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Controlling shareholder ownership structure and conflict-related party transactions

Concentrated companies offer various types of shareholding structures either direct, indirect, or pyramidal ownership. The opportunist controlling shareholders may intend to utilize the complex nature of indirect and pyramidal shareholding to engage in related party transactions (RPT) by conceal...

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Main Authors: Siti Hajar Asmah Ali,, Mohd Mohid Rahmat,, Noor Idayu Ismail,, Norman Mohd Saleh,
Format: Article
Language:English
Published: Penerbit Universiti Kebangsaan Malaysia 2021
Online Access:http://journalarticle.ukm.my/16749/1/47789-154773-1-PB.pdf
http://journalarticle.ukm.my/16749/
https://ejournal.ukm.my/ajac/issue/view/1393
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spelling my-ukm.journal.167492021-06-10T01:52:53Z http://journalarticle.ukm.my/16749/ Controlling shareholder ownership structure and conflict-related party transactions Siti Hajar Asmah Ali, Mohd Mohid Rahmat, Noor Idayu Ismail, Norman Mohd Saleh, Concentrated companies offer various types of shareholding structures either direct, indirect, or pyramidal ownership. The opportunist controlling shareholders may intend to utilize the complex nature of indirect and pyramidal shareholding to engage in related party transactions (RPT) by concealing or hiding their related party identity. We examine the association between controlling shareholder’s shareholding structure (direct shareholding (DCS), indirect shareholding (INDCS), and pyramid shareholding (PYRCS)) and RPT in Malaysia. Based on a sample of 580 companies listed on Bursa Malaysia from 2013 to 2017, we found that the controlling shareholders utilize all types of shareholding (DCS, INDCS, and PYRCS) to engage with RPT. These findings support the argument that the controlling shareholder is at the privilege to manipulate the various type of shareholding to get personal benefit through RPT. The findings also indicate that controlling shareholders with INDCS or PYRCS disclose a lower magnitude of RPT-conflict rather than controlling shareholders with DCS. We provide an important implication for capital market regulators to strengthen approval procedures or guidelines for RPT, especially upon the concentrated ownership. Also, regulators such as the MSWG may increase minority shareholder’s awareness of the possibility of conflict-RPT behind the RPT among related party companies. The findings might be helpful for users to understand the relationship between controlling shareholders and RPT in other developing countries with similar governance and culture attributes to Malaysia. Penerbit Universiti Kebangsaan Malaysia 2021 Article PeerReviewed application/pdf en http://journalarticle.ukm.my/16749/1/47789-154773-1-PB.pdf Siti Hajar Asmah Ali, and Mohd Mohid Rahmat, and Noor Idayu Ismail, and Norman Mohd Saleh, (2021) Controlling shareholder ownership structure and conflict-related party transactions. Asian Journal of Accounting and Governance, 15 . pp. 1-13. ISSN 2180-3838 https://ejournal.ukm.my/ajac/issue/view/1393
institution Universiti Kebangsaan Malaysia
building Tun Sri Lanang Library
collection Institutional Repository
continent Asia
country Malaysia
content_provider Universiti Kebangsaan Malaysia
content_source UKM Journal Article Repository
url_provider http://journalarticle.ukm.my/
language English
description Concentrated companies offer various types of shareholding structures either direct, indirect, or pyramidal ownership. The opportunist controlling shareholders may intend to utilize the complex nature of indirect and pyramidal shareholding to engage in related party transactions (RPT) by concealing or hiding their related party identity. We examine the association between controlling shareholder’s shareholding structure (direct shareholding (DCS), indirect shareholding (INDCS), and pyramid shareholding (PYRCS)) and RPT in Malaysia. Based on a sample of 580 companies listed on Bursa Malaysia from 2013 to 2017, we found that the controlling shareholders utilize all types of shareholding (DCS, INDCS, and PYRCS) to engage with RPT. These findings support the argument that the controlling shareholder is at the privilege to manipulate the various type of shareholding to get personal benefit through RPT. The findings also indicate that controlling shareholders with INDCS or PYRCS disclose a lower magnitude of RPT-conflict rather than controlling shareholders with DCS. We provide an important implication for capital market regulators to strengthen approval procedures or guidelines for RPT, especially upon the concentrated ownership. Also, regulators such as the MSWG may increase minority shareholder’s awareness of the possibility of conflict-RPT behind the RPT among related party companies. The findings might be helpful for users to understand the relationship between controlling shareholders and RPT in other developing countries with similar governance and culture attributes to Malaysia.
format Article
author Siti Hajar Asmah Ali,
Mohd Mohid Rahmat,
Noor Idayu Ismail,
Norman Mohd Saleh,
spellingShingle Siti Hajar Asmah Ali,
Mohd Mohid Rahmat,
Noor Idayu Ismail,
Norman Mohd Saleh,
Controlling shareholder ownership structure and conflict-related party transactions
author_facet Siti Hajar Asmah Ali,
Mohd Mohid Rahmat,
Noor Idayu Ismail,
Norman Mohd Saleh,
author_sort Siti Hajar Asmah Ali,
title Controlling shareholder ownership structure and conflict-related party transactions
title_short Controlling shareholder ownership structure and conflict-related party transactions
title_full Controlling shareholder ownership structure and conflict-related party transactions
title_fullStr Controlling shareholder ownership structure and conflict-related party transactions
title_full_unstemmed Controlling shareholder ownership structure and conflict-related party transactions
title_sort controlling shareholder ownership structure and conflict-related party transactions
publisher Penerbit Universiti Kebangsaan Malaysia
publishDate 2021
url http://journalarticle.ukm.my/16749/1/47789-154773-1-PB.pdf
http://journalarticle.ukm.my/16749/
https://ejournal.ukm.my/ajac/issue/view/1393
_version_ 1702170872444354560
score 13.211869

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