Ownership structure and firm performance in emerging economies: the role of offshore locations - Магистерская работа

(Bevan, Estrin, and Schaffer 1999; Earle 1999; Lin et al. 2011) This is connected with the fact that one of the major transition processes is restructuring and privatization which leads to the formation of distinctive ownership structures in these countries. Special features of corporate ownership in transition economies include high share of institutional owners, concentrated ownership as well as underdeveloped standards of corporate information disclosure even for public companies while private companies practically do not have any standards of disclosure.(Chernykh, 2008) Thus, in current work we concentrate mainly on the influence of a particular type of ownership, namely, intermediate and ultimate parental holdings by offshore companies. We study the link between financial performance measured by Returns on Assets and Returns on Sales and offshore ownership indicators such as intermediate and ultimate offshore holder dummy, number of intermediate offshore holders, particular offshore countries in ownership structure with special attention to their transparency characteristics, using the dataset for 151 Russian listed companies. Moreover, in current paper we address several econometric problems arising in the research agenda of this type, endogeneity of ownership and performance, in particular. Using the dataset of 151 biggest (according to the average turnover) listed Russian companies for 2004-2013 years, we first, examine and refresh the findings of previous research devoted to the revealing of ownership structure in Russia (see Chernykh). We show that although there is a high level of private non-anonymous ultimate owners compared to anonymous ultimate ownership, there is a high number of offshore parental companies in the intermediate structure. Secondly, we found evidence of negative significant influence of both presence of offshores in ownership structure and their total number on ROA and ROS indicators of financial performance, which is explained by the arising of agency costs due to the asymmetric information among market agents towards the transparency of companys operational and financial performance. However, the number of countries in which the offshores are located influences companys performance significantly and positively, which may be reasoned by diversification as well as special features of peculiar offshore countries. We then continue our analysis of countrys effects on financial performance for the sub-sample of only offshore-owned companies. We find out that the intransparency of country of offshore origin measured by Financial Secrecy Ratio negatively correlated with ROA and ROE. This means that, indeed, transparency makes difference even when applied to naturally in- or low- transparent territories. This have contribution to both academic literature devoted to the research of ownership-performance field as well as to practical questions such as de-offshorization policies and various tax-agreements. The paper is structured in 4 parts. To make the statement about the importance and relevance of ownership-performance relationship we first study the literature in order to find out theoretical and empirical evidence. Next part covers methodology, where the data, propositions and model specification are discussed. It is followed by the analysis and results section in which we show the estimated models for ownership-performance relationship with the emphasis on offshore ownership as well as country specifics for offshore-owned companies. In last part we discuss the conclusions, limitations and future directions of the research. 1. Literature Review on Ownership-Performance Relationship Since the corporate ownership structure questions were first brought up to the academic literature by Berle and co-authors (1933) who discussed the effects of separation between ownership and control, the research agenda towards the ownership structure has significantly grown. Fung and Tsai (2012) also find positive significant effect of institutional owners using the sample of Canadian firms and explain this result by institutional firms advisory and monitoring capabilities. Chhibber and Majumdar (1998) show that there is negative significant influence of state ownership on ROA and ROS performance measures of Indian listed firms. At the same time, analyzing the performance of Chinese real-estate firms, Huang and Boateng (2013) show the evidence that state ownership has significant negative effect on performance in pre-boom stage and positive influence in boom period. The main findings are made by Mueller, Dietl, and Peev (2003) (statistically insignificant negative influence of offshore ownership on profitability for Bulgarian firms) and Gugler, Ivanova, and Zechner (2014) who found that there is a significant negative influence of anonymous (offshore) ownership on Q Tobin value for firms from 11 CEE countries. From theoretical point of view, such effect may be explained similarly to the insiders and ot