Impacts of Ownership Structures on Profitability and Corporate Governance in Southeast Asian Media Firms

Abstract

Media ownership scholars have extensively studied the shift from forming media conglomerates to building cross-media portfolios in developed countries, but not in emerging markets (Noam 2018). This economic analysis fills this gap by examining secondary data retrieved from the S&P Capital IQ database, including ownership information, profiles of key people, and financial metrics of 132 listed media and information technology firms from six countries: Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam. The purpose of this study is twofold: first, to examine the current status of media ownership by financial institutions in the region; and second, to assess the impact of ownership types concerning the appointment of key people and the financial performance of media firms. Agency, stewardship, and resource dependency theories guide the development of three research questions and five hypotheses examining relationships between ownership structure and two key variables – profitability and corporate governance. Results show that most Southeast Asian media firms have higher levels of insider ownership than institutional ownership, suggesting that they are less attractive to large investment funds. Despite being held at a minimal level, institutional ownership emerges as a positive predictor of profitability after controlling for country and sector, and it also positively influences the appointment of external directors who have ties to financial institutions. These findings imply that while the gradual shift toward forming cross-media portfolios has not significantly altered the media ownership landscape in Southeast Asia, media managers should prepare to face the growing influence of large funds over the top-level decision-making.