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Unformatted text preview: fine ”influential families” that are the owners of the 60 largest business groups. The choice of 60 is arbitrary, however. The size of these business groups, measured by sales, ranges from 122, 039 million Baht to 6,241 million Baht (Suehiro (2000)). These groups are owned by the following prominent families: Asakun, Assawaphokin, Bencharongkun, Bodharmik, Boonnamsap, Bulakul, Buraphachaisiri, Charnsiri, Charnwirakun, Chiarawanon, Chirathiwat, Choke Wattana, Chonwicharn, Chungrungruenkit, Chaiyawan, Chuturakun, the Crown Property Bureau, Darakanon, Damnoencharnwanit, Horruagruang, Kannasut, Khachanapat, Khanathanawanit, Konutakiat, Krisdathanont, Laohathai, Lamsam, Liaophairat, Leeissaranukun, Lee-nutapong, Lee-sawattrakun, Osathanukhro, Phenchart, Pornprapha, Photirattanangkun, Phiromphakdi, Rattanarak, Sarasin, Sirimongkonkasem, Sophonpanit, Siriwat11 tanapakdi, Srifuengfung, Sriwikorn, Suoson, Taechaphibun, Taephaisitphong, Tangmatitham, Thienprasidda, Uachukiat, Umput Wang Lee, Wiriyaprapaikit, Wattanawekin, Wiriyaphan, and Wongkusolkit. We define firms as connected to these influential families if any of these families own at least a 10 percent stake in the firms. According to the Thai corporate law, a shareholder is a major shareholder if he owns at least 10 percent of the shares (Stock Exchange of Thailand (1997)). With this level of shareholdings, a shareholder can control the firm in the following manner. He has the right to submit a motion to the court for the company’s liquidation if i.) management fails to act in accordance with the provisions relating to payments of stock issuance and transferring of ownership, ii.) the number of shareholders is less than 15, and iii.) the company is in financial distress and has no possibility of recovering (see Wiwattanakantang (2001b)). As shown by the family names, business groups not only proxy strong political connections but also the close ties that the big business groups have with banks and finance companies. Our results show that 96 firms or 35.56 percent of firms in our sample are affiliated to these connected families. Among these families, the Crown Property Bureau, Lamsam, Rattanarak, Sophonpanit, Taechaphibun, and Wang Lee own and control banks, finance and insurance companies. In fact, they are also the founders of the banks. Except for the Crown Property Bureau, the controlling families of these banks have been involved in management as top executives. There are 31 firms which accounts for 11.48 percent of the sample where the controlling shareholders are the major shareholders of banks and finance companies (Table 3). With respect to the connections with banks via the board of directors, we define the board connections in a similar manner to Kroszner and Strahan (2001a). Specifically, a firm has connections with the bank board when at least one member of the firm’s board serves on the boards of banks and finance companies. Out of 270 firms in the sample, 186 firm...
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This document was uploaded on 02/28/2014 for the course ECONOMICS fn314 at Harvard.

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