Browsing by Author "Yeh, Yin-Hua"

Now showing 1 - 12 of 12

Affiliation and professionalism: Alternative perspectives on decomposing the board structures of financial institutions
(2014-07-01)
Yeh, Yin-Hua
;
Shu, Pei-Gi
;
Chiang, Tsui-Lin
;
資訊管理與財務金融系註：原資管所+財金所
;
Department of Information Management and Finance
Most financial institutions around the world are under concentrated ownership. To protect rents and the private benefits of control, controlling owners prefer to include more affiliated members on their boards. This study empirically examines financial institutions in Taiwan a country that harbors both firms with controlling shareholders and pyramidal groups and its results verify the aforementioned postulation. We find that board affiliation is positively associated with control rights, cash flow rights and the control/cash flow deviation associated with controlling owners. In contrast, professionalism can disentangle controlling owners\' motives, as it is positively associated with the controlling-owner cash flow/control rights ratio and negatively correlated with the control/cash flow deviation. The results support the incentive effect associated with controlling owners. Moreover, the information argument provides auxiliary explanations for how boards are structured. Family is a catalyst for the bias toward lower levels of board professionalism. Finally, whereas board professionalism is positively correlated with stock returns during a financial crisis, board affiliation has a negative correlation. (C) 2014 Elsevier Inc. All rights reserved.
Are all regulatory compliant independent director appointments the same? An analysis of Taiwanese board appointments
(2018-06-01)
Chou, Hsin-I
;
Hamill, Philip A.
;
Yeh, Yin-Hua
;
資訊管理與財務金融系註：原資管所+財金所
;
Department of Information Management and Finance
Globally many regulators adopted a rules-based approach to independent director appointments stipulating Independence' criteria. This paper investigates whether partitioning a regulatory compliant sample of independent director appointments by prior affiliation to the board influences the relationship between ownership and control rights, and performance. We report a significant positive relationship between board independence and controlling shareholders' cash-flow rights for firms where the appointee had prior affiliation to the board, but no performance improvement. Firms where the regulatory compliant independent directors had no prior-affiliation to the board experienced significant improvement in firms' next period Return -on-Assets. Appointing affiliated directors is indicative diminished board quality, which is consistent with the empirical evidence that controlling shareholders determine board quality to accommodate tunneling to extract the private benefits of control to compensate for significant additional costs associated with concentrated ownership (Yeh and Woidtke, 2005; Luo et al., 2012; Liu et at, 2015). The positive association between performance and unaffiliated independent directors suggests a desire to introduce expertise to receive benefits via improved firm performance which is consistent with the literature, mostly from studies of emerging markets, reporting a causal link from independent directors to firm performance (Choi et al., 2007; Dahya et at 2008; Liu et al., 2015). (C) 2016 Elsevier B.V. All rights reserved.
Committee Independence and Financial Institution Performance during the 2007-08 Credit Crunch: Evidence from a Multi-country Study
(2011-09-01)
Yeh, Yin-Hua
;
Chung, Huimin
;
Liu, Chih-Liang
;
資訊管理與財務金融系註：原資管所+財金所
;
Department of Information Management and Finance
Manuscript Type: Empirical Research Question/Issue: Using the data of the 20 largest financial institutions from G8 countries, we explore whether the performance is higher for financial institutions with more independent directors on different committees during the 2007-08 financial crisis. We also examine the moderating effect of a country-level civil law dummy and firm-level excessive risk-taking behaviors on the independence-performance relationships. Research Findings/Insights: The empirical evidence shows that the performance during the crisis period is higher for financial institutions with more independent directors on auditing and risk committees. The influence of committee independence on the performance is particularly stronger for civil law countries. In addition, the independence-performance relationships are more significant in financial institutions with excessive risk-taking behaviors. Theoretical/Academic Implications: Our findings complement existing works to partially resolve the independence-performance relationship controversies by exploring the independence of different committees. The moderating effects of civil law countries and excessive risk-taking firms further address the governance environment's role in the effectiveness of director independence. Practitioner/Policy Implications: Our results provide important policy implications for financial institutions. The regulation authorities should enhance regulation compliance to improve director independence, particularly for auditing and risk committees in banking industry. Independent directors in the banking industry are supposed to put more emphasis on excessive risk-taking behaviors, as the financial institutions profit from risk-bearing earnings.
Corporate governance and family succession: New evidence from Taiwan
(2019-10-01)
Yeh, Yin-Hua
;
資訊管理與財務金融系註：原資管所+財金所
;
Department of Information Management and Finance
Succession in family firms has historically been associated with risk. However, improvements in laws and regulations along with the consequent improvements in corporate governance can greatly mitigate the potentially negative impacts on succession performance. This study utilizes a comprehensive data set of 280 cases of succession from Taiwan between the years 1997 and 2012, a period which coincides with the introduction of a big bang of new domestic laws and regulations. The results indicate that improvements in the regulatory environment along with the consequent strengthening of corporate governance reduces the probability of family succession while at the same time increases firm performance during the succession period. In many cases the impact of improved corporate governance outweighs the influence of improved laws and regulations. The implications of these findings underscore the importance of the government's role in establishing robust internal and external mechanisms to enhance corporate governance, so that in significant events such as firm succession, the attendant risks are reduced.
Internal capital markets, ownership structure, and investment efficiency: Evidence from Taiwanese business groups
(2020-04-01)
Lin, James Juichia
;
Yeh, Yin-Hua
;
資訊管理與財務金融系註：原資管所+財金所
;
Department of Information Management and Finance
This study uses a unique data set to thoroughly investigate how the financing provided by a business groups' internal capital markets and control-enhancing ownership structure relate to investment efficiency. We find that group-affiliated firms that make more intensive use of related-party transactions that facilitate an internal capital market exhibit a reduced probability of under-investment. We also find that pyramidal (cross) ownership improves (weakens) investment efficiency suggesting different types of control-enhancing structure have strongly contrasting effects on investment efficiency. These findings reveal both the financing advantages and disadvantages of business groups.
Investment-cash flow sensitivity to internal capital markets and shareholding structure: evidence from Taiwanese business groups
(1970-01-01)
Yeh, Yin-Hua
;
Lin, James Juichia
;
資訊管理與財務金融系註：原資管所+財金所
;
Department of Information Management and Finance
This study examines to what extent investment-cash flow sensitivity in business groups' is affected by internal capital markets (characterized by related-party transactions) and shareholding structure. We approach the subject by exploring potential financing advantages as contrasted with the agency problem. Using a hand-collected data set to quantify related-party transactions and classify control-enhancing structures, we find that group-affiliated firms with a higher scale of related-party transactions have lower levels of investment-cash flow sensitivity. Further, our results show that related-party transactions are both associated with investment opportunity and the type of shareholding structure, which support both financing advantage and agency hypotheses. The evidence shows that business groups transfer intra-group capital from low-growth to high-growth member firms, but it also demonstrates that the outcomes of these transfers are affected by the type of control-enhancing structure. Additional analysis shows that the agency problem tends to dominate the financing advantage effect in cross-shareholding structures, which leads to overinvestment.
Managerial Overconfidence and Share Repurchases
(2013-03-01)
Shu, Pei-Gi
;
Yeh, Yin-Hua
;
Chiang, Tsui-Lin
;
Hung, Jui-Yi
;
資訊管理與財務金融系註：原資管所+財金所
Following prior studies, we use keywords in press portrayals to gauge managerial overconfidence. We hypothesize that managerial overconfidence is related to a manager's perception that the firm is undervalued. Results from 2744 share repurchase programs launched by 783 listed firms in Taiwan confirm this hypothesis. We find that managerial overconfidence is positively correlated with the intensity of share repurchasing, which is measured by scale, execution, frequency, and the difference between the announced price and post-execution price. Moreover, the programs launched by overconfident managers were not undervalued and therefore were associated with reduced post-announcement returns.
Ownership concentration and bank risk: international study on acquisitions
(2018-01-01)
Liu, Chih-Liang
;
Yeh, Yin-Hua
;
資訊管理與財務金融系註：原資管所+財金所
;
Department of Information Management and Finance
This paper explores the effects of different types of bank ownership concentration on changes in bank risk during acquisition years. Using multi-country data from 2000 to 2006, during which market failures caused by various crises and government interventions are less influential to acquisition decisions, we collect 505 banking acquisition deals from 23 countries to examine which type of ownership concentration (such as financial intermediary, capital investor, non-financial, and state ownership) brings larger changes to an acquirer's risk from pre-acquisition year to post-acquisition year (including non-performing loans, capital adequacy ratio, loan loss reserve, and credit rating). The empirical analyses show that acquirer banks with a concentration of shares owned by financial intermediaries and non-financial firms experience larger risk changes during acquisition years. In contrast, the risk changes of acquirer banks with a concentration of capital investors and state ownership are lower. Robustness checks from the random effect estimation, instrumental variables model, reverse causality, and different subsamples of (non-)U.S. or different levels of regulation enforcement confirm these results.
Political connections, corporate governance and preferential bank loans
(2013-01-01)
Yeh, Yin-Hua
;
Shu, Pei-Gi
;
Chiu, Shean-Bii
;
資訊管理與財務金融系註：原資管所+財金所
;
Department of Information Management and Finance
The presidential election in Taiwan during 2000 resulted in the first political changeover in more than fifty years from the ruling party, the Kuomintang (KMT), to the Democratic Progressive Party (DPP). In 2004, the KMT was expected to win, but eventually lost to the DPP. We use these two exogenous events to investigate three issues: how political connections are related to preferential bank loans, how the entrenched position of the ruling party affects the types of preferential bank loans and how corporate governance is related to preferential bank loans. We find that KMT-connected (DPP-connected) firms were associated with higher (lower) abnormal returns before the 2004 election. This pattern of returns was reversed after the unexpected result. Moreover, we find that political connections were positively correlated with preferential bank loans. However, the types of preferential bank loans differed between KMT-connected and DPP-connected firms due to differences in the entrenched power of the ruling party. Finally, we find that corporate governance is negatively correlated with preferential bank loans, probably because firms with good corporate governance have more alternative financial sources. (C) 2012 Elsevier B.V. All rights reserved.
The effect of estate tax change on the controlling shareholding structure and corporate value of family firms
(2019-01-01)
Yeh, Yin-Hua
;
Liao, Chen-Chieh
;
資訊管理與財務金融系註：原資管所+財金所
;
Department of Information Management and Finance
Manuscript type: Empirical Research question/issue: Estate tax planning has always been a primary concern of large shareholders when arranging the controlling shareholding structure of family firms. This paper provides evidence on the effect of a drastic change in estate tax on the shareholding structure of family-controlled firms in Taiwan, as well as the impact of these changes on the firms' corporate value. We examine a 2008 policy change in Taiwan that substantially reduced the estate tax from a maximum rate of 50% to a single tax rate of 10%. Research findings/insights: We analyze a 12-year period from 2002 to 2014 looking at data of family-controlled, listed companies with IPOs prior to 2001. The empirical results reveal a reduced motivation among controlling families to circumvent estate tax through altering the shareholding structure after the law change. The results also reveal a positive impact on firm value as a result of the reduction in the tax burden of controlling families. These findings contribute to the family firm and tax literature and provide insight into the effects of tax policy change on the controlling structure of family firms and the consequent benefits on firm value. Theoretical/academic implications: To the best of our knowledge, this paper is the first empirical study that establishes a significant relationship between estate tax and tax-avoidance behaviors reflected in the change of the shareholding structure of a family firm. Many research topics linking estate tax with other corporate governance issues in family firms are here unexplored. Practitioner/policy implications: For the policymaker, this study highlights the increase of firm value due to a reduction in the estate tax rate. Moreover, a tax-friendly environment can help the controlling family commit themselves to the proper management of the firm instead of expending effort on tax minimization to safeguard their wealth.
The family business map: Framework, selective survey, and evidence from Chinese family firm succession
(2015-08-01)
Bennedsen, Morten
;
Fan, Joseph P. H.
;
Jian, Ming
;
Yeh, Yin-Hua
;
資訊管理與財務金融系註：原資管所+財金所
This paper analyzes the causes and consequences of founding family engagement in firm ownership and management. We hypothesize that families manage their firms because they are able to make contributions that non-family managers cannot provide. However, roadblocks arising from within the family, from markets, and from surrounding institutions challenge family ownership. We propose a new framework for organizing these assets and roadblocks, called the family business map; this framework is useful for categorizing the papers presented in this Special Issue. We support the predictions of the framework with evidence from Chinese family firm succession, and conclude that family firm organization is an adaptation to environmental opportunities and constraints. We end the paper with suggestions for future research. (C) 2015 Published by Elsevier B.V.
The role of the audit committee and the informativeness of accounting earnings in East Asia
(2013-06-01)
Woidtke, Tracie
;
Yeh, Yin-Hua
;
資訊管理與財務金融系註：原資管所+財金所
;
Department of Information Management and Finance
Policy makers around the world have focused on corporate governance reform since the Asian financial crisis and scandals in the United States such as the Enron debacle. In particular, policy makers have focused on the establishment of independent audit committees to improve investor confidence in reported accounting information. In a sample of East Asian companies, we find that the negative relation between concentrated control and earnings informativeness that was documented prior to the Asian financial crisis persists in a more recent period, even though many corporate governance reforms have been adopted since the crisis to improve financial disclosure. We do, however, find that earnings informativeness is strengthened by both fully independent audit committees and audit committees with a majority of independent directors with accounting financial or legal expertise. In addition, the increased reliability that is associated with these audit committee characteristics appears to more than offset the detrimental effect that is associated with concentrated control. The results in this paper suggest that an emphasis on audit committee independence alone may not be enough to enhance earnings informativeness. Instead, focusing on both complete independence and the financial or legal expertise of independent directors who are appointed to the audit committee may be a more fruitful way to increase investor confidence in accounting information, especially when ownership is concentrated. (C) 2012 Elsevier B.V. All rights reserved.