Jeffrey Owen Herzog,Kamal A. Munir and Paul Kattuman, “The King and I: monarchies and the performance of business groups,” … first published online July 31, 2012.
Unfortunately, to read it, one has to be a registered user, pay $32 or be at a university or company that has a subscription. No doubt it will soon be posted somewhere else, but we can’t find it at present.
For a taste of the article, which is a mix of quantitative and qualitative methods, the abstract states:
Large, highly diversified business groups are a prominent feature of the industrial landscape of most emerging economies. Their competitiveness has been the topic of much debate in the international business literature. This paper intervenes in this debate by utilising data from Thailand and demonstrating that whereas business groups create value by filling institutional voids, the political context of a country and the investment of powerful actors in particular groups can cause great variance across business groups’ performance.
From that, you would be hard-pressed to know that the paper is about the monarchy’s Crown Property Bureau.
While PPT hasn’t read the whole thing in detail yet, we do note that the authors tend to treat the non-economic literature on the monarchy uncritically, and seem unaware of debates regarding the veracity of claims made in works like Stevenson’s disgraced biography, and they seem unaware of other relevant work such as the update on the CPB in the recent King Bhumibol Adulyadej. A Life’s Work. In addition, it seems that the data used is drawn from 2001 to 2005, with considerable emphasis on the Booker Group’s report on ownership groups from 2001. Much has changed in the period since. Caveats aside, this from the conclusion seems of interest:
This study utilised robust panel estimation procedures to investigate different hypotheses regarding the performance of affiliated firms in Thailand. We carefully assessed group affiliation using previous authors’ work and established experts on Thai business groups. We found that those businesses affiliated with a particular group tended to outperform non-affiliated businesses, thus lending more credence to scholars espousing an ‘institutional voids’ view. We rejected the possibility that agency problems in business groups compromise their performance. Most significantly, upon dividing groups into those in which the Crown has invested and those where it has not, we found that firms whose groups are affiliated with the Crown outperform all other firms in the stock market, thus reflecting the market’s positive response to the Crown’s investment in a particular firm. Our analysis suggests that while the short-term profitability of Crown-related business groups may lag behind that of their competitors, investors place more value in Crown-related firms because of the Crown’s symbolic capital. It does not appear that the Crown invests in the most successful firms in an industry. It does, however, seem to be the case that the Crown’s halo effect leads to higher than expected valuation in the stock market. If the Crown’s association bestows any material benefits, they do not appear in the profitability ratio. The market, then, appears to respond not to greater efficiencies but to the power of association.
Each of the highlighted points is worthy of attention, not least by investors as the succession draws closer.