Showing papers on "Corporate group published in 2018"

Group Affiliation and Entry Barriers: The Dark Side Of Business Groups In Emerging Markets

Abstract: Business groups dominate the economic landscape in many economies around the world. While business groups overcome the institutional voids arising due to inefficiencies of external markets, they also possess market power, which could be economically and socially counterproductive, especially for unaffiliated firms. Drawing on the transaction cost and industrial organization economics, we examine whether the presence of business group affiliated firms in industries restricts the entry of unaffiliated firms or firms affiliated with small- and medium-size business groups. Findings based on Indian firms suggest that investments by business group affiliated firms in an industry have an inverted U-shaped relationship with the investment by unaffiliated firms. However, investments by firms affiliated with large-sized business groups have a U-shaped relationship with the investment by affiliates of small and medium business groups. These findings suggest that the market power of business groups and entry barrier relationship is contingent on the size of the business groups.

Business Groups and Corporate Social Responsibility

Abstract: There is a growing literature on corporate social responsibility (CSR), but few have focused on the implications of business groups for CSR. We examine the antecedents and outcomes of CSR behaviors of group firms in Korea. We find that group affiliation is associated with higher CSR overall and for its major societal and environmental components. However, the ownership disparity between cash flow and control by controlling inside shareholders is associated with lower CSR, consistent with opportunistic rent expropriation theory. We further find that CSR initiatives can impact group firms positively in the event of bad events, consistent with insurance theory. This motive for CSR as a means of enhancing reputation capital to buffer the bad events is pronounced for group firms because of group-wide dissemination of negative reputational externality.

Not Good, Not Bad: The Effect of Family Control on Environmental Performance Disclosure by Business Group Firms

Abstract: We combine research on business groups with the socioemotional wealth approach from family firm research to examine how family control of business group firms affects voluntary disclosure of environmental performance information. Theorizing that disclosing environmental performance information weakens the owning family’s control over its business group firm, but also generates reputational benefits, we expect family ownership and disclosure propensities to relate in a U-shaped way and, further, that this U-shape is accentuated for business group firms with a family CEO. Analysis of longitudinal data on disclosure decisions of South Korean business group firms supports our theory and suggests that the effect of family control on environmental performance disclosure is neither good nor bad; instead, it depends on both the level of family ownership and whether a family CEO is in place. The finding that disclosure propensities are greatest when family control of business group firms is most extensive is provocative: it suggests that the very element that often is seen to encourage inefficiencies and fraud in business groups—family ownership combined with family leadership—can also be leveraged to foster responsible behaviors.

Business Group Affiliation and Corporate Sustainability Strategies of Firms: An Investigation of Firms in India

Abstract: In spite of an overwhelming importance of business groups (BG) in the economic development of many countries, systematic inquiry on how the BGs and their affiliated firms approach and contribute to shared value creation and sustainable development is rare. In this paper we address this research gap by investigating two related questions—do BG-affiliated firms differ from non-BG firms in their corporate sustainability strategy (CSS) and how does BG affiliation influence the relationship between stock of fungible resources and CSS of firms? Drawing from the BG literature we theorize that BG-affiliated firms tend to adopt of both environmental and social sustainability strategies more than non-BG firms. We also argue that although according to resource-based view, the stock of fungible resources of firms positively influences CSS, BG affiliation negatively moderates the relationship between stock of fungible resources and CSS of firms. Stock of fungible resources matters less for BG-affiliated firms in undertaking CSS as they have access to resources of the BG network. We test our theoretical predictions using a proprietary data set of 163 Indian publicly listed firms, out of which 76 are BG-affiliated firms belonging to 74 BGs. The data for corporate environmental and social sustainability strategies have been obtained by administering a survey instrument among the top level executives of the participating firms. We find support for our theoretical predictions that signify that BGs and their affiliates make important contributions to shared value creation and sustainable development in emerging economies like India.

Does Business Group Affiliation Matter for Superior Performance? Evidence from Pakistan

Abstract: Business groups have been described as improving the value of the affiliated firms they control, which is often beyond the capability of standalone firms The purpose of the current study is to analyze the financial performance of affiliates of diversified Pakistani business groups relative to standalone firms The current study employs data from 284 Pakistani listed non-financial firms from 2008–2015 In order to test the hypotheses, two dependent variables are used, namely, accounting (Return on Assets (ROA)) and stock market (Tobin’s Q) measures of performance Specifically, this study probes and compares the performance measures of group member and standalone firms The findings of the study suggest that business group memberships have statistically significant effects on accounting and stock market measures of firm performance In addition, size and sales growth have an increasing effect on the performance of firms We believe that business groups in Pakistan are efficient economic actors and can be considered responses to high transaction costs and market failures

Market Segmentation Analysis and Visualization Using K-Mode Clustering Algorithm for E-Commerce Business

Abstract: Now, all business organizations are adopting data driven strategies to generate more profits out of their business. Growing startups are investing a lot of funds in data economy to maximize profits of the business group by developing intelligent tools backed by machine learning and artificial intelligence. The nature of business intelligence (BI) tool depends on factors like business goals, size, model, technology, etc. In this paper, the architecture of BI tool and decision process has been discussed with a focus on market segmentation, based on user behavior geographical distributions. Principal Component Analysis (PCA) followed by k-mode clustering algorithm has been used for segmentation. The proposed toolkit also incorporates interactive visualizations and maps.

Culture and Law in Corporate Governance

Abstract: Understanding the role of culture in corporate governance has become a subject of growing importance. Today, no institutional analysis of corporate governance systems would be complete without considering the cultural environment in which such systems are embedded. This paper provides an overview of different accounts on how culture interacts with the law - especially corporate law - to shape corporate governance and on how this may help explain diversity and persistence in corporate governance. Basic concepts in cultural analysis are first presented, together with prevalent theories of cultural dimensions and of social networks as social capital. Relying on this analytical framework, this paper reviews current research on culture’s consequences for corporate governance on issues such as legal transplants, the objectives of the corporation (corporate social responsibility), relations with investors and other stakeholders by way of disclosure and dividend distribution, executive compensation, and the operation, composition, and network structure of the board of directors.

Groups of Companies: A Comparative Study on the Economics, Law and Regulation of Corporate Groups

Abstract: The phenomenon of groups of companies is very common in modern corporate reality. The empirical data on groups of companies are heterogeneous because they are collected for very different regulatory and other objectives. Two main agency problems arise in groups of companies: between the controlling shareholder and the minority shareholders and between the shareholders and the creditors. There are three regulatory models for dealing with groups of companies: regulation by general corporate and/or civil law (prototype: the UK); regulation by special group law (prototype: Germany); and regulation by areas of the law such as banking, competition, and tax law (to be found in many countries, either combined with the first or the second model). The main strategy for dealing with groups of companies is disclosure and group accounting. It is effectuated by special investigation with a group dimension and by the help of auditors and independent experts. A fair amount of international convergence, at least for listed companies, can be observed as far as shareholder protection is concerned. Related party transactions are a key area of concern for corporate and group law, usually dealt with by specific disclosure and consent requirements. In addition, appropriate standards for directors and controlling shareholders for dealing with agency conflicts in groups of companies have been developed in many countries. These standards become stricter, if insolvency is approaching. The concept of the shadow director plays an important role in extending liability to the controlling shareholder and the parent. Other mechanisms for creditor protection, both in the independent company and in groups of companies, are indemnification, veil-piercing, subordination and substantive consolidation. Creditor protection is still very path-dependent, and convergence is much less advanced.

Stewardship Theory of Corporate Governance and Value System: The Case of a Family-owned Business Group in India:

Abstract: Stewardship theory of corporate governance is a normative alternative to agency theory. This article argues that the stewardship behaviour of managers results in exemplary corporate governa...

Intragroup Transactions, Corporate Governance, and Corporate Philanthropy in Korean Business Groups

Abstract: This study examines how the corporate philanthropy decisions of group-affiliated firms in Korea (Chaebol firms) are made. Based on the attention-based view, we argue that when corporate decision makers at group-affiliated firms focus their attention more (less) on internal markets than external stakeholders because of the firm’s high (low) reliance on intragroup transactions, the firm will decrease (increase) its level of corporate philanthropy. We further argue that the relationship will be stronger when governance mechanisms focus on the instrumental value of corporate philanthropy. Using a panel sample of group-affiliated firms in Korea from 2011 to 2015, we find that as intragroup sales increase, the level of corporate philanthropy decreases, and such a negative relationship is stronger when outside director representation and foreign investor ownership are high. Our study suggests that internal dependence and corporate governance mechanisms jointly affect the level of corporate philanthropy at firms in a business group. Thus, this study contributes to the literature on corporate philanthropy, business group, and corporate governance.

Parents’ Use of Subsidiaries to “Push Down” Earnings Management: Evidence from Italy

Abstract: We find evidence consistent with Italian nonlisted subsidiaries engaging in accrual and real earnings management, so that their listed parents can meet or beat benchmarks. Thus, the parent firm drives the earnings management of the subsidiaries.We identify parents that are more likely to have managed earnings as the ones that avoid a small loss or meet or beat analyst forecast by a few cents. Cross-sectional analysis reveals that Big 4 auditors mitigate accrual earnings management at the subsidiary level and that family-owned firms use earnings management through nonlisted subsidiaries mainly to avoid reporting losses. Finally, we find that parent firms communicate earnings management strategies to their subsidiaries using board proximity. Our evidence shows that business groups manage earnings differently from single firms, pushing earnings management down to subsidiaries. It also supports the monitoring role of Big 4 auditors in a business group setting and contributes to understanding financial reporting decisions in family-owned firms. This article is protected by copyright. All rights reserved.

A study on the earnings response coefficient (ERC) of socially responsible firms

Abstract: The purpose of the paper is to examine the corporate social responsibility (CSR) – earnings response coefficient (ERC) relation in the code-law tradition and the early stage of CSR practice to fill the research gap in the literature on CSR–ERC relation.,The authors use an association framework for the study. They use the firms listed on Korea Stock Exchange because Korea is classified as a code-law country and most of firms in Korea are in the early stages of CSR development, and Korean samples are considered credible and stable because of the effective financial reforms initiated by Korean government in the late 1990s. The authors collected data from the two data sources: KisValue and Korea Corporate Governance Service.,The authors find the following. First, CSR is negatively associated with ERC, which indicates that the ability of earnings to capture CSR implication is lower under the circumstances of the code-law and the early stage of CSR development. Second, political sensitivity (business group effect) is positively (negatively) associated with CSR–ERC relation, which means that the politically noticeable CSR concerns strengthen the CSR–ERC relation, and the inclusion of a firm in a business group weakens the CSR–ERC relation.,The paper derives theoretical implications on the quality of earnings reflecting CSR activities, provides practical implications to the investors who target international capital markets and is expected to help broaden the understanding of CSR–ERC relations in international capital markets.,The paper provides practical implications to the investors who target international capital markets. Regarding the interpretation of accounting earnings that contain information on CSR activities, the legal origin and the CSR development stages are considered as key factors. Specifically, in the code-law and the early CSR environment, the potential benefits of CSR activities tend to be evaluated optimistically and reflected aggressively in reported earnings. Thus, if investors are in a similar international investment environment, they may need to recalibrate estimates in their decision model with additional CSR information from non-financial sources (e.g. sustainability reports).,The paper is based on the international institutional theory and the discussion of CSR development stages. The international institutional theory states that the legal origin is one of the factors that can help explain the differential aggressiveness of reported earnings by country. In addition, the discussion of CSR stages argues that the CSR practices can be differentially implemented by CSR stages. The authors try to fill the gap in the existing literature by conducting an empirical study based on data from Korea Stock Exchange.

Mergers and Operating Performance - Indian Experience

Abstract: In today's global economy, Mergers and Acquisitions (M&A) are being increasingly used world over as a strategy for achieving larger size and faster growth in market share and reach, and to become more competitive through economies of scale. This research study aims to study the impact of mergers on the operating performance of acquiring corporates in different periods in India, after the announcement of industrial reforms, by examining some pre- and post-merger financial ratios, with chosen sample firms, and all mergers involving public limited and traded companies of the nation between 1991 and 2003. The results suggest that there are minor variations in terms of impact on operating performance following mergers in different intervals of time in India. The results also indicate that for mergers between the same group of companies in India, there has been a deterioration in performance and return on investment, suggesting that such mergers were only motivated by a potential for increasing the asset base through consolidation of different businesses, rather than driving efficiency improvements.

Related Party Transactions and Tax Avoidance of Business Groups

Abstract: This study aims to examine if the firms in business groups avoid tax by related party transactions. If other conditions are the same, firms have an incentive to maximize after-tax profits by minimizing tax burden. If the firms are in business groups, they tend to minimize tax at the business group level. It is expected that the level of tax avoidance of both parties of related party transactions will be high if tax is minimized at the business group level as the transactions will be made at a level that can minimize the tax of both the firm that reduces the taxable income through related party transactions and the firm whose taxable income increases. In addition, the effect of being in a Chaebol business group and the effect of the Unfair Related Party Transactions Tax Law on the association with related party transactions and tax avoidance are also examined. According to this study, the firms in business groups avoid tax by related party transactions. It is also found out that tax avoidance by related party transactions is done more aggressively in Chaebol member firms than non-Chaebol firms, while tax avoidance by related party transactions in Chaebol business groups decreases after the implementation of the Unfair Related Party Transactions Tax Law.

The MNE headquarters-subsidiary relationship, subsidiary strategy and performance : an empirical examination in China

Abstract: Since 2010, China has become the second largest economy in the world, providing a more attractive environment for enterprises doing business than most other countries. Many multinational enterprises (MNEs) have set up subsidiaries to seek resources and opportunities in China. Since there are often cultural and institutional differences between home and host countries, MNEs usually face some management problems when doing business in a host country. How to develop corporate strategy to better support subsidiary performance becomes an important question for MNEs entering developing countries like China. Given China’s unique business environment, MNEs face many challenges in adapting to this local marketplace. They need time to develop and apply local capacity, such as relational networks, namely guanxi. They also need to determine the entry mode according to the social system of China. Finally, one of the most important questions for an MNE entering China is how to design its subsidiary strategy. This research seeks to identify the mechanisms that influence the operating performance of MNE subsidiaries in host countries. It addresses the following questions: (1) How does the MNE subsidiary strategy develop and what are the main influencing factors? (2) How is an MNE’s China subsidiary strategy influenced by its international business strategies and vice versa? (3) How is the subsidiary’s performance affected by the subsidiary strategy and why? (4) How does the MNE’s headquarters-subsidiary relationship and headquarters control mediate the process and why? To answer these questions, strategic contingency theory is applied to study the effect of the headquarters-subsidiary relationship on subsidiary strategy and performance. The object of this qualitative research is an international corporation, UST Group of companies. The findings are summarized in the form of a framework which shows that (1) the MNE’s internal and external environments, i.e. the host market conditions, competitors, institutions and uncertainties, tend to directly influence its subsidiary strategy; (2) the MNE’s environment can also influence subsidiary strategy indirectly through the relationship between the headquarters and the subsidiary, which means that the headquarters-subsidiary relationship acts as a mediator between environment and subsidiary strategy; (3) forms of informal control such as flexible control and personal connections significantly affect subsidiary strategy and performance in China; (4) the subsidiary’s strategy, particularly its strategic motives, entry strategy and human resource management, tend to influence its financial and non-financial performance in the host country. The main conclusions are: (1) MNE environment is the principal factor to be considered when entering a host country; (2) subsidiary strategy is determined by the MNE environment and headquarters-subsidiary relationship; (3) the MNE environment influences the subsidiary environment through the headquarters-subsidiary relationship. The managerial…

Tax system of consolidated taxpayers groups in Russia and ways of its improvement

Abstract: One of perspective directions of business development is creation of large companies (holdings, concerns, corporations, etc.) that unite legally separate economic entities linked by organizational, economic and civil-law subordination. Increasing the efficiency of such companies and, on this basis, the growth of the national economy and its competitiveness in the world market is influenced by tax system of a group of interconnected companies. International experience has shown that these tax systems in different countries were created under the influence of a combination of various factors, most of which were due to both, historical development and mutual influence. The article presents the development of methodological approach to the improvement of Russian tax system for consolidated groups of taxpayers, which requires the integration of a number of scientific ideas and hypotheses of various schools and international experience in formation and development of the institution of consolidated tax reporting. This approach is based on the fact that consolidated group of taxpayers should be considered as an economic entity, which is a separate object of financial accounting and tax system. In present work with the help of such general scientific methods as system approach, comparison, method of data systematization and generalization, the conditions for creating consolidated group of taxpayers were studied; mechanism of consolidation and system of consolidated profitability reporting for the group of companies, their main content; the procedure for granting the right to set off losses, including losses incurred for the period preceding the year of consolidation of one company member of the group, against the profits of other members of the group.

Organizational characteristics of cross-border mergers and acquisitions: A synthesis and classic case examples from around the world

Abstract: Given that several publicly announced international merger and acquisition deals have been abandoned in recent years, the purpose of this paper is to present a synthesis of influential articles that examine organizational characteristics of cross-border acquisition transactions. The synthesis is framed through general traits and resources, learning and prior acquisition experience, and top-level management and governance attributes. Specifically, the paper conceptualizes key organizational attributes influencing the propensity of cross-border negotiations, and the most common characteristics and post-deal effects by illustrating several case examples from around the world.,Owing to fairness and integrity principles of the literature survey studies, the paper adopts an exploratory review design to present a synthesis of several influential articles published in strategy, international business and corporate finance journals. Since case method and storytelling are the best qualitative approaches to conceptualizing extant theoretical contributions, a number of case examples—successful, delayed and abandoned—from around the world have been discussed by leveraging the case information from archival sources.,Drawing on resource-based view, organizational learning, upper echelons and agency theory perspectives, the paper underscores three observations. First, organizational characteristics such as firm age, firm size, ownership structure, slack resources, marketing resources, technological intensity, export intensity and business group affiliation have different impacts on the propensity of publicly announced cross-border deals. Second, firm’s prior acquisition experience and firm’s acquisition experience in the target country have positive or moderating effects on the success of a cross-border merger. Third, top-level management characteristics such as CEO foreign nationality and CEO international career experience, and governance characteristics such as board size, the number of independent directors and directors with overseas experience, have mixed effects on the incidence of cross-border acquisitions.,The paper puts forth several recommendations for top-level managers participating in cross-border acquisition negotiations, such as learning from peers in the same industry, learning from predecessors in the target country and learning from failure negotiations in the same industry and other industries.,Nested within the organizational, international business strategy and corporate finance literature, the paper presents a synthesis of influential publications that study organizational characteristics affecting the propensity of cross-border acquisitions. The cases discussed in this paper are unique examples from around the world.

German corporate law in the 20th century

Abstract: German corporate law in the 20th century was marked by a steady flow of reforms molding and shaping the corporation. Having started at the outset of the century with a corporate governance model revolving around shareholder power (at least according to the law in the books), the reform of 1937 established a shift to a board-centered structure, which prevails until today. Adhering to the structure set nearly 30 years earlier, another reform in 1965 mainly readjusted several details and sharpened the model’s features, with two exceptions: It contained a section on Konzernrecht, the law of corporate groups, and massively restricted the freedom of contract in corporate law by disallowing deviations from the Aktiengesetz in the corporate charter. Codetermination laws in 1951, 1952 and 1976 established board-level employee participation. Beyond these and other, smaller, reforms, German corporate law was part of broader political developments in Germany – the agony of the Weimar Republic, the rise and fall of the Third Reich, democratization, and Europeanization. This chapter aims at providing a longitudinal view of German corporate law. For the years 1945 to 1990, it is a history of corporate law in West Germany. Readers will, for the most part, not find an explanation of the specific rules governing board members’ duties, capital maintenance, or other details. Instead, they will find out about how the two-tier board structure evolved and why it is still in place today, why German corporate law abolished the shareholder-centric model of old, and which ideas lie behind the concept of board-level codetermination so foreign to many non-Germans.

Towards a Legal Theory of the Firm: The Effects of Enterprise Liability on Asset Partitioning, Decentralization and Corporate Group Growth

Abstract: Limited liability is a key attribute of the corporate form and one of the most important institutional innovations of the nineteenth century. However, when the owner of a corporation is another corporation as in many corporate groups, an important justification for limited liability—to protect small, passive investors from unlimited losses—is severely weakened. Accordingly, countries differ considerably in their propensity to protect parent and sister companies from the liabilities incurred by other group affiliates, with some countries (e.g. Germany) viewing a subsidiary as an integral part of the group that controls it while others (e.g. Great Britain) emphasizing the legal rather than the economic substance. In this paper, we construct a novel country-level measure of enterprise liability, the propensity of courts to hold an entire group liable for the obligations of one of its subsidiaries. Using data from sixteen countries in Europe, the Americas, and Asia, we examine how enterprise liability affects firm boundaries, internal organization, and corporate group growth. We find that in countries where enterprise liability is weaker, groups tend to partition their assets more finely into distinct legally independent subsidiaries and grant their subsidiaries more autonomy. Groups also tend to grow faster. This paper highlights one underappreciated channel—risk compartmentalization through incorporation—through which legal systems affect economic outcomes.

Performance of business group affiliated firms in emerging markets: Causal mediation analysis of internationalization and investment into innovation strategy

Abstract: The purpose of this paper is to explore the existing mechanism through which business group affiliated firms in emerging markets (EMs) continue to generate superior performance.,The authors build our argument on the basis of how business group affiliation in EM facilitates internationalization and investment into innovation in affiliated firms compared to un-affiliated firm, resulting in higher firm performance. The authors use advance statistical modeling – causal mediation analysis to separate direct effect and indirect effect of business group affiliation in EM on performance through internationalization and investment into innovation of business group affiliated firms as mediating variables.,Based on 122,479 observations (firm year) from 17,235 Indian business group affiliated and un-affiliated firms, the findings help to identify that internationalization and investment into innovation of business group affiliated firms do have a mediating role in affiliation–performance relationship for EM business groups.,This study unravels the existing causal chain between business group affiliation in EMs and subsequent performance of affiliated firms. The authors complement institutional argument for superior performance of business group affiliation and focus on the performance implication of mediating strategic decisions in affiliated firms.

Related Party Transactions in East Asia

Abstract: Related party transactions (RPTs) exist in most countries, including developing countries as well as those already developed. RPTs may take place on an ad hoc basis, or routinely. Routine RPTs are commonly found in a corporate group structure and pose tougher regulatory challenges than ad hoc RTPs do. The degree of prevalence of RPTs and the shape of their regulation vary country by country, reflecting differences in their corporate governance environment. Stated reversely, a glimpse into the actual regulation of RPTs may shed light on essential features of the corporate governance ecosystem of a particular jurisdiction. This is a chapter for Luca Enriques and Tobias Troger, eds., The Law and Finance of Related Party Transactions (Cambridge University Press, forthcoming). The purpose of this chapter is to examine, from a comparative perspective, the status of RPTs and their regulation in three East Asian countries, namely Japan, South Korea and China. This chapter will primarily focus on routine RPTs involving large listed firms – which will serve as a convenient window through which to view the complex world of corporate governance in the three aforementioned countries. This chapter proceeds as follows. Part II sets out the theoretical framework which serves as a basis for the ensuing discussion. It will address basic perspectives and conventional strategies employed to deal with RPTs. Part III entails a brief survey of the current status of RPTs and the regulatory structure in each jurisdiction. It will first present basic RPT-related data, and go on to outline substantive constraints, procedural constraints and disclosure requirements applicable to RPTs. Based on this survey, Part IV will attempt to make some general observations from a comparative perspective. Part V will offer a conclusion.

International new ventures and firm performance: evidence from India

Abstract: This study aims to explore the role of liberalization, business group affiliation and degree of internationalization (DOI) on the performance of Indian international new ventures (INVs).,The study identifies Indian INVs incorporated between 1991 and 2010 against the backdrop of liberalization. To test various hypotheses, a random effects panel regression analysis was conducted for publicly listed Indian INVs.,The results highlight that business group affiliation and DOI are positively related to INV performance. Further, liberalization negatively moderates the relationship between group affiliation and INV performance. The authors’ findings indicate that as institutions improve, the positive effect of business group affiliation on firm performance decreases in emerging markets.,This paper highlights the benefits accruing to business group affiliated INVs and the moderating role of liberalization on firm performance. Future studies may augment the authors’ understanding of INV performance by testing heterogeneity within business groups and their impact on INV performance across other emerging economies.,As institutional reforms strengthen over time, the positive effect of group affiliation on INV performance declines. Hence, managers of group affiliates need to adapt to the changing institutions faster and develop their fit with the institutional environment earlier than standalone firms, to mitigate their profitability issues.,To the best of the authors’ knowledge, this is the first paper to discuss the role of business group affiliation and the moderating role of liberalization on INV performance with theoretical and managerial implications.

Ownership structure of family business groups of Pakistan

Abstract: This study analysis the family business groups ownership structure in the framework of corporate legal system, regulatory institutions and codes of corporate governance of Pakistan. The study uses unique handpicked data comprising a sample of 326 non-financial firms listed on Pakistan Stock Exchange for a period of 2009-13. The results reveal that Pakistani corporations have high degree of concentration of ownership. The controlling shareholders own about 87 % of firms with 10 % or more shareholding and 60 % of firms with 20 % or more shareholding. Most of the businesses are controlled by families. In 63 % of business group firms, families own 20 % or more top shareholdings. The novel contribution of the study is to develop the ownership structure of family businesses and measure the cash flow leverage, cash flow and voting rights of ultimate owners in family business groups. The study finds the considerable difference in voting and cash flow rights in family business group firms. This has strong implications for regulators, minority shareholders and dispersed investors.