Expropriation of Minority Shareholders:
Evidence from East Asia
Stijn Claessens*, Simeon Djankov*Ù , Joseph P. H. Fan**, and Larry H. P. Lang***
* World Bank
** Hong Kong University of Science and Technology
*** The University of Chicago

Expropriation of Minority Shareholders: Evidence from East Asia
Stijn Claessens, Simeon Djankov, Joseph P. H. Fan, and Larry H. P. Lang
1. Introduction
As many East Asian countries have plunged into a period of economic decline, policy
advisers have pointed to the ownership concentration structure of corporations and associated
corporate governance as one of the main culprits for the crisis and the weak performance of
corporations.1 Little empirical evidence exists, however, on the nature of the ownership structures
in East Asia and its relation to corporate performance under the typical East Asian external
environment, often including weak property and shareholders’ rights, inefficient judicial systems,
and corruption. This study is a first attempt to investigate this nexus. Using a unique, new dataset
of 2,658 East Asian corporations in 1996, the year before the regional financial crisis, we
study the relation between the concentration of cash-flow rights and control rights and the type of
block ownership (family, state, widely-held financial institutions, and widely-held corporations),
on the one hand, and corporate valuation, on the other hand. We also examine the evidence on
minority shareholders’ expropriation in East Asian corporations.