**3. Ownership structure and monitoring system**

Ownership structure can be explained in many formats. In one form, it can be viewed as a concentrated and well-dispersed ownership structure. Concentrated ownership structure is the form of ownership in which large shareholders exist and are able to monitor a manager's activities in order to ensure the highest shareholder's value. Dispersed ownership structure, on the other hand, is the structure of ownership in which shareholders are not large enough to form an active monitoring group themselves. Concentrated ownership is found mostly in countries where stock markets are not yet developed. Another structural view is that the activities of the company are the criteria used to justify whether the structure is concentrated or dispersed [5, 17, 58, 60]. Ownership structure is also classified by its use of a particular legal system in La Porta et al. [56]. Countries where common law is used to enforce the governance structure (found in the US and the UK) lead to a more dispersed form of structure. On the other hand, countries where civil law (found in France, Germany, or in emerging markets) is used to protect investors may lead to a more concentrated ownership structure, since the poorer protection afforded by civil law is substituted by the internal control system derived from the larger shareholders. Berle and Means [9] proposed that ownership concentration should have a positive effect on value because it reconciles the interests of managers to shareholders. However, other researchers argue in opposite directions [25, 26].

Byun et al. [16] used data from the Korean stock market to explore the relationship between ownership structure and firm value. They found that controlling shareholders through more direct ownership moderates the relationship between intensive board monitoring and firm value. In the US, Ajinkaya et al. [3] showed that firms with higher ownership concentration and higher institutional shareholdings are associated with stronger monitoring mechanisms. Previous research also argues that for any board with an entrenched CEO, monitoring capability will decrease because entrenched managers have greater bargaining rights, through which they can use their right to deviate firm resources to benefit their group [44]. Previous literatures have measured the entrenchment power of CEOs, using the situation when the CEO is the same person as the chairman of the board [13, 44]. Also, a CEO of long tenure is more likely to become entrenched [19].

One form of controlling shareholders is known as the family firm. A firm is regarded as a family firm if the shares of the company belong to either a single or a few families. In contrast, a widely held firm is the case in which shares of the company are held by many widespread investors. Many researchers have investigated the role of family firms on the firm value. Whether family firms improve or destroy the overall value of a firm is an interesting topic for researchers. Under the agency problem, large shareholders can expropriate wealth from minority shareholders to their group. Or, they can divert resources of the firm in order to facilitate a monitoring system that is tailored to their own requirements. The former hypothesis regarding firm value is destroyed, while the latter hypothesis proposes that firm value should improve [77]. Evidence shows that owner-manager conflict in nonfamily firms is more costly than a conflict between family and nonfamily shareholders in founder-CEO firms [77].
