The effect of owner identity and investor protection on unrelated corporate diversification

dc.contributorAalto Universityen
dc.contributorAalto-yliopistofi
dc.contributor.authorSoikkanen, Katariina
dc.contributor.departmentDepartment of Financeen
dc.contributor.departmentRahoituksen laitosfi
dc.contributor.schoolKauppakorkeakoulufi
dc.contributor.schoolSchool of Economicsen
dc.date.accessioned2012-06-15T01:30:42Z
dc.date.available2012-06-15T01:30:42Z
dc.date.dateaccepted2012-06-08
dc.date.issued2012
dc.description.abstractPURPOSE OF THE STUDY The effects of ownership structure and corporate governance mechanisms on corporate diversification have been widely investigated in corporate strategy research. However, majority of the previous studies have presumed that all owners have identical decision making objectives and motivation. This paper contributes to the existing knowledge on the implications of different owner identities by pointing out a link between owner identity and unrelated corporate diversification decision. In addition, this paper further investigates the association between unrelated corporate diversification and investor protection and demonstrates that the effect of owner identity on corporate decision making is dependent on the institutional environment. DATA The company information used in the analysis is obtained from the Worldscope database. The sample consists of 2,956 publicly traded firms from 14 countries representing Common law, German civil law, French civil law and Scandinavian law countries. The analysis is effectively a cross-section of the year-end situation in 2010 and most of the data is from 2010 financial statements. The information on the identity and ownership share of the largest owner is manually collected from the Thomson ONE Banker database. RESULTS The results show that the owner identity is an important factor in corporate decision making, and that there are significant differences in how owner identities behave in respect to corporate diversification decisions. Of all owner identities, unrelated corporate diversification is least common among private equity owners. I also observe a negative relationship between institutionally owned firms and unrelated corporate diversification. Further, the results show that unrelated corporate diversification is most common in German and French civil law countries, characterized with weak shareholder protection, and least prevalent in Common law environment known for high level of investor protection. In line with this, investor protection measures ASD and ADR are negatively associated with the level of unrelated corporate diversification. In addition, the results indicate that the influence of owner identity on corporate diversification decisions is dependent on the institutional background and owner identity plays bigger role in an environment characterized with weak shareholder protection.en
dc.ethesisid12836
dc.format.extent74
dc.format.mimetypeapplication/pdfen
dc.identifier.urihttps://aaltodoc.aalto.fi/handle/123456789/3586
dc.identifier.urnURN:NBN:fi:aalto-201206162605
dc.language.isoenen
dc.locationP1 I
dc.programme.majorFinanceen
dc.programme.majorRahoitusfi
dc.subject.heleconrahoitus
dc.subject.heleconfinancing
dc.subject.heleconomistus
dc.subject.heleconownership
dc.subject.heleconidentiteetti
dc.subject.heleconidentity
dc.subject.heleconsijoittajat
dc.subject.heleconinvestors
dc.subject.heleconriskienhallinta
dc.subject.heleconrisk management
dc.subject.heleconyritykset
dc.subject.heleconcompanies
dc.subject.helecontoimialat
dc.subject.heleconbusiness branches
dc.subject.heleconhajautus
dc.subject.helecondecentralization
dc.subject.keywordunrelated corporate diversification
dc.subject.keywordowner identity
dc.subject.keywordinvestor protection
dc.titleThe effect of owner identity and investor protection on unrelated corporate diversificationen
dc.typeG2 Pro gradu, diplomityöfi
dc.type.dcmitypetexten
dc.type.ontasotMaster's thesisen
dc.type.ontasotPro gradu tutkielmafi
local.aalto.idthes12836
local.aalto.openaccessyes
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