Corporate group

About: Corporate group is a research topic. Over the lifetime, 1747 publications have been published within this topic receiving 46868 citations.

Why Investor Protection is Not All That Matters in Corporate Law and Economics

Abstract: The standard approach to the legal foundations of corporate governance is based on the 'law matters' thesis, according to which corporate law promotes separation of ownership and control by protecting minority shareholders from expropriation. This paper takes a broader perspective on the economic and legal determinants of corporate governance. It shows that investor protection is a necessary, but not sufficient, legal condition for efficient separation of ownership and control. Supporting control powers vested in managers or controlling shareholders is at least as important as protecting investors from their abuse. Corporate law does not only matter in the last respect; it matters in both. This result is derived by interpreting corporate governance based on three categories of private benefits of control. Corporate law affects corporate governance depending on its impact on each category of private benefits, and not just on those accounting for shareholder expropriation. Three major areas of corporate law are considered with this view. The first is the legal distribution of corporate powers. The second is the discipline of related-party transactions. The third is regulation of control transactions. The three areas are investigated comparatively in the US, the UK, Italy, Sweden, and the Netherlands. The investigation shows that, when corporate law is analyzed in this fashion, it explains the different patterns and performance of corporate governance. This account of corporate law is not only useful for understanding separation of ownership and control, but also for indicating how to improve its efficiency through legal intervention.

Emerging market business groups and firm risk: Effects of internal capital markets, corporate governance and capital structure

Abstract: This thesis examines an important yet largely unexplored inner-workings of business group affiliation in emerging economies by exploring firm risk of group affiliates in comparison to their non-group firms. Using data for seven financial years the analysis focused on group affiliated firms and non-group firms in India, one of the largest emerging economies. The study is done in three phases. In the first study, the impact of business group affiliation on firm risk relative to non-group firms is examined. Followed by analysing if the difference between risk-taking by business-group affiliated firms and non-group firms depends on the relative size, sales revenue and cash flow of a firm within a business group, and finally on the relative bankruptcy risk of a firm. The second study extended the analysis by examining the impact of corporate governance on risk-taking, and the difference in the impact of these corporate governance variables between business group affiliated and non-group firms. The proxies for corporate governance include a wide range of board characteristics. Finally, the study extended the modelling of firm-level risk by considering the two-way relationship between risk and capital structure using a structural equation modelling (SEM) framework.

Spillover Effects of Capital Expenditure Announcements Within Business Groups

Abstract: Using the capital expenditure announcements of Taiwanese business group affiliated firms, this study examines whether the group diversification and ownership structure influence intragroup spillover effects. We find that the stock price reactions of the announcing firms are positively associated with both the stock price reactions and the post‐announcement long‐term performance of their non‐announcing group peers. More importantly, the evidence shows that this positive spillover effect weakens for business groups associated with a pyramidal ownership structure. The evidence supports the conjecture that principal–principal conflicts play an important role in moderating the spillover effects in a business group. The findings further show that the spillover effects are stronger during periods of financial crises. Finally, in the 3‐year period following announcements, the non‐announcing group members experience declining industry‐adjusted performance.

Australia's Consolidation Regime: A Road of No Return?

Abstract: Australia’s consolidation regime is the world's first "asset-based" model under which multiple levels of ownership in a corporate group are collapsed into one: a bold attempt to deal with the dual cost bases issue. Compared with the consolidation regimes in other countries, the Australian regime represents the strongest application of the enterprise doctrine to date, under which a corporate group is treated as one single entity for income tax purposes. Under this strong single entity concept, the important tax attributes of a subsidiary are changed permanently once it joins a consolidated group. Now that the regime has matured after operating for seven years, it is an appropriate time to reflect and draw lessons from the experience. This article argues that, in contrast to other countries' consolidation regimes, the Australian regime provides some unusual attractions under its unique asset-based model. However, the price to pay for these advantages - namely the problems and complexity associated with them - is high, perhaps too high to be acceptable as a model for other countries.

Germany's Corporate and Financial Law 2007: (Getting) Ready for Competition

Abstract: The paper provides an overview of the status of corporate and financial law making in Germany in 2007 and examines the driving forces behind current reforms. It also considers amendments to tax and accounting law that are related to corporate and financial law. The authors provide brief comments on pending legislative steps and measure the impact of the reforms on the overall structure of German business law. This paper serves three purposes. Firstly, it provides an insight into the dynamic development of German corporate and financial law under the influence of European, national, and international reform agendas. Secondly, it reveals that the German legislature responds to competitive pres-sure in the market for incorporations through service-oriented law making and innovative reforms. Generally speaking, these reforms follow three lines: 1) Simplifying the current law; 2) Increasing flexibility for issuers, investors and market participants; and 3) Opening German law as an option for foreign corporations. Finally, it develops the working hypothesis requiring further testing in the future that the German legal system has regained strength as a role model for other states. This emancipation comes after almost 20 years of 'permanent corporate law reform' in which primarily provisions stemming from foreign (Anglo-American) jurisdictions were adopted and the German corporate and financial law was turned from upside down.