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Disentangling the driving force of pyramidal firms' capital structure: a new perspective


Citation

Amin Noordin, Bany Ariffin (2010) Disentangling the driving force of pyramidal firms' capital structure: a new perspective. Studies in Economics and Finance, 27 (3). pp. 195-210. ISSN 1086-7376; ESSN: 1755-6791

Abstract

Purpose: The purpose of this paper is to disentangle the driving force of pyramidal firms' capital structure from nine East Asian economies. Design/methodology/approach: To disentangle the driving force, this paper develops a new theoretical framework for the pyramidal firms'. Using panel regression, the new theoretical framework is tested on a set of 1,433 pyramidal firms covering a period from 1992 to 1997. Findings: The regression results reveal that the separation of cash flow rights and control rights in the pyramidal firms have led to high usage of leverage for the purpose of preserving the ultimate owners' (UO) dominance in the pyramidal firms that he or she controls. Based on the findings, the study concludes that the actual driving force of the pyramidal firms' capital structure is the UO non‐dilution entrenchment motive. Originality/value: The main contribution of this paper is the new theoretical framework developed which enable us to disentangle the driving force behind pyramid firm's capital structure.


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Additional Metadata

Item Type: Article
Divisions: Faculty of Economics and Management
DOI Number: https://doi.org/10.1108/10867371011060027
Publisher: Emerald Group Publishing
Keywords: Capital structure; Corporate governance; South East Asia; Far East
Depositing User: Nabilah Mustapa
Date Deposited: 04 Sep 2018 08:09
Last Modified: 04 Sep 2018 08:09
Altmetrics: http://www.altmetric.com/details.php?domain=psasir.upm.edu.my&doi=10.1108/10867371011060027
URI: http://psasir.upm.edu.my/id/eprint/14092
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