| Essay I. Due to the existence of keiretsu networks and influential bank shareholders, managerial-ownership has traditionally been viewed as un-important in Japan. However, because Japanese banks are not as powerful as they used to be, this view may be outdated. In this essay, we present evidence that managerial-ownership is an alternative corporate governance mechanism in Japan. Using 1993 and 1996 data, we find that firms with significant managerial ownership are typically non-keiretsu firms with less bank debt. In addition, these same manager-owned firms exhibit more control potential and use more discretionary expenditures than do other firms. Overall, our findings suggest that managerial-ownership is a substitute governance mechanism for keiretsu and bank monitoring.; Essay II. We examine Korean chaebols to determine the costs and benefits associated with the operation of a diversified business grouping this essay. We find that chaebol-affiliated firms suffer a value loss relative to non-affiliated firms. We observe that this value loss holds even after controlling for the relatedness of the diversification present within the chaebol. To identify the causes of this value loss, we obtain evidence suggesting that chaebol firms: (1) pursue profit stability rather than profit maximization, (2) over-invest in low performing industries, and (3) cross-subsidize the weaker members of their group. We do find however that chaebol firms possess greater debt capacity and consequently enjoy lower tax burdens. Nevertheless, because chaebols suffer an overall loss in value, we conclude that the costs associated with chaebol membership exceed its benefits.; Essay III. In this essay, we examine the operating performance of Thai firms after they go public. Overall, we find that their performance declines. We then explore the relationship between managerial ownership and the change in firm performance. We find that firms with ‘low’ and ‘high’ levels of managerial ownership experience positive relationships between managerial ownership and the change in performance (alignment-of-interest hypothesis), while firms with ‘intermediate’ levels of managerial ownership exhibit a negative relationship between managerial ownership and the change in performance (entrenchment hypothesis). Examining the operating performance of IPO firms from an emerging market, and finding a curvilinear relationship between managerial ownership and the post-IPO change in performance, represents two significant contributions to the IPO literature. |
