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The Impact of Equity Ownership Groups on Investment: Evidence from Ukraine

Mykhayliv, D. & Zauner, K. (2017). The Impact of Equity Ownership Groups on Investment: Evidence from Ukraine. Economic Modelling, 64, pp. 20-25. doi: 10.1016/j.econmod.2017.03.005


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 under-investment, and to the free cash flow or cash constraint hypothesis.

Publication Type: Article
Publisher Keywords: Investment, Ownership, Corporate Governance, Investment, Financial Constraints, Soft Budget Constraints
Subjects: H Social Sciences > HB Economic Theory
Departments: School of Policy & Global Affairs > Economics
Text - Accepted Version
Available under License Creative Commons Attribution Non-commercial No Derivatives.

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