The Impact of Pyramid Structure Towards Corporate Value Among Malaysian Firms

The aim of this paper is to examine the impact of pyramid structure towards corporate value of Malaysian firms. Pyramid structure is a business entity whose ownership structure depicts a top-down chain of control. A direct consequence of this structure is a divergence of ultimate owners' actual ownership and control, particularly for firms located at the lower level of the structure. Previous research have documented that in many East Asian firms, the ultimate owners show a mismatch in cash flow rights and control rights which leads to severe expropriation of minority shareholders' interest. We adapt the model developed by Attig and the unit of study is pyramidal firms in Malaysia. Our finding shows that the mismatch of cash flow rights and control rights of pyramid structures leads to negative corporate value as well as dilution of minority interest.