Family Ownership Structure

Structures

The following are the forms of ownership structures considered by the study. They are:

2.1.3.1 Managerial Ownership Structure

Holderness 's (2003) defined managerial ownership as the percentage of equity owned by insiders and block holders, where insiders are defined as the officers and directors of a firm. Cho (2008) defines insider ownership as "the fraction of shares, not including options, held by officers and directors of the board.

2.1.3.2 Institutional ownership structure

This is defined as the amount of a company’s available stock owned by mutual or pension funds, insurance companies, investment firms, private foundations, endowments or other large entities that manage funds on the behalf of others. Stocks with a large amount

Agency cost literature argues that large shareholders should have enhanced incentives and capabilities to monitor managerial behaviour closely. At most times, the owners themselves act as managers. Thus, there is less need for debt to function as disciplining tool for managers. Therefore, shareholdings of family ownership are expected to be negatively correlated with leverage (Zou & Xiao, 2006). Family legacy and concentration of family wealth in the business also causes family-owned to have less appetite for debt financing (King & Santor, 2008).

Features of a family ownership structure

The following are the characteristics of family ownership structure.

a. A group of people belonging to one or more families run one business enterprise.

b. Position in family business is influenced by the relationship the family members enjoy among themselves.

c. Family exercises control over business in the form of ownership or in the form of management of the firm where family members are employed on key positions.

d. Family exercises the influence on the firm’s policy direction in the mutual interest of family and business.

e. The succession of family business goes to the next

A state-owned enterprise might variously operate as a not-for-profit corporation, as it may not be required to generate a profit; as a commercial enterprise in competitive sectors; or as a natural monopoly. Governments may also use the profitable entities they own to support the general budget. The creation of a state-owned enterprise from other forms of public property is called corporatization. In Soviet-type economies, state property was the dominant form of industry as property. The state held a monopoly on land and natural resources, and enterprises operated under the legal framework of a nominally planned economy, operating according to different criteria than state and private enterprises in capitalistic market and mixed economies (Hastings,