Business Management Dynamics

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ISSN: 2047-7031

bmd Business and Management Dynamics bmd
ISSN: 2047-7031  
Volume     Issue     
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Article Abstract
The Nature and Determinants of Pyramid Structure: A Theoretical and Empirical Exposition
Keywords:  Pyramid Structure, Cash Flow Rights, Control Rights, Attig Model, Malaysia
Irfah Najihah Basir Malan , Norhana Salamudin and Noryati Ahmad
There is high incidence of pyramid structure issue which leads to severe agency problem in Malaysia. Prior research have documented that in many East Asian firms, there is divergence in actual ownership and control leading to expropriation of minority shareholders' interest. We examine this issue to answer the normative questions in terms of the nature and determinants of firm affiliation to pyramid structure of public listed firms in Malaysia. Using Attig Model on Malaysian pyramid firms during 1990 to 2010, we show that the determinants of firm affiliation to pyramid structure are more observable for firms with low CFR ratio resulting from large differences between cash flow rights and control rights. Mean comparative statistics depicts that low CFR ratio firms are associated with higher risk, larger cash, bigger size, higher firm performance, higher debt ratio and lower dividend payout ratio. While the regression analysis result reveals that all variables are statistically significant at 1% and 10% level except for cash and dividend payout ratio.
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