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This study aims to examine the effect of the separation of control and ownership on the efficiency performance of Taiwanese electronics firms.

The paper employs data envelopment analysis to estimate efficiency performance. Following Kuan et al., the paper measures the severity of a firm's agency problems using the difference between voting rights and cash flow rights, and the difference between seat control rights and cash flow rights. Using a panel dataset for the period from 2004 to 2010, the paper runs OLS regressions to find the relationship between efficiency performance and the separation of control and ownership.

The results show that both the divergence between voting rights and cash flow rights, and the divergence between seat control rights and cash flow rights are significantly and negatively related to efficiency performance. Using Tobit regression in the second stage also provides a consistent result.

Shareholders, especially the minority group, should think twice before investing in a firm with a high deviation of control and ownership.

This is the first paper to examine the effect of the separation of control and ownership on the efficiency performance of Taiwanese electronics firms. The empirical evidence suggests existence of negative entrenchment effects in the electronics industry in Taiwan.

The choice of accounting policies by a company has implications for the market’s understanding of corporate performance. Whilst the critical areas of choice may change over time with new developments and changes in standards, the underlying issue remains relevant. This paper examines the effect of accounting techniques upon the relationship between accounting variables and UK share prices.