The Separation of Ownership and Control in East Asian Corporations

TLDR

The study examines the separation of ownership and control across 2,980 corporations in nine East Asian countries. The authors analyze ownership and control structures of these firms. Voting rights often exceed cash‑flow rights through pyramid structures and cross‑holdings, especially in family‑controlled and small firms, with more than two‑thirds of firms controlled by a single shareholder, managers typically being relatives of the controlling shareholder, older firms remaining family‑controlled, and significant corporate wealth concentrated among a few families.

Abstract

We examine the separation of ownership and control for 2,980 corporations in nine East Asian countries. In all countries, voting rights frequently exceed cash-flow rights via pyramid structures and cross-holdings. The separation of ownership and control is most pronounced among family-controlled firms and small firms. More than two-thirds of firms are controlled by a single shareholder. Managers of closely held firms tend to be relatives of the controlling shareholder's family. Older firms are generally family-controlled, dispelling the notion that ownership becomes dispersed over time. Finally, significant corporate wealth in East Asia is concentrated among a few families.