A gan, Nouman; Mum az, Muhammad Zubai ; Kuns , Robe M.
A icle
Owne ship concen a ion and in es men pe o mance o
Aus ian lis ed companies
PSL Qua e ly Re iew
P o ided in Coope a ion wi h:
Associazione Economia ci ile, Rome
Sugges ed Ci a ion: A gan, Nouman; Mum az, Muhammad Zubai ; Kuns , Robe M. (2024) :
Owne ship concen a ion and in es men pe o mance o Aus ian lis ed companies, PSL Qua e ly
Re iew, ISSN 2037-3643, Associazione Economia ci ile, Rome, Vol. 77, Iss. 311, pp. 511-529,
h ps://doi.o g/10.13133/2037-3643/18179
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ol. 77 n. 311 (Decembe 2024)
Owne ship concen a ion and in es men pe o mance
o Aus ian lis ed companies
NOUMAN AFGAN, MUHAMMAD ZUBAIR MUMTAZ, ROBERT M. KUNST
Abs ac :
We apply panel es ima ion echniques o ull popula ion o
Aus ian co po a ions om 2007-2020 in o de o analyze
he impac o owne ship concen a ion on pe o mance.
Re u n on in es men (ROI) is lowe han cos o capi al,
which insinua es ha manage s in es beyond op imal
in es men le el ins ead o maximizing sha eholde s’
weal h. ROI o py amidal i ms is 35% lowe han cos o
capi al implying ha manage s pu sue hei objec i es.
S a e-owned i ms’ ROI is 28% lowe han cos o capi al
showing ha disc e iona y in es men s lead o sub-
op imal pe o mance. An in e ed U-cu e is es ima ed
wi h a u ning poin a 69% o ing igh s, beyond which
en enchmen e ec domina es he incen i es e ec o
37% i ms. This e idence con i ms mino i y sha eholde s’
exp op ia ion, which has epe cussions o e icien
go e nance in Aus ian co po a ions.
A gan: Haj e y Uni e si y and Go e nmen College Uni e si y
(Laho e, Pakis an), email: nouman.a[email p o ec ed]
Mum az: Uni e si y o Bah ain and NUST (Islamabad,
Pakis an), email: mmum [email p o ec ed]
Kuns : Ins i u e o Ad anced S udies and Uni e si y o Vienna,
(Aus ia), email: obe .kuns @ihs.ac.a
How o ci e his a icle:
A gan N., Mum az M.Z., Kuns R.M. (2024), “Owne ship
concen a ion and in es men pe o mance o Aus ian
lis ed companies”, PSL Qua e ly Re iew, 77 (311), pp. 511-529.
DOI: h ps://doi.o g/10.13133/2037-3643/18179
JEL codes:
L2, G3
Keywo ds:
ul ima e owne ship, ma ginal q, e u n on in es men ,
incen i es e ec , en enchmen e ec
Jou nal homepage:
h p: //www.pslqua e ly e iew.in o
Analysis o he e ec s o owne ship concen a ion on co po a e in es men pe o mance has been
an impo an s and o he li e a u e since he pionee ing wo k o Mo ck e al. (1988). In a sample
o la ge US companies, hey ound ha Tobin’s 𝑞 displays a non-mono onic eac ion o manage ial
sha eholdings: a posi i e associa ion holds o manage ial sha eholdings up o 5%, while be ween
5% and 25% a nega i e ela ion domina es; he ea e , a posi i e ela ionship akes o e once
mo e. Thei analysis in e p e ed he posi i e pa o he ela ion as being consis en wi h
incen i es becoming mo e and mo e aligned be ween ou side sha eholde s and manage s, i.e.
manage ial sha eholdings o e come he p oblem o he sepa a ion o owne ship and con ol.
Howe e , i manage s begin o hold a subs an ial s ake in he company, i is nea ly impossible o
eplace hem. Thus, he e is a ange o hei sha eholdings whe e hey des oy mo e alue han
hey add – a which poin , hey become en enched.
Analyzing he impac o owne ship concen a ion on in es men pe o mance is impo an o
coun ies wi h s ong co po a e go e nance egimes. I is all he mo e impo an o Aus ia, a
de eloped economy in Wes e n Eu ope, which has a Ge manic inside co po a e go e nance
sys em, wi h wo-boa d sys ems in place in Aus ian Co po a ions (see Gugle e al., 2003 o a
A icle
512 Owne ship concen a ion and in es men pe o mance o Aus ian lis ed companies
PSL Qua e ly Re iew
de ailed discussion on inside and ou side co po a e go e nance sys ems). I en enchmen
e ec s and p i a e bene i s o con ol a e easonably low, small mino i y sha eholde s will in es
in he sha es o lis ed companies. Only i capi al ma ke ins i u ions p ope ly p o ec hem agains
manage s will ex e nal capi al ma ke s g ow.
This s udy analyzes he impac o owne ship concen a ion on he in es men pe o mance o
all non- inancial companies lis ed on he Vienna S ock Exchange. This is he i s s udy ha
comp ehensi ely analyzes co po a e in es men pe o mance employing he en i e popula ion o
all non- inancial Viennese lis ed i ms. In he mic oeconomic amewo k, manage s ha e hei
own goals such as inc easing he g ow h and size o he i m. They wish o pu sue hese goals e en
when i ha ms hei sha eholde s (Ma is, 1998). The i m’s manage o he la ges sha eholde
has disc e ion in alloca ing hei in e nal cash lows. While in es ing hey choose his sou ce o
inance o e ex e nal sou ces i.e. bank loans o equi y o e ings (Jensen, 1986). Fo he ull
popula ion o all non- inancial companies lis ed on he Vienna S ock Exchange, we ask how
co po a e in es men a ec s he co po a ion’s ma ke alue. In his s udy we exploi he ime
se ies a ia ion in ul ima e owne ship o con ol he endogenei y p oblem o s uc u al e e se
causali y by es ima ing i m ixed e ec s and andom e ec s eg essions (see Demse z and Lehn,
1985). We measu e pe o mance using a ma ginal q ha has been de i ed om he mic o heo y
o he i m. Ma ginal q is a ma ginal e u n on a i m’s in es men . I is de ined as he a io o
e u n on in es men o he cos o capi al. I is mo e adequa e o dealing wi h e e se causali y
han al e na i e app oaches ha use a e age pe o mance measu es such as e u n on asse s o
ma ke o book alue ha con ound in a-ma ginal and ma ginal e u ns and a e no ideal o
analyzing agency p oblems (see Demse z and Lehn, 1985). The concep o ma ginal 𝑞 allows us o
es ima e a causal ela ionship be ween owne ship concen a ion and pe o mance, which uns
om he o me o he la e .
Ou esea ch pape analyzes he owne ship s uc u es o he en i e popula ion o non-
inancial companies lis ed on he Vienna S ock Exchange. I is he i s s udy o Aus ia ha
examines he ela ionship be ween owne ship concen a ion and in es men pe o mance
measu ed by a ma ginal 𝑞, by employing da a om 2007-2020 o all non- inancial companies
lis ed on he Vienna S ock Exchange. The empi ical analysis es ablishes a non-linea ela ionship
be ween ma ginal 𝑞 and concen a ion o o ing igh s, which is an in e ed U-cu e wi h a
u ning poin a 69% concen a ion, in con as o he diag am wi h wo u ning poin s d awn by
Mo ck e al. (1988). The s eep downwa d sloping pa o he cu e p esen s easonably s ong
e idence o en enchmen .
This a icle is o ganized as ollows. Sec ion 1 gi es an o e iew o he li e a u e on he
in e ac ion o owne ship concen a ion and pe o mance. Sec ion 2 p esen s ou hypo hesis.
Sec ion 3 ocuses on de e mining ul ima e owne ship. Sec ion 4 p esen s he me hodology used
o measu ing pe o mance and he equa ion o es ima ing he e ec s o owne ship
concen a ion on pe o mance. In sec ion 5, we desc ibe he sou ces o in o ma ion and epo he
desc ip i e s a is ics o a iables used in he eg ession analysis. Sec ion 6 comp ises panel-da a
analyses o he impac o owne ship concen a ion on pe o mance. Conclusions a e d awn in he
inal sec ion.
1. Li e a u e e iew
Tobin (1969) illus a ed he (schema ic) capi al accoun app oach o a closed economy. A ow
may be labeled as demand deposi s o p oduce s’ du able equipmen in his gene al accoun ing
N. A gan, M.Z. Mum az, R.M. Kuns 513
PSL Qua e ly Re iew
amewo k. In con as , columns ep esen sec o s o he economy ha a e cons ained by hei
own weal h. Comme cial banks, cen al banks, non-bank inancial ins i u ions, and he gene al
public a e examples o sec o s. In his app oach, inancial policies and e en s mainly a ec
agg ega e demand by changing he alua ions o physical asse s ela i e o hei eplacemen
cos s. Mone a y policies can accomplish such changes, bu o he exogenous e en s can oo.
Hayashi (1982) analyzes US co po a ions and inds ha in es men is a unc ion o ma ginal
𝑞 ( he a io o ma ke alue o an addi ional uni o capi al o i s eplacemen cos ). He es s he
conjec u e pu o wa d by Tobin and de i es he op imal a e o in es men as a unc ion o
ma ginal 𝑞 adjus ed o ax pu poses. The a io o co po a e in es men o he o al capi al s ock
a eplacemen cos is eg essed on ma ginal 𝑞 o e 1953 o 1976, which gi es a posi i e
coe icien on ma ginal q. The analysis shows ha ma ginal 𝑞 and a e age 𝑞 ( he a io o ma ke
alue o capi al o i s eplacemen cos ) a e he same unde he condi ions ha he i m is a p ice
ake and he p oduc ion and ins alla ion unc ions a e homogenous.
Hoshi e al. (1991) p esen e idence om Japanese companies, which is consis en wi h he
iew ha in o ma ion and incen i e p oblems in he capi al ma ke ha e impo an e ec s on
co po a e in es men . They hypo hesize ha g oup i ms a e no subjec o asymme ic
in o ma ion p oblems when inancing hei in es men s because o he g oup membe s ha e
access o in o ma ion. The sample is di ided in o 176 independen and 121 g oup companies
based on he e inemen made by Naka ani (1984) o he Kei e su no Kenkyu’s classi ica ion ha
ocuses on a company’s inancial ies wi h i s g oup’s inancial ins i u ions. Tobin’s 𝑞 ( a io o he
ma ke alue o o al asse s o he company and book alue) is used as a p oxy o in es men
p ospec s. The dependen a iable is dep eciable asse s di ided by he capi al s ock. Cash low,
he measu e o liquidi y, only has a posi i e signi ican coe icien in he in es men equa ion o
independen companies. Con a y o he o e -in es men hypo hesis ha p edic s a nega i e
coe icien o bo h in e ac ion e ms, he di e ence be ween liquidi y coe icien s o g oup
companies and non-g oup companies is la ge o high Tobin’s 𝑞 i ms.
Walke (2001) explo es he e ec o g oup membe ship on he in es men policies o
Japanese companies. In o de o analyze he de e minan s o in es men s, he uses a la ge sample
o Japanese companies om 1993-1998. The in es men o ho izon al g oup membe s is less
sensi i e o g ow h oppo uni ies and mo e sensi i e o ope a ing cash low han he in es men
o independen i ms. The measu e o in es men e iciency used is he p oduc o he ela i e
in es men le el and g ow h oppo uni ies. The Kei e su p o ides s ong e idence ha indus ial
g oups in Japan ans e capi al be ween membe s. The in es men pa e ns o Japanese g oup
companies appea o be simila o he e idence o in es men pa e ns in US conglome a es.
Acco ding o Ganche (2013), he mone a y ci cui heo y was he Keynesian hough
ega ding he ci cula ing low o goods and se ices in he economy. Gene ally, he cha ac e is ics
o he p e ious s udies in he heo y o mone a y ci cula ion comp ise money as a unc ion o
ci cula ion, ini ia ion, and de as a ion o money as an endogenous p ocess by he eal economy,
and he capabili y o he banks o c ea e money. The p obable ea u e o his heo y is he
ansi ion om mic o o mac o le el (A ena and Sal ado i, 2003). This implies ha he
neoclassical pa adigm shi is associa ed wi h indi idual supply and demand, and mone a y ci cui
heo y, explain ha he cons uc ion o socioeconomic g oups may ha e di e en ela ionships
wi h he banking indus y.
Acco ding o he in es men li e a u e, he e is a hie a chy o inance in i ms’ inancing
pa e ns. Fi s ly, i ms use cash lows o inance in es men s. Secondly, hey ake on deb , and
inally hey app oach he equi y ma ke . Mye s (1983) epo s ha US companies ely hea ily on
514 Owne ship concen a ion and in es men pe o mance o Aus ian lis ed companies
PSL Qua e ly Re iew
in e nal unds and deb o inance hei in es men s. Mye s (2002) e iews capi al s uc u e
heo ies; pecking o de heo y, agency heo y, capi al s uc u e i ele ance, and ade-o heo y.
Fazza i and Hubba d (1988) es ed he asymme ic in o ma ion hypo hesis by basing hei
es solely on he inancial cons ain pa o he hypo hesis. They di ided he sample o 422 US
companies in o low, medium, and high e en ion a io sub-samples, and used hem o es ima e
cash low-in es men equa ions, which also included Tobin’s 𝑞 o analyze di e ences in
in es men oppo uni ies.
Muelle and Yu oglu (2000) es ima e ma ginal 𝑞’s on in es men s om cash low, deb and
equi y o e ings o a la ge sample o companies om 38 coun ies. They ca ego ize coun ies by
o igins o legal sys ems and epo ha ma ginal 𝑞 on ein es ed cash lows is lowe han 1 o
some coun ies om all ypes o legal o igins. In hese cases, in es men s om in e nal cash lows
yield he wo s pe o mance. Fo o he coun ies, again om a ious kinds o legal o igin,
ma ginal 𝑞’s on deb and equi y a e equal o o g ea e han 1. In hese cases, his holds o
in es men s ou o deb . On he whole, coun ies wi h English-o igin legal sys ems end o pe o m
be e han o he s. Thus, ex e nal capi al ma ke s a e e ec i e in o cing manage s o ea n
ma ginal 𝑞’s on deb and equi y equal o o g ea e han 1.
F anks and Maye (2001) epo e y high le els o concen a ion o owne ship in Ge man
co po a ions, pa icula ly associa ed wi h holdings by o he companies and amilies. The complex
owne ship pa e ns in ol e py amidal s uc u es. They ask whe he dis inc i e owne ship
cha ac e is ics a e associa ed wi h e ec i e co po a e go e nance o exploi a ion o p i a e
bene i s o con ol. Al hough he e is no hos ile akeo e ma ke in Ge many, he e is a subs an ial
ma ke in sha e s akes ha supe icially bea s close esemblance o an Anglo-Ame ican ma ke
o co po a e con ol. Howe e , i di e s in wo c ucial espec s. Fi s ly, i allows p ice
disc imina ion be ween selle s o sha e blocks and o he in es o s and, secondly, he o e all gains
o me ge as e lec ed in bid p emia a e low in ela ion o hose in he UK and US. The modes
gains o changes in owne ship a e mi o ed in boa d u no e ha is low as compa ed o
akeo e s in he UK and US, sugges ing ha con ol bene i s o owne ship changes in Ge many
a e compa a i ely small.
Ma is (1998) epo s ha manage s pu sue excessi e g ow h o i ms e en when i ha ms
he in e es s o he sha eholde s (see also Ka hu ia and Muelle , 1995).
Gugle (1998) analyzes he owne ship s uc u es o he 600 la ges Aus ian non- inancial
co po a ions. Compa ing concen a ion o owne ship ac oss Eu opean coun ies e eals ha
owne ship concen a ion in Aus ia is pa icula ly high. Py amiding leads o sepa a ion o
owne ship and con ol, s a e-con olled py amids and bank-con olled py amids may su e om
insu icien moni o ing. Con ol in he domes ic in es o ca ego ies, banks, he s a e, and
amilies/indi iduals educes i m p o i abili y signi ican ly. Al hough o eign con ol inc eases
i m p o i abili y, s a e con ol is pa icula ly de imen al o sha eholde weal h maximiza ion.
F om his pe spec i e owne ship concen a ion seems excessi e in Aus ia. Acco ding o he
au ho , a mo e de eloped capi al ma ke , especially a mo e de eloped s ock exchange would
su ely help in he e icien inancing and go e ning o Aus ian co po a ions.
Gugle e al. (2004) analyze he e ec o co po a e go e nance ins i u ions and owne ship
s uc u es on in es men pe o mance by using a sample o mo e han 19000 companies om 61
coun ies. They use ma ginal q o measu e pe o mance and show ha legal sys em o igin is he
mos impo an de e minan o pe o mance. Companies in coun ies wi h a legal sys em o
English o igin ea n a leas as much as hei cos s o capi al. Howe e , companies in coun ies wi h
ci il law sys ems ea n e u ns on in es men below hei cos s o capi al. Di e ences in
N. A gan, M.Z. Mum az, R.M. Kuns 515
PSL Qua e ly Re iew
pe o mance ha a e ela ed o a coun y’s legal sys ems domina e di e ences ela ed o
owne ship s uc u es.
Muelle (2006) emphasizes he need o s ong co po a e go e nance ins i u ions o acili a e
he c ea ion o hick equi y ma ke s in de eloping coun ies. Manage s o companies in de eloping
coun ies in Sou heas Asia ha e mo e disc e ion o make bad in es men s om deb and equi y
o e ings because co po a e go e nance ins i u ions a e weake in de eloping han in de eloped
coun ies. Some imes, g ow h maximizing manage s o companies in de eloping coun ies in Asia
use excessi e equi y o inance ques ionable in es men s. Thus, in es o s in Sou heas Asia a e
willing o in es in he sha es o lis ed companies wi hou su icien egula o y p o ec ion.
Fa ooque e al. (2007) analyze a sample o 73 Bangladeshi lis ed companies. They epo an
S-shaped non-linea ela ionship be ween boa d owne ship and pe o mance, wi h en enchmen
domina ing o small and o la ge owne ship a ios, essen ially a mi o image o he unc ion
epo ed by Mo ck e al. (1988). Howe e , he non-linea eac ion disappea s when hey apply a
wo-s age leas squa es es ima ion p ocedu e ha akes ca e o po en ial owne ship endogenei y.
Kuma (2008) analyzes owne ship s uc u es and pe o mance o Indian companies om
1994 o 2000. He es ima es a U-cu ed ela ionship be ween di ec o s’ sha eholding and
pe o mance.
Khwaja and Mian (2005) epo e idence o manipula ion o s ock p ices by collusi e
s ockb oke s. A signi ican pa o he s ock ma ke u no e e lec s manipula i e p ac ices. They
ecommend he implemen a ion o good go e nance and o he laws o s eng hen he equi y
ma ke s.
A gan e al. (2017) analyze he owne ship s uc u es o 125 Pakis ani lis ed companies om
1997 o 2007. Pakis an’s co po a e go e nance is weak and unable o p o ec mino i y
sha eholde s om exp op ia ion by dominan la ges sha eholde s. S ong e idence shows ha
e u n on in es men compa ed o he cos o capi al is below 1 o Pakis an. Re u n on ein es ed
cash low is less han he cos o capi al o Pakis an, which p o ides e idence o he hypo hesis
ha he la ges sha eholde s o manage s exe cise disc e ion while ein es ing cash lows, which
leads o sub-op imal pe o mance. The analysis e eals ha inancial ins i u ions in Pakis an a e
con ounded wi h asymme ic in o ma ion while lending o i ms. Due o he weak go e nance
egime, inancial ins i u ions o en canno sell colla e alized asse s pledged by delinquen
bo owe s.
Jin and Pa k (2015) analyze how he sepa a ion o cash low and o ing igh s a ec s he
pe o mance o i ms a ilia ed wi h la ge amily business g oups. Analyzing da a om Ko ean
Chaebols om 2003 o 2010, hey ind ha he sepa a ion o cash low and o ing igh s posi i ely
a ec s accoun ing pe o mance bu no ma ke pe o mance.
Blanca e al. (2010) analyze inside owne ship and i m pe o mance o Spanish lis ed i ms.
They employ a la ge sample o Spanish lis ed companies o in es iga ing he e ec o inside
owne ship on pe o mance and p o ide e idence o he con e gence o in e es s and
en enchmen e ec . The empi ical analyses sugges ha inside s o Spanish amily i ms become
en enched a highe owne ship le els.
Hamadi (2010) explo es he ela ionship be ween owne ship o con olling sha eholde s and
i m pe o mance o Belgian lis ed companies om 1991 o 1996. Fi m pe o mance is measu ed
by Tobin’s 𝑞. In he s udy, Tobin’s q is eg essed on la ges sha eholde ’s concen a ion, i m size
& age, le e age, and esea ch and de elopmen . She inds ha la ge sha eholde s in amily-owned
i ms ha e a posi i e e ec on pe o mance. The analysis shows ha he la ges sha eholde s ha e
a nega i e e ec o pe o mance and he p esence o a second sha eholde has no impac on
pe o mance.
516 Owne ship concen a ion and in es men pe o mance o Aus ian lis ed companies
PSL Qua e ly Re iew
T an and Le (2020) analyze he ela ionship be ween owne ship concen a ion and
pe o mance o Vie namese lis ed companies. They ind a posi i e ela ion be ween owne ship
concen a ion and he iskiness o p o i abili y. This inding is consis en wi h he a gumen ha
la ge sha eholde s owning con olling equi y s akes p omo e he i m’s isk- aking ac i i ies by
weakening he s a egic oles o isk-a e se manage s. In Vie nam’s weak ins i u ional
amewo k, his empi ical e idence ad oca es ha p i a e bene i s appeal o dominan
sha eholde s and encou age hem o engage in isk- aking ac i i ies a he expense o mino i y
in es o s.
Pasko e al. (2020) analyze owne ship concen a ion and pe o mance o ag o-indus ial
companies in Uk aine. They ha e ound no signi ican ela ionship be ween owne ship
concen a ion and pe o mance, which is measu ed by EBITDA, p o i be o e ax, and Tobin’s 𝑞.
To syn hesize he indings o he e iewed li e a u e on owne ship concen a ion and
in es men pe o mance, Mo ck e al. (1988) es ima ed an up-down-up ela ionship be ween
owne ship concen a ion and Tobin’s 𝑞 o 371 Fo une 500 companies in he USA. Analyzing US
co po a ions, Hayashi (1982) a gues ha ma ginal 𝑞 and a e age 𝑞 ( he a io o ma ke alue o
capi al o i s eplacemen cos ) a e he same unde he condi ions ha he i m is a p ice ake and
i s p oduc ion and ins alla ion unc ions a e homogeneous.
Fo he Uni ed Kingdom, Sho and Keasey (1999) epo a non-linea ela ionship be ween
owne ship concen a ion and co po a e in es men pe o mance.
Cable (1985) is o he iew ha banks a e mos impo an in co po a e go e nance in
Ge many. F anks and Maye (2001) epo e y high le els o concen a ion o owne ship in
Ge man co po a ions, pa icula ly associa ed wi h holdings by o he companies and amilies, and
complex pa e ns o owne ship.
Fo Japan, Hoshi e al. (1991) analyze in o ma ion and incen i e p oblems in he capi al
ma ke . Employing cash low and sho - e m secu i ies as measu es o liquidi y, hey ind ha
cash low has a posi i e coe icien only in he in es men equa ion o independen companies.
An impo an inding is ha he di e ence be ween liquidi y coe icien s o he g oup and non-
g oup companies is la ge o i ms wi h high Tobin’s 𝑞. Walke (2001), analyzing a la ge sample
o Japanese lis ed companies, inds ha in es men o ho izon al g oup membe s is less sensi i e
o g ow h oppo uni ies and mo e sensi i e o ope a ing cash low han is he in es men le el o
independen i ms. Acco ding o his esea ch, he Japanese Kei e su p o ides s ong e idence ha
indus ial g oups in Japan ans e capi al be ween membe s.
Jin and Pa k (2015) analyze Ko ean Chaebols and ind ha sepa a ion o cash low and o ing
igh s posi i ely a ec s accoun ing pe o mance.
Fo Belgium, Hamadi (2010) ound ha la ge sha eholde s in amily-owned i ms ha e a
posi i e e ec on pe o mance. Pasko e al. (2020) ound no signi ican ela ionship be ween
owne ship concen a ion and pe o mance o Uk ainian ag o-indus ial i ms, which is measu ed
by EBITDA, p o i be o e ax, and Tobins q.
The e a e e y ew s udies on Aus ia such as P a e may (1999) and Nie o (2021) ha
employ samples o lis ed companies o analyze co po a e go e nance in Aus ian co po a ions.
The e is no exclusi e s udy o Aus ia ha uses a ma ginal q o es ima e he e ec s o owne ship
concen a ion on in es men pe o mance employing he whole popula ion o non- inancial
companies lis ed a he Vienna s ock exchange.
N. A gan, M.Z. Mum az, R.M. Kuns 517
PSL Qua e ly Re iew
2. Hypo hesis
The manage ial disc e ion hypo hesis (MDH) pos ula es ha manage s o i ms pu sue hei own
objec i es ins ead o maximizing he weal h o sha eholde s. Manage s’ own objec i es a e o
inc ease he size o g ow h o hei companies, e en when g ow h is ha m ul o hei sha eholde s
(Ma is, 1998). The pu sui o excessi e g ow h is de imen al o sha eholde s.
Acco ding o he MDH, manage s could conceal he na u e o in es men s in he i m o
maximizing hei own alue (Yu oglu, 2006). The e o e, hey ha e endencies o in es beyond
he op imal le el o in es men . This leads us o he ollowing hypo hesis: in es men
pe o mance is hypo hesized o be a unc ion o la ges ul ima e sha eholde s’ o ing igh s
concen a ion.
3. Owne ship s uc u es
The owne ship o Aus ian lis ed companies is highly concen a ed: concen a ion o owne ship
is e iden om able 1, which epo s he di ec and ul ima e owne ship in Aus ia. The owne ship
s uc u e o OMV AG is illus a ed in igu e 1.
Figu e 1 – Owne ship S uc u e o OMV AG, Vienna
OMV AG
Mubadala
Pe oleum and
Pe ochemicals
Holding Co. LLC
24.9%
Dispe sed
sha eholdings
43.1%
Os e eichische
Bundes- und
Indus ie-
Be eiligungen
GmbH 31.5%
Fo eign owne s
100%
Republic o Aus ia
100%
518 Owne ship concen a ion and in es men pe o mance o Aus ian lis ed companies
PSL Qua e ly Re iew
The la ges di ec sha eholde o OMV AG is Oes e eichische Bundes- und
Indus iebe eiligungen GmbH ha has sha eholdings o 31.5%. Oes e eichische Bundes- und
Indus iebe eiligungen GmbH is ully owned by he s a e. The la ges ul ima e sha eholde o OMV
AG is he s a e. Mubadala Pe oleum and Pe ochemicals Holding Co. LLC, Uni ed A ab Emi a es,
a o eign en i y has sha eholdings o 24.9%.
Table 1 epo s he owne ship concen a ion by he iden i y o he la ges di ec and ul ima e
sha eholde s. The a iable owne ship exp esses he mean (median) o owne ship whene e hese
en i ies a e la ges di ec sha eholde s.
Table 1 – Di ec owne ship and ul ima e owne ship panels
Di ec owne ship panel
Ul ima e owne ship panel
La ges di ec sha eholde s
La ges ul ima e sha eholde sa
Owne ship
Vo ingb Righ s (𝑉𝑅)
Companiesc
Owne ship iden i y
Mean
Mean
Median
SD
Numbe
(N)
% age
Lis ed companies
57.88
Holding companies
51.46
Families
25
44.24
38.47
24.21
14
52
S a e
31.50
48.38
40
22.28
3
11
Financial ins i u ions
10.25
20.25
20.25
–
2
7
Fo eign
54.56
68.24
72.35
25.92
8
30
To al
52.45
52.03
51.87
24.85
No es: This able p esen s he owne ship and con ol s uc u es o Aus ian lis ed companies.
a Ul ima e sha eholde s o 3 i ms in he sample a e dispe sed sha eholde s.
b We do no epo cash low igh s in abula o m because o a minimal de ia ion o cash low igh s om o ing igh s.
c N ep esen s he numbe o ul ima ely-con olled i ms by each o he la ges ul ima e sha eholde s like s a e, amilies,
o eign, and inancial ins i u ions.
Table 1 illus a es ha ul ima e owne ship is a mo e meaning ul concep han di ec
owne ship. By acing he owne ship links ac oss he mul iple laye s o a Py amidal Owne ship
S uc u e, we can asce ain he iden i y o he la ges ul ima e sha eholde along wi h he
espec i e o ing igh s in he i m. As compa ed o di ec owne ship, i is mo e meaning ul o
know ha he la ges ul ima e sha eholde is a amily o s a e o o eign-owned en i y (see
Almeida and Wol enzen, 2006).
The median o la ges ul ima e sha eholde s’ o ing igh s concen a ion is 51.87 %. Aus ia
has a bank-based inancing sys em. Concen a ion o owne ship is an impo an ea u e in bank-
based sys ems o inance. Py amidal s uc u es a e e y common in bank-based sys ems as hey
allow la ges ul ima e sha eholde s o exe cise con ol a a low cos (see Gugle , 1998). In Aus ia,
ul ima e sha eholdings a e highly concen a ed.
N. A gan, M.Z. Mum az, R.M. Kuns 525
PSL Qua e ly Re iew
The analysis implies ha he ela ionship be ween ma ginal 𝑞 and o ing igh s is an in e ed
U-cu e wi h a u ning poin a 69.3% o ing igh s (see igu e 2). The incen i e o con e gence
o in e es s’ e ec domina es he en enchmen up o 69.3% o ing igh s. Howe e , he
en enchmen e ec domina es he incen i es e ec beyond he o ing igh s’ concen a ion o
69.3%. Vo ing igh s o he la ges ul ima e sha eholde s o 37% o he i ms all unde he
downwa d sloping pa o he cu e.
Table 5 – Owne ship concen a ion and in es men pe o mance o companies, lis ed on he
Vienna s ock exchange
Panel E
Pooled O dina y
Leas Squa es
Fi m Fixed E ec s
Random E ec s
Coe icien a
(SE)
Coe icien
(SE)
Coe icien
(SE)
𝑉𝑅 ⋅ 𝐼𝑡∕ 𝑀𝑡−1
4.35***
(1.459)
4.02**
(1.789)
4.35***
(1.459)
𝑉𝑅2⋅ 𝐼𝑡∕ 𝑀𝑡−1
–3.14**
(1.229)
–2.85**
(1.505)
–3.14**
(1.229)
𝑆 ⋅ 𝐼𝑡∕ 𝑀𝑡−1
0.02**
(0.011)
0.03***
(0.012)
0.02***
(0.011)
𝐼𝑡∕ 𝑀𝑡−1
0.70***
(0.382)
0.63
(0.469)
0.71*
(0.382)
Cons an
0.04
(0.010)
0.04***
(0.010)
0.04
(0.010)
E ec -co a ia e co ela ion
–0.05***
0
(assumed)
Obse a ions
385
385
385
Adj. R2
Wi hin R2
0.50
0.56
0.30
Chow F- es s a is ic o da a pooling
Deg ees o eedom (d. .)
0.75**
(43, 337)
Hausman es b
0.67
a Le e age is insigni ican . The e o e, i is no epo ed o sa ing space.
b Null dis ibu ion is chi-squa e (²) wi h i e deg ees o eedom.
7. Conclusion
This is he i s esea ch pape on Aus ia ha analyzes owne ship s uc u es o he ull
popula ion o all non- inancial co po a ions’ lis ed on he Vienna S ock Exchange. The median o
he la ges ul ima e sha eholde s’ o ing igh s concen a ion is 51.87%, e ealing ha owne ship
in Aus ia is highly concen a ed. The Aus ian lis ed companies exhibi a emendously high
concen a ion o owne ship.
526 Owne ship concen a ion and in es men pe o mance o Aus ian lis ed companies
PSL Qua e ly Re iew
Re u n on in es men
3
is 21% lowe han he cos o capi al, which shows s ong e idence o
agency cos s in he owne ship s uc u es o Aus ian lis ed companies. We ind s ong e idence
ha he e u n on in es men o i ms, which a e cons i uen s o py amidal business g oups, is
41% lowe han he cos o capi al. This implies ha he ul ima e sha eholde s o companies ha
a e cons i uen s o a py amidal business g oup could di e esou ces o hei p i a e en e p ises.
S a e companies in Aus ia ope a e in i al indus ies such as oil and gas explo a ion and
ansmission, ae ospace, elec ici y gene a ion, and high echnology. Re u n on in es men o he
s a e sample is 28% lowe han he cos o capi al. This sugges s ha manage s o s a e companies
exe cise disc e ion in in es ing, which among o he ac o s, leads o subop imal in es men
pe o mance.
The analy ical app oach used o de e mining he op imal le el o in es men speci ies ha
he ma ginal a e o e u n on in es men (𝑚𝑟𝑟𝐼) cu e is downwa d sloping ha in e sec s he
cos o capi al schedule ( he cos o capi al unc ion is a ho izon al line). The in es men le el ha
co esponds o he poin o in e sec ion is he op imal in es men le el.
Fi m ixed e ec s (FE) and andom e ec s (RE) a e es ima ed on unbalanced panel-da a om
2007 o 2020, he eby p o iding s ong e idence o he manage ial disc e ion hypo hesis (MDH),
which hypo hesizes ha dominan la ges ul ima e sha eholde s o manage s in es beyond he
op imal le el o in es men ha would maximize i m alue. The analyses p o ide s ong e idence
o ou hypo hesis ha in es men in capi al equipmen is highly sensi i e o i ms’ cash lows.
The e o e, his s udy p o ides conclusi e e idence ha o e -in es men leads o e u ns on
in es men lowe han he cos o capi al.
The concep o ma ginal 𝑞 allows us o es ima e a causal ela ionship be ween owne ship
concen a ion and pe o mance, which uns om he o me o he la e . Vo ing igh s (𝑉𝑅) o
ul ima e sha eholde s posi i ely a ec pe o mance, whe eas he o ing igh s squa ed (𝑉𝑅2)
nega i ely a ec pe o mance. This esul implies an in e ed U-Cu e ela ionship be ween
ma ginal 𝑞 and o ing igh s concen a ion wi h a u ning poin a 69.3% (see igu e 2). The
in e ed U-cu e d awn in ou esea ch con o ms o he ela ionships es ima ed be ween
owne ship and i m pe o mance in p e ious s udies such as he one conduc ed by Sho and
Keasey (1999), who measu ed i m pe o mance o co po a ions in he UK by e u n on equi y
and ma ke o book a ios, and es ima ed posi i e, nega i e, and posi i e coe icien s on di ec o s’
sha eholdings, squa ed di ec o s’ sha eholdings, and cubed di ec o s’ sha eholdings espec i ely
(see also S ulz, 1988; Kuma , 2008).
The in ui i e explana ion o he upwa d sloping pa o he cu e is ha he posi i e
con e gence o in e es s o incen i e e ec domina es he en enchmen e ec up o o ing igh s
concen a ion o 69%. Beyond 69% o ing igh s concen a ion, he e is s ong e idence o he
en enchmen hypo hesis as he nega i e en enchmen e ec domina es he incen i e e ec .
Vo ing igh s o he la ges ul ima e sha eholde s o 37% o he i ms analyzed in his esea ch
all unde he downwa d sloping pa o he cu e. This inding has policy implica ions o
p o ec ion o mino i y sha eholde s. Al hough he co po a e go e nance sys em is s ong, la ges
ul ima e sha eholde s in Aus ia exp op ia e i m alue o he de imen o mino i y sha eholde s.
This e idence on mino i y sha eholde s’ exp op ia ion has a eaching implica ions as he
en enchmen o ul ima e sha eholde s implies ha mino i y sha eholde s su e om
3
GMY (2004) es ima ed he 𝑞𝑚𝑠 o a ious coun ies including Aus ia. The e a e a ew di e ences o poin ou
be ween his s udy and ou s: hey capped 𝑀𝑡 and 𝐼𝑡 a he 1s and 99 h pe cen ile o each coun y sample in a global
s udy, while we did no use capped da a in ou analysis. They do no es ima e he e ec o owne ship concen a ion on
in es men pe o mance in hei s udy. Ou s udy es ima es he qm o he en i e popula ion o Aus ian non- inancial
companies as well as he impac o owne ship concen a ion on pe o mance, om which we d aw an in e ed U-cu e.
N. A gan, M.Z. Mum az, R.M. Kuns 527
PSL Qua e ly Re iew
exp op ia ion by la ges ul ima e sha eholde s. The e idence on exp op ia ion o mino i y
sha eholde s no only has epe cussions o e icien co po a e go e nance in Aus ian lis ed
companies bu also slows down he g ow h o Aus ia’s inancial ma ke s.
Appendix
De ini ions:
One-sha e–one o e p inciple: Each common o dina y sha e ca ies one o e.
Dispe sed Sha eholdings: Pe cen age o sha es owned by indi idual sha eholde s in a publicly-
lis ed company.
Tobin’s 𝑞: The a io o he ma ke alue o o al asse s o he company and book alue.
Company size (𝑆): Na u al loga i hm o o al asse s.
Le e age (𝐿): To al deb di ided by o al asse s.
Ma ginal 𝑞 is a unc ion o la ges ul ima e sha eholde s’ o ing igh s (𝑉𝑅), o ing igh s squa ed
(𝑉𝑅2), company size (𝑆) and le e age (𝑙𝑒𝑣) as he ollowing equa ion: 𝑞𝑚= 𝐶𝑜𝑛𝑠𝑡𝑎𝑛𝑡 + 𝛾1𝑉𝑅 +
𝛾2𝑉𝑅2+ 𝛾3𝑆 + 𝛾4𝑙𝑒𝑣
Figu e A1 – The ela ionship be ween o ing igh s o ul ima e sha eholde s and ma ginal q
0
0,5
1
1,5
2
2,5
010 20 30 40 50 60 70 80 90 100
Ma ginal q
Vo ing Righ s
528 Owne ship concen a ion and in es men pe o mance o Aus ian lis ed companies
PSL Qua e ly Re iew
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