An application of panel threshold regression to the study of ultimate ownership structures on the firm value

• Main Authors: Hai-Ling Lin, 林海齡
• Other Authors: Feng-Li Lin
• Format: Others
• Language: zh-TW
• Published: 2008
• Online Access: http://ndltd.ncl.edu.tw/handle/91629851167486517967

碩士 === 朝陽科技大學 === 會計所 === 96 === This paper analyzes whether ultimate ownership structures affect firm value and uses balanced panel data of 242 Taiwanese listed companies for the year 1997 to 2006. We employ an advanced panel threshold regression model to test whether there is Incentive Effect or Entrenchment Effect which causes there to be threshold effects and asymmetrical relationships between ultimate ownership structures and firm value. We adopt Tobin''s Q as proxy for firm value. Our results indicate that there is only single threshold effect between cash-flow rights and firm value, which is 27.8%. The positive incentive effect between cash-flow rights and firm value generates an increasingly progressive impact with slower speed while cash-flow rights exceed threshold values. There are triple threshold effects between control rights and firm value, which are 0.96%, 32.34%, and 34.03%. When control rights are less than 0.96%, it will lead to operational inefficiencies and lower firm value (negative entrenchment effect); on the contrary, when control rights are larger than 0.96, ultimate owners will engage in managing company efficiently and mitigate the agency conflicts (positive incentives effect). There is a double threshold effect between the ratio of cash-flow rights to control rights and firm value, which are 72.11% and 73.91%, respectively. But the relationship between the ratio of cash-flow rights to control rights and Tobin''s Q varies with different changes in the extent of divergence in cash-flow and control rights, only existence in the ratio larger than 72.11%.