Date of Award


Document Type

Open Access Dissertation


Business Administration

First Advisor

Tatiana Kostova

Second Advisor

Marc van Essen


This dissertation aims to examine the effectiveness of “good” governance principles that are commonly benchmarked in shaping the Corporate Governance (CG) policies. Specifically, I examine the firm level internal mechanisms of Monitoring CG and Incentive CG and the country level external mechanisms of legal rules and disclosure provisions. The origin of these CG policies is rooted in the Anglo-Saxon countries, where stand-alone firms are mostly owned by the dispersed shareholders, and Type I agency problem is common between company owners and top managers. For precisely examining the generalizability of “good” CG principles, I have conducted my investigation in an empirical setting, where organizational form, governance concern, and institutional context are different compared to those common in the Anglo-Saxon environment. I have focused on the closely-held firms with ultimate controlling owners (UCOs) from Europe, Asia, and Latin America and analyzed how the suggested CG policies address potential agency problems evident in these firms. There is a longstanding debate among the governance scholars in regard to the generalizability of “good” CG principles. While some scholars recommend/promote a set of standardized CG mechanisms, others question the effectiveness of such uniform means in diverse settings. I define these perspectives as the Universal View of CG and Embedded View of CG, respectively. Theoretically, I hypothesize that UCOs’ excessive control negatively affects minority shareholders’ wealth – a conflict that manifests in Type II agency problem in the closely-held firms. Based on the Universal View vs. vii Embedded View, I then develop a set of alternative hypotheses for examining whether commonly recommended “good” CG policies prevent the UCOs from expropriating the minority shareholders. Both the views present their arguments on the basis of two core issues – first, the issue of policy-goal alignment of the firm level CG mechanisms in addressing Type II agency problem and second, the role of country level CG institutions in implementing firms’ internal mechanisms. Inferences of the two views, however, differ substantially. For conducting the empirical analyses, I have collected data on 1109 publicly traded nonfinancial firms from 40 European, Asian, and Latin American economies. The cross-sectional dataset is developed for the year 2016 (the data period of company ownership structure ranges in between 2015 to 2017). Since information availability is limited on the closely-held firms, I have collected/calculated data on majority of the measures manually from the sources of Bureau van Dijk-Orbis, Capital-IQ, and company annual reports. Empirical findings of the analyses consistently indicate that Type II agency problem is present in the concentrated firms. Results are also consistent in supporting the Embedded View based policy analysis. In particular, the study postulates that the firm and country level CG mechanisms significantly improve firms’ valuation; however, the internal mechanisms cannot attenuate the negative effect of excessive control even in the contexts with advanced external institutions. That is, in the closelyheld firms, commonly recommended “good” CG policies cannot safeguard their value creation from being expropriated by the UCOs. These findings are robust across the tests conducted with alternative model and measures and a series of ad-hoc analyses. viii This dissertation provides critical insights into the literature on International CG. Ownership concentration is one of the dominant forms of organizational structure in many countries around the world. A thorough investigation of these firms’ complex agency concern is crucial in advancing the CG research agenda. This dissertation also generates important managerial and policy implications. Institutional actors should utilize the existing CG policies in accordance with their functionality or even substitute them given the problem specificities. For example, the current study indicates that the institutionally contested mechanisms of CEO-Duality and Multiple Blockholders Presence in fact are effective ‘niche’ mechanisms to check on the UCOs. Future research should focus on developing additional goal-aligned targeted means.