Yuen Teen Mak

Corporate governance and voluntary disclosure

Abstract This paper examines the impact of ownership structure and board composition on voluntary disclosure. Ownership structure is characterized by managerial ownership, blockholder ownership and government ownership, and board composition is measured by the percentage of independent directors. Voluntary disclosure is proxied by an aggregated disclosure score of non-mandatory strategic, non-financial and financial information. Our results show that ownership structure and board composition affect disclosure. We find that lower managerial ownership and significant government ownership are associated with increased disclosure. However, blockholder ownership is not related to disclosure. An increase in outside directors reduces corporate disclosure. We also find that larger firms and firms with lower debt had greater disclosure.

Determinants of corporate ownership and board structure: evidence from Singapore

Abstract This study examines the determinants and interrelationships among corporate ownership and board structure characteristics using a sample of Singapore listed firms. The institutional environment in Singapore differs from that in many developed Western economies in several important respects, including a weak market for corporate control, more concentrated stock ownership, and significant government ownership in many private sector firms. Three characteristics—board composition, board leadership structure and board size—are used to capture the monitoring ability of the board. These board characteristics are assumed to be endogenously determined, together with two ownership characteristics, managerial ownership and blockholder ownership. We use two-stage least squares regression to estimate the determinants of board and ownership characteristics. Our findings indicate that corporate ownership and board structures are related, and that there are significant interrelationships among board structure characteristics. The proportion of outside directors is negatively related to managerial ownership, board size and government ownership. The use of a dual leadership structure is positively related to blockholder ownership, and negatively related to regulation and to CEO tenure.

The relationship between managerial ownership and firm performance in high R&D firms

Abstract Several studies have examined the relationship between managerial ownership and firm performance/value (e.g., [Journal of Financial Economics 20 (1988) 293; Journal of Financial Economics 27 (1990) 595; Journal of Corporate Finance 5 (1999) 79]). Using different samples, these studies provide general support for the argument that increases in managerial ownership create countervailing interest alignment and entrenchment effects, leading to a nonlinear relationship between managerial ownership and firm performance. However, the actual form of this nonlinear relationship differs across the studies. The present paper examines the relationship between managerial ownership and performance for high R&D firms that are listed on the NYSE, AMEX and NASDAQ. We find that Tobins Q initially declines with managerial ownership, then increases, then declines again and, finally, increases again—a W-shaped relationship. The findings from our study point to the importance of industry effects in the relationship between managerial ownership and firm performance.

Factors Affecting the Characteristics of Boards of Directors: An Empirical Study of New Zealand Initial Public Offering Firms

Abstract This study examines the associations between the characteristics of boards of directors of initial public offering (IPO) firms and the availability of growth opportunities and level of inside share ownership of these firms. Three characteristics of boards of directors are examined: board size, proportion of outside directors, and the separation of the CEO and chairpersons roles (dual leadership). The impact of firm size on board characteristics is controlled for in the empirical tests. Based on a sample of 110 New Zealand firms that made initial public offerings of equity securities over the period 1983 to 1987, this study finds that firms that have lower inside share ownership tend to employ larger boards. In addition, the proportion of outside directors is positively related to the extent of growth opportunities available to a firm and negatively related to inside share ownership. Finally, firms with relatively more growth opportunities are likely to have dual leadership. Although some contrary results are found, the findings from this study provide some support for arguments that firms with greater agency problems, attributable to low inside share ownership and significant growth opportunities, are likely to choose boards of directors that are more effective at mitigating these problems.

Forecast disclosure by initial public offering firms in a low-litigation environment

Abstract My study examines the level of disclosure of forecast information by initial public offering firms (IPO firms) in a low-litigation environment. Based on a sample of New Zealand IPO firms, the associations among the level of disclosure of earnings forecast information in their prospectuses and the following independent variables are examined: operating history, variance of aftermarket returns, proportion of inside share ownership, expected short-term earnings, and size of IPO firms. The level of disclosure of earnings forecast information has been measured by the number of individual financial years covered by earnings forecasts. Firms with higher variance of returns tended to disclose more earnings forecast information, while the proportion of shares retained by inside owners was negatively related to the level of disclosure of forecast information. Further, firms with relatively lower expected short-term earnings tended to disclose longer-range forecasts. There is only weak support for the hypothesized negative relationship between number of years of operating history and forecast disclosure. Firm size, which is used as a control variable, was not significantly related to the disclosure of forecast information, after controlling for the other explanatory variables. There was also evidence of differences in forecast disclosure across industries, after controlling for the other explanatory variables.