An empirical study of the effects of inside ownership on financial and operational performances: A study of publicly traded companies in the Taiwan stock market (China).

摘要

Purpose. This study investigated the effects of insider ownership (IO) on performances of publicly traded companies in Taiwan. The study attempted to model the effects of IO on financial and operational performance indicators. The study also examined the effects of changes in inside ownership (CIO) in subsequent periods.; The study was important due to a lack of study of this kind in non-U.S. markets. There was also a lack of controlled study across different market climates. Using a quantitative approach, this study modeled the relationship between IO and expected financial performance (ROA).; Method. This study analyzed cross-sectional stock data from the Taiwan Stock Exchange in 3 calendar years that had very different market climates. The qualified sample sizes were 364, 441, and 579 stocks, respectively. Correlation, analysis of variance, and difference t tests were used to test the relationships between IO and various performance indicators. The study built a quantitative model of expected ROA based on IO with the multiple regression model. Event study methods were used to examine the effects of CIO.; Results. Size of the firm (SZ) and IO showed significant relationships with ROA, while block holder ownership (BH) had no significant effects. SZ and IO were used to build a quantitative model of ROA, which had statistical significance.; IO had significant relationships with ROA, sales efficiency (ETS), asset turnover ratio (STA), growth of equity (GRE), number of segments (SEG), and leverage ratio (DE). They study found no significant relationships between IO and value created (VC), revenue-based Herfindahl index (RHI), growth expenditure (GE), and stock price returns (ROI). The directions and significance of relationships were generally consistent in all years studied.; Substantial CIO had no significant immediate effects on ROA. However, substantial CIO resulted in immediate abnormal stock market returns (SMR) at the time of public announcement.