Title: Relationship between ownership structure and creditor monitoring: evidence from a bank-based civil law emerging country

Authors: Elif Korkmaz Orak; M. Banu Durukan

Addresses: Department of Business Administration, Faculty of Business, Dokuz Eylul University, 35390 Izmir, Turkiye ' Department of Business Administration, Faculty of Business, Dokuz Eylul University, 35390 Izmir, Turkiye

Abstract: In civil law countries where investor protection is regarded as low, ownership and debt maturity structures act as substitute corporate governance mechanisms. This study examines the relationship between ownership structure and creditor monitoring in a bank-based civil law emerging country, where creditor monitoring is considered a significant corporate governance mechanism. The generalised method of moments model is employed to analyse the sample consisting of small and medium enterprises, which have unique ownership characteristics, from the Borsa Istanbul BIST SME Industrials Index for the period 2007-2019. The empirical findings provide evidence that when multiple blockholders exist, the frequent monitoring role of creditors is not sought by the shareholders as a corporate governance mechanism. However, the analysis yields an insignificant relationship between family ownership and creditor monitoring.

Keywords: corporate governance mechanism; creditor monitoring; multiple blockholders; family ownership; generalised method of moments; GMM; small and medium enterprises; bank-based country; civil law country.

DOI: 10.1504/IJBEM.2024.139427

International Journal of Business and Emerging Markets, 2024 Vol.16 No.3, pp.295 - 312

Received: 06 Sep 2022
Accepted: 01 Jun 2023
Published online: 02 Jul 2024 *

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