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Article: Ownership structure and financial constraints: Evidence from a structural estimation
Title | Ownership structure and financial constraints: Evidence from a structural estimation |
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Authors | |
Keywords | Ownership structure Insider excess control rights Financial constraints |
Issue Date | 2011 |
Publisher | Elsevier. The Journal's web site is located at http://www.sciencedirect.com/science/journal/0304405X |
Citation | Journal of Financial Economics, 2011, v. 102 n. 2, p. 416-431 How to Cite? |
Abstract | This article examines the impact of the divergence between corporate insiders' control rights and cash-flow rights on firms' external finance constraints via generalized method of moments estimation of an investment Euler equation. Using a large sample of U.S. firms during the 1994–2002 period, we find that the shadow value of external funds is significantly higher for companies with a wider insider control-ownership divergence, suggesting that companies whose corporate insiders have larger excess control rights are more financially constrained. The effect of insider excess control rights on external finance constraints is more pronounced for firms with higher degrees of informational opacity and for firms with financial misreporting, and is moderated by institutional ownership. The results show that the agency problems associated with the control-ownership divergence can have a real impact on corporate financial and investment outcomes. |
Persistent Identifier | http://hdl.handle.net/10722/192338 |
ISSN | 2023 Impact Factor: 10.4 2023 SCImago Journal Rankings: 13.655 |
SSRN | |
ISI Accession Number ID |
DC Field | Value | Language |
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dc.contributor.author | Lin, C | en_US |
dc.contributor.author | Ma, Y | en_US |
dc.contributor.author | Xuan, Y | en_US |
dc.date.accessioned | 2013-10-24T01:50:01Z | - |
dc.date.available | 2013-10-24T01:50:01Z | - |
dc.date.issued | 2011 | en_US |
dc.identifier.citation | Journal of Financial Economics, 2011, v. 102 n. 2, p. 416-431 | en_US |
dc.identifier.issn | 0304-405X | en_US |
dc.identifier.uri | http://hdl.handle.net/10722/192338 | - |
dc.description.abstract | This article examines the impact of the divergence between corporate insiders' control rights and cash-flow rights on firms' external finance constraints via generalized method of moments estimation of an investment Euler equation. Using a large sample of U.S. firms during the 1994–2002 period, we find that the shadow value of external funds is significantly higher for companies with a wider insider control-ownership divergence, suggesting that companies whose corporate insiders have larger excess control rights are more financially constrained. The effect of insider excess control rights on external finance constraints is more pronounced for firms with higher degrees of informational opacity and for firms with financial misreporting, and is moderated by institutional ownership. The results show that the agency problems associated with the control-ownership divergence can have a real impact on corporate financial and investment outcomes. | - |
dc.language | eng | en_US |
dc.publisher | Elsevier. The Journal's web site is located at http://www.sciencedirect.com/science/journal/0304405X | - |
dc.relation.ispartof | Journal of Financial Economics | en_US |
dc.rights | This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License. | - |
dc.rights | NOTICE: this is the author’s version of a work that was accepted for publication in Journal of Financial Economics. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in PUBLICATION, [VOL 102, ISSUE 2, (2011)] DOI 10.1016/j.jfineco.2011.06.001 | - |
dc.subject | Ownership structure | - |
dc.subject | Insider excess control rights | - |
dc.subject | Financial constraints | - |
dc.title | Ownership structure and financial constraints: Evidence from a structural estimation | en_US |
dc.type | Article | en_US |
dc.description.nature | postprint | - |
dc.identifier.doi | 10.1016/j.jfineco.2011.06.001 | en_US |
dc.identifier.scopus | eid_2-s2.0-80052751003 | en_US |
dc.identifier.volume | 102 | en_US |
dc.identifier.issue | 2 | en_US |
dc.identifier.spage | 416 | en_US |
dc.identifier.epage | 431 | en_US |
dc.identifier.isi | WOS:000295393600009 | - |
dc.identifier.ssrn | 1590748 | - |
dc.identifier.issnl | 0304-405X | - |