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The Impact of Equity Ownership Groups on Investment: Evidence from Ukraine
Mykhayliv, Dariya Zauner, K.G.
Mykhayliv, Dariya
Zauner, K.G.
Publication Date
2017
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© 2017 Elsevier. Reproduced in accordance with the publisher's self-archiving policy. This manuscript version is made available under the CC-BY-NC-ND 4.0 license.
Peer-Reviewed
Yes
Open Access status
openAccess
Accepted for publication
07/03/2017
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Department
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Abstract
We empirically investigate the impact of different ownership groups on companies’
investment in Ukraine with a novel dynamic investment model where investment is based on
present and historical levels of profitability (market-to-book value of equity) and lagged
investment. Groups include state, insider, non-domestic, financial and financial and industrial
group (FIG) ownership. Contrary to the literature, we find that the past level of profitability
significantly affects investment; the presence of and increases in state ownership have a
negative impact on firms’ investment, as is the case for non-domestic and financial
companies’ ownership. Insider and FIG ownership have no impact on investment. We explain
the results by the extent of liquidity concerns (hard and soft budget constraints) and the extent
of asset stripping for the corresponding ownership group and relate them to over- and underinvestment, and to the free cash flow or cash constraint hypothesis.
Version
Accepted manuscript
Citation
Mykhayliv D and Zauner KG (2017) The Impact of Equity Ownership Groups on Investment: Evidence from Ukraine. Economic Modelling. 64: 20-24.
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Article