Determinants of Firm Affiliation to Pyramid Structure: A Survey from Malaysian Public Listed Firms

This research seeks to examine the determinants of affiliation to pyramid structure of Malaysian public listed firms. A motivation of the research comes from the phenomenon of pyramid structure causing divergence of ultimate owners' actual ownership and control leading to severe expropriation of minority shareholders' interest. The method adapts Attig Model and employs Panel Generalised Least Square on 136 Malaysian pyramid firms over a twenty one-year period from 1990 to 2010. There are ten independent variables used including risk, cash, size, capital expenditure, tobinQ, debt ratio, dividend payout ratio, duality, financial institution as second largest shareholder and stock liquidity. The key findings show that pyramid structure in Malaysia has large differences between cash flow rights and control rights. The result of regression analysis reveals that all variables are statistically significant except for cash and dividend payout ratio. In order to get more accurate results, future research should increase the sample size and cover a larger geographical area. It is recommended to determine other extraneous factors which might lead to firm affiliation to pyramid structure particularly among Malaysian pyramid firms.