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Journal of Corporate Finance Vol. 44 2017

A pecking order of shareholder structure

Fuxiu Jiang1; Kenneth A. Kim2,3; John R. Nofsinger4,5; Bing Zhu6

1 Renmin University of China · 2 University at Buffalo, State University of New York · 3 Tongji University · 4 University of Alaska Anchorage · 5 Providence College · 6 Central University of Finance and Economics

Abstract

We develop and test an ownership structure pecking order. Our ownership pecking order sorts out which structures are likely to have relatively fewer agency costs versus higher agency costs. At the top of the pecking order are firms with a single controlling shareholder, they have the lowest agency costs when that shareholder is not the government. Next is the presence of multiple large shareholders. They are even more effective when the large shareholders are of the same type. The structure with the highest agency costs consists of a single large non-controlling shareholder. Our empirical tests confirm this pecking order.

DOI
10.1016/j.jcorpfin.2017.03.002
Volume
44
Pages
1-14
Language
en
Sources
bibtex:phds-export.bib openalex crossref

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