How does group affiliation affect the diversification performance of family-controlled firms in Malaysia? - A governance perspective

Ng, Sin Huei (2014) How does group affiliation affect the diversification performance of family-controlled firms in Malaysia? - A governance perspective. Asian Academy of Management Journal of Accounting and Finance, 10 (2). pp. 81-115. ISSN 2180-4192

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Abstract

This paper examines the roles of business group affiliations and whether the size and ownership structure of business groups influence the performance outcomes of diversification among family-controlled firms in Malaysia. It presents evidence that agency-driven and thus performance-diminishing firm diversification is more likely to take place in firms affiliated with a family-controlled business group than in independent firms. The findings support the hypothesis that if the benefits of diversification can be captured through group-level diversification, then diversification at the firm level is more of an act of expropriation. In Malaysia, the undue political interference in business that to a certain extent has contributed to a weak enforcement of rules causes the enhanced control of family ownership through the formation of large and structurally complicated business groups to go unchecked. This grants the controlling families opportunities to pursue sub-optimal firm diversification policies that bring them more self-interested benefits at the expense of firm performance.

Item Type: Article
Uncontrolled Keywords: family-controlled business groups, firm performance, group size, group structure, agency problems, firm diversification
Subjects: H Social Sciences > HD Industries. Land use. Labor > HD28 Management. Industrial Management
Divisions: Faculty of Law, Arts and Social Sciences > School of Business
Depositing User: Unnamed user with email masilah.mansor@newinti.edu.my
Date Deposited: 15 Jan 2016 09:35
Last Modified: 23 Sep 2016 07:50
URI: http://eprints.intimal.edu.my/id/eprint/45

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