Ownership–Control Divergence and Firm Value in Borsa Istanbul: The Moderating Role of Privileged Board Appointment Rights

Abstract

Purpose– This study examines the association between ownership–control divergence and firm value among firms listed on Borsa Istanbul and evaluates the moderating role of privileged board appointment rights. It considers that control rights may diverge from economic ownership not only through voting mechanisms but also through privileges affecting board composition.

Design/Methodology/Approach– The analysis uses a balanced panel of 178 non-financial firms listed on the BIST Main and Star Markets over the 2020–2024 period, yielding 890 firm-year observations. Firm value is measured using Tobin's Q. The C/V, V/O, and C/O divergence measures are calculated following the ultimate-ownership approach, while privileged board appointment rights are captured by the BOARD_PRIV dummy variable constructed from firms' articles of association. The main models are estimated using a random-effects specification with Driscoll–Kraay robust standard errors.

Findings– Voting-rights-based divergence (V/O) is negatively and statistically significantly associated with Tobin's Q (β = −0.4572; p < 0,01). The coefficient on total ownership–control divergence (C/O) is negative and marginally significant at the 10% level, whereas pyramidal divergence (C/V) is not statistically significant. The interactions of V/O and C/O with BOARD_PRIV are negative and statistically significant, while the C/V × BOARD_PRIV interaction is not significant.

Discussion– The findings suggest that the association between ownership–control divergence and firm value varies with the institutional mechanism reinforcing control. Governance concerns appear stronger when voting-rights divergence coexists with privileged board appointment rights, underscoring the need for transparent privileged-share disclosure.