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Networks, Business Groups, and Corporate Governance in Emerging Financial Markets

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Abstract

Chapter 2: Business groups are an essential feature of economic and social organization across the world. As such, they provide a compelling empirical and theoretical tool for improving our understanding of the ownership and control of organizations outside of the Anglo-American tradition. However, widely incorporating business groups into analyses of regions like the Middle East has been limited by the availability of information on group membership. This paper seeks to advance the comparative study of corporate governance by demonstrating a method for inferring these groups with data on director-firm and ownership networks of publicly traded companies using data for 1336 listed firms from 12 Arab countries in the Middle East and North Africa (MENA) region. Group-level measures are then calculated based on information aggregated from firms affiliated with each potential group. These data are used to support the validity of the communities by showing that---based on scores of family influence, geographic heterogeneity, and government ownership---it is possible to identify groups corresponding to one of these specific and measurable axes of solidarity. Chapter 3: Although business groups have been intensely studied in regions like Latin America and East Asia, the literature on the Middle East and North Africa is relatively less developed; the sparsity of this research is a pressing concern because of the variety of ways in which business groups have been shown to influence the political allocation of economic resources in these other parts of the world. This study presents evidence for the value-relevance of family business groups, government ownership, and other inter-firm relationships among 1110 publicly traded firms in 12 countries in the Middle East and North Africa. Due to the difficulty in obtaining direct observations of business group membership, business groups are inferred with methods from network analysis. Next, I apply a Bayesian multilevel model to estimate the associations between group-comembership(as well as other relationships), and pairwise stock returns correlations. Using the results of the model, I perform an exploratory analysis of the correlations between exchange-level attributes and estimated cofficient values, finding that, despite the small number of exchanges, minority-investor protections appear to be associated with stronger value-relevance of business groups. Chapter 4: We use a novel data set of the outcomes of 18125 loan guarantee transactions attempted by Chinese public firms between 2008 and 2015 to study banks' reactions to related party transactions in the context of ongoing marketization reforms. We find that guaranteed loans with better governed guarantors from more marketized provinces are more likely to succeed, that the influence of political ties is contingent on the ownership structure of the guarantor, and that the embeddedness of the transaction in multiplex relationships between the guarantor and bank increases the likelihood of approval.

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2018-08-30

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Keywords

Sociology; Finance; Corporate Governance; Business Group; Network; Stock Market; Middle East; china

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Committee Chair

Nee, Victor

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Committee Member

Swedberg, Richard
Cornwell, Benjamin T.

Degree Discipline

Sociology

Degree Name

Ph. D., Sociology

Degree Level

Doctor of Philosophy

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Government Document

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Attribution 4.0 International

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dissertation or thesis

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