excess returns are significantly negatively related to percentage ownership by the controlling shareholder. They are also significantly negatively related to proxies for information disclosure. The likelihood of undertaking connected transactions is higher for firms whose ultimate owners can be traced to mainland China. Finally, we find limited evidence that the market anticipates the expropriation by discounting firms that undertake connected transactions.
490 citations
TL;DR: Himmelberg et al. as discussed by the authors analyzed a sample of 412 publicly listed Hong Kong firms during 1995-1998 in order to answer three questions: Does concentrated family ownership affect firm operating performance and value? Does it affect dividend policy? What is the impact of corporate governance on performance, value, and dividend payouts?
Abstract: We analyze a sample of 412 publicly listed Hong Kong firms during 1995–1998 in order to answer three questions. Does concentrated family ownership affect firm operating performance and value? Does it affect dividend policy? What is the impact of corporate governance on performance, value, and dividend payouts? Our results do not show a positive relationship between family ownership and return on assets, return on equity or the market-to-book ratio. In addition, we find a negative relationship between CEO duality and performance (where CEO duality is much more likely in family-controlled firms). We also find little relationship between family ownership and dividend policy. Only for small firms there is a significant negative relationship between dividend payouts and family ownership up to 10% of the company's stock and a positive relationship for family ownership between 10 and 35%. Dividend payouts in small firms also show little sensitivity to performance. Finally, the composition of the board of directors (proportion of independent non-executive directors, outsider-dominated board, presence of audit committees) has little impact on firm performance and dividend policy, particularly for small market capitalization firms. Our results for Hong Kong are in line with both Demsetz and Lehn (1985) [Demsetz, H., Lehn, K., 1985. The structure of corporate ownership: causes and consequences. Journal of Political Economy 93, 1155–1177] and Himmelberg et al. (1999) [Himmelberg, C.P., Hubbard, R.G., Palia, D., 1999. Understanding the determinants of managerial ownership and the link between ownership and performance. Journal of Financial Economics 53. 353–384], who show that concentrated ownership is not associated with better operating performance or higher firm valuation.
397 citations
Posted Content•
TL;DR: Li et al. as discussed by the authors examined a sample of related party transactions between Chinese publicly listed firms and their controlling shareholders during 2001-2002 and found that minority shareholders in these firms seem to be subject to expropriation through tunneling but also gain from propping up.
Abstract: We examine a sample of related party transactions between Chinese publicly listed firms and their controlling shareholders during 2001-2002. Minority shareholders in these firms seem to be subject to expropriation through tunneling but also gain from propping up. On balance, there is more tunneling than propping. Both types of firms have larger state ownership compared to the rest of the Chinese market but firms that are propped up are larger and have larger state ownership than firms subject to tunneling. Propped up firms are more likely to have foreign shareholders and to be cross-listed abroad compared to firms that are subject to tunneling. Propped up firms also tend to have worse operating performance in the fiscal year preceding the announcement of the related party transaction. Finally, we find that related party transactions representing tunneling are accompanied by significantly less information disclosure compared to related party transactions representing propping.
250 citations
TL;DR: Li et al. as mentioned in this paper examined a sample of related party transactions between Chinese publicly listed firms and their controlling shareholders during 2001-2002 and found that minority shareholders in these firms seem to be subject to expropriation through tunneling but also gain from propping up.
Abstract: We examine a sample of related party transactions between Chinese publicly listed firms and their controlling shareholders during 2001–2002. Minority shareholders in these firms seem to be subject to expropriation through tunneling but also gain from propping up. On balance, there seems to be more tunneling than propping up. Both types of firms have larger state ownership compared to the rest of the Chinese market but firms that are propped up are larger and have larger state ownership than firms subject to tunneling. Propped up firms are more likely to have foreign shareholders and to be cross-listed abroad compared to firms that are subject to tunneling. Propped up firms also tend to have worse operating performance in the fiscal year preceding the announcement of the related party transaction. Finally, we find that related party transactions representing tunneling are accompanied by significantly less information disclosure compared to related party transactions representing propping.
210 citations
Cited by
More filters
TL;DR: Li et al. as mentioned in this paper investigated a particularly brazen form of corporate abuse, in which controlling shareholders use intercorporate loans to siphon billions of RMB from hundreds of Chinese listed companies during the 1996-2006 period.
1,104 citations
TL;DR: A review of the existing literature on groups can be found in this paper, where the authors point out important biases in the literature including the avoidance of a serious discussion of the origins of business groups, and the unfounded assumption that rentseeking is the only feasible political economy equilibrium in an interaction between groups and the government.
Abstract: Diversified business (or corporate) groups, consisting of legally independent firms operating in multiple markets, are ubiquitous in emerging markets and even in some developed economies. The study of groups, a hybrid organizational form between firm and market, is of relevance to industrial organization, corporate finance, development, economic growth and other domains of economic inquiry. This survey begins with stylized facts on groups around the world, and proceeds to a critical review the existing literature, which has focused almost entirely on groups as diversified entities and on conflicts between controlling and minority shareholders. Other schools of thought on the political economy of corporate groups, on groups and monopoly power, and on groups as networks are discussed next. We then proceed to promising, yet virtually unexplored, alternative lenses for viewing groups, for example, as quasi venture-capitalists or as family-based structures. The analysis points out important biases in the literature including the avoidance of a serious discussion of the origins of business groups, and the unfounded assumption that rentseeking is the only feasible political economy equilibrium in an interaction between groups and the government. We note that the empirical tendency to use recent data implies that the vast majority of studies exploit cross-sectional variation; the absence of (long) time-series data ensures that some conceptually important issues, such as how groups shape the environment in which they operate, receive relatively little attention. Lastly, we outline an agenda for future research.
992 citations
TL;DR: In this article, a business group taxonomy is proposed, which is used to formulate hypotheses and present evidence about the reasons for the formation, prevalence, and evolution of groups in different environments.
Abstract: Diversified business groups, consisting of legally independent firms operating across diverse industries, are ubiquitous in emerging markets. Groups around the world share certain attributes but also vary substantially in structure, ownership, and other dimensions. This paper proposes a business group taxonomy, which is used to formulate hypotheses and present evidence about the reasons for the formation, prevalence, and evolution of groups in different environments. In interpreting the evidence, the authors pay particular attention to two aspects neglected in much of the literature: the circumstances under which groups emerge and the historical evidence on some of the questions addressed by recent studies. They argue that business groups are responses to different economic conditions and that, from a welfare standpoint, they can sometimes be "paragons" and, at other times, "parasites." The authors conclude with an agenda for future research.
970 citations
TL;DR: Li et al. as mentioned in this paper found that abnormal related sales are not entirely accrual-based but can be cash-based as well, and they serve as a substitute rather than complement to accruals management for meeting earnings targets.
Abstract: Based on a sample of Chinese listed firms from 1998 through 2002, this paper documents that listed firms prop up earnings by using abnormal related sales to their controlling owners. Such related sales propping is more prevalent among state-owned firms and in regions with weaker economic institutions. We also find that these abnormal related sales are not entirely accrual-based but can be cash-based as well, and they serve as a substitute rather than complement to accruals management for meeting earnings targets. Since these abnormal related sales can be cash-based, there is significant cash transfer via related lending from listed firms back to controlling owners after the propping. However, no cash transfer via related lending is found to be associated with accruals earnings management.
632 citations