新西兰Essay范文 Corporate Ownership & Control Essay 代写新西兰essay
LEVELS OF OWNERSHIP STRUCTURE, BOARD COMPOSITION
AND BOARD SIZE SEEM UNIMPORTANT IN NEW ZEALAND
Trevor Chin, Ed Vos* and Quin Casey
Abstract
The relationship between firm performance and board composition, size and equity ownership structure
are investigated in this paper for a sample of 426 annual observations of New Zealand firms
across a five-year period. No statistically significant relationships could be found. These results are
consistent with several previous studies and cast doubt on agency explanations used to relate board
ownership to corporate performance. This may be due to endogenous factors or due to the small size
of the New Zealand pool of corporate directors.
Keywords: firm performance, board composition, ownership structure
* Associate Professor of Finance, Waikato Management School, University of Waikato, Private Bag 3105
Hamilton, New Zealand, Email: evos@waikato.ac.nz
1. Introduction
Finance literature assumes that managers are imperfect
agents for investors (Jensen and Meckling
(1976)). This assumption reflects circumstances in
which managers of firms may attempt to pursue
goals other than shareholder wealth maximization.
As a result, agency costs arise from this divergence
of interests. Several methods for controlling these
agency costs have been advocated, such as the payment
of dividends, the use of private debt and managerial
stock ownership. However, another important
dimension in the reduction of agency costs lies with
the monitoring of managers by the board of directors.
The board of directors is generally regarded as a
crucial aspect of the corporate structure of any organization.
In theory, they provide the link between
those who provide the capital (shareholders) and the
people who use the capital to create value – the managers
(Monks and Minow (1995)). This link infers
that boards are the overlap between the small and
powerful group that runs the company and a large
yet relatively powerless group that wishes to see
company performance maximized.
The board’s primary role is to monitor managers
on behalf of shareholders. Numerous studies have
suggested that the effectiveness of this overseeing
role is affected by the number of independent or
‘outside’ directors included on the board (see for
example Kaplan and Reishus (1990)), the percentage
of outstanding stock held collectively by the board
(e.g. Morck et al. (1988)), and the size of the board
of directors (e.g. Yermack (1996)). These studies
have however primarily focused on firms based in
the United States, which have been found to have a
significant amount of their large, and medium-sized
publicly traded firms being widely controlled (found |
