Abstract
Theoretical and empirical research regarding the impact of corporate
ownership on the behaviour and performance of firms have typically
focused on consequences stemming from the separation of ownership
and control. While large scale business enterprise characterized
by such a separation is dominant in the US, Japan and the UK, firms
in which ownership and control is coupled in the hands of individuals
and their families are apparent in many other large developed economies
and are dominant in most emerging markets. This paper examines consequences
regarding the generation and allocation of financial resources stemming
from the coupling of ownership and control among Hong Kong based
firms. In doing so, we join insights from the economics literature
regarding the incentive and risk bearing consequences of coupled
ownership and control with the extant management, sociology and history
literatures regarding Chinese family business groups and develop
and six hypotheses pertaining to patterns in the allocation of financial
resources. Results indicate that coupled ownership and control is
positively related with dividend payout levels and financial liquidity
while it is negatively related to investments in capital expenditures.
Consistent with these results, we also find that coupled ownership
and control is positively related to short-term (accounting) profitability.
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