The impact of ownership structure on corporate debt policy : two stage least square simultaneous model approach for post crisis period : evidence from Kuala Lumpur Stock Exchange

Ali Ahmed, Huson Joher, Ali, Mohd and Nazrul, 2006, The impact of ownership structure on corporate debt policy : two stage least square simultaneous model approach for post crisis period : evidence from Kuala Lumpur Stock Exchange, International business & economics research journal, vol. 5, no. 5, pp. 51-64.

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Title The impact of ownership structure on corporate debt policy : two stage least square simultaneous model approach for post crisis period : evidence from Kuala Lumpur Stock Exchange
Author(s) Ali Ahmed, Huson Joher
Ali, Mohd
Nazrul,
Journal name International business & economics research journal
Volume number 5
Issue number 5
Start page 51
End page 64
Publisher Clute Institute for Academic Research
Place of publication Littleton, Colo.
Publication date 2006-05
ISSN 1535-0754
2157-9393
Keyword(s) ownership structure
corporate debt policy
two stage least square
Summary Ownership concentration as a governance mechanism has received considerable attention among academician, practitioners as well as policy makers because large-block shareholders are increasingly active in their demands that corporations adopt effective governance mechanisms to control managerial decisions, which include corporate debt policy. Earlier study on the agency model of the firm widely recognizes that the managerial ownership and external debt play an important role in mitigating agency conflicts and enhancing firm value. They also found that increase in the external monitors, for example the institutional investors, can actually play a useful role in limiting agency problems in the firm. This paper, using 100 Composite Index companies from Brusa Malaysia between 1998 to 2002 explores the impact of institutional holdings on managerial ownership and debt policy in an integrated framework by using a simultaneous equations estimation procedure (2SLS). The findings show that there is a significant impact of institutional ownership which serves effective control mechanism on managerial ownership and corporate debt policy as hypothesized. Findings of such evidence suggest that institutional holding thus have played an important role in managers' strategic management decision and reduce agency conflict. In addition, corporate debt policy too is governed by managerial ownership and exhibited a negative relation.
Language eng
Field of Research 140207 Financial Economics
Socio Economic Objective 910206 Market-Based Mechanisms
HERDC Research category C1.1 Refereed article in a scholarly journal
Copyright notice ©2006, Clute Institute for Academic Research
Persistent URL http://hdl.handle.net/10536/DRO/DU:30023742

Document type: Journal Article
Collections: Faculty of Business and Law
School of Accounting, Economics and Finance
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Created: Wed, 17 Feb 2010, 10:52:05 EST by Huson Ali Ahmed

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