Template-Type: ReDIF-Article 1.0
Author-Name: Zuaini Ishak
Author-Workplace-Name: Faculty of Accountancy, Universiti Utara Malaysia, 06010 UUM, Sintok, Kedah
Author-Email: zuaini@uum.edu.my
Author-Name: Christopher Napier
Author-Workplace-Name: School of Management, Royal Holloway, University of London, Egham, Surrey, TW20 OEX, United Kingdom
Title: Expropriation of Minority Interests and Corporate Diversification in Malaysia
Abstract: This study provides evidence on ownership structures and corporate diversification by analysing 355 public listed companies (PLCs) in Malaysia. The majority of the companies in the sample have an ultimate controlling owner, particularly an individual or family. As controlling owners have on average, rights of control over a greater percentage of shares in any given company than their rights to participate in the cash flows from that company, controlling owners may have an incentive to expropriate minority interests through methods such as inefficient corporate diversification. The risk of such expropriation would be expected to be reflected in the value of highly diversified companies. The results of the research provide no evidence to support the argument that diversification reduces the value of companies. However, the finding is consistent with the argument that high control rights of controlling owner might encourage expropriation of minority interests through corporate diversification strategies. Thus, corporate diversification in Malaysia is perceived as a mixed blessing strategy. 
Classification-JEL:
Keywords: ownership structure, ultimate owner, corporate diversification, control rights, cash flow rights, Malaysia
Journal: Asian Academy of Management Journal of Accounting and Finance
Pages: 85-113
Volume: 2
Issue: 1
Year: 2006
File-URL: http://web.usm.my/journal/aamjaf/vol 2-1/2-1-5.pdf
File-Format: Application/pdf
Handle: RePEc:usm:journl:aamjaf00201_85-113