I need some help in criticizing this article on Equity Ownership and Firm Value in Emerging Markets written by Karl V. Lins. The critic is to be done like a College Professor would do it in relation to the Sekaran ( 2003) Step 7 Collected data Analysis and Interpretation Chapter 12, and Step 8 Chapter 12. Deduction is hypothesis substantiated? See attach file for both examples.
1. The paper asserts that the costs of private benefits of control are capitalized into share prices. As a support the author cites his results that managerial control between 5% and 20% is negatively related to Tobin's Q. However, share prices are a function of a number of subjective and varied factors and share prices cannot be attributed to capitalization of the costs of private benefits of control.
2. The paper analyzes the effects of higher management control rights on lower firm values and runs a regression on data. However, management control rights are not always perceptible or subject to numbers. Companies with very small ownership holdings have low management control rights and visa versa. This version of the managerial entrenchment is not adequately supported by evidence.
3. The paper asserts on the basis of its data that there is an overall loss in the firm value when the management group's control exceeds its proportional ownership. The paper says that there are some expected benefits of control that affect firm value in emerging markets. The paper seems to indicate that there is some cause and effect relationship between the management group's control and the firm value in ...
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