Ownership concentration, firm performance, and dividend. Ownership concentration, firm performance, and dividend policy in hong kong zhilan chen, yanleung cheungt, aris stouraitis, anita w. The initial view of the advantages of ownership concentration in joint stock companies was determined by the concern about the opportunistic managerial behavior. Ownership concentration, corporate governance and firm. The relationship between ownership concentration and firm performance has been the focal point of corporate governance literature and the subject of rather rich empirical literature. Conceptually, concentrated ownership may improve performance by increasing monitoring and alleviating the freerider problem in takeovers shleifer and vishny, 1986, but other mechanisms may work in the opposite direction. Ownership structure, inside ownership and firm performance. The concentration of ownership by top five blockholders seems to have positive effect on firms profitability and performance measures. Corporate social responsibility and firm performance. Ownership concentration and firm performance in a transition. The results indicate that firm specific factors affect in concentration of ownership. Return on assets roa, return on equity roe, markettobook value. The present paper contributes to the literature on boards in several aspects.
However, the study indicates that firm size, quick ratio and ratio of inventory investment to total assets have positive impacts on the roa. This study aims to examine effect of capital structure and ownership structure on firm performance. Berle and means 1932 were the first who seriously tried to explain the importance of ownership concentration. Ownership concentration, managerial ownership and firm. Panel a reports data on ownership concentration, panel b on board of directors composition and panel c reports operating performance and dividend payout ratios. For example, of the 27 singlecountry studies of the relation between concentrated ownership and firm performance we have retrieved. The growing importance of knowledge and human capital in the operation of firms shifts the focus of concern. Ownership concentration, institutional development and. Besides that, it provides a completed research database for us to conduct this research project. Banking sector of pakistan was chosen for this study and 14 banks. This research focuses on the relationship between ownership concentration and corporate governance and disclosure practices of firms. Ownership concentration and firm performance in transition. Consequences of outside ownership for firm performance depend on the degree to which outsiders are able to monitor and control managers.
The data was taken over a period ranging from 2002 to 2009. In case of the latter two, also the relation to firm performance according to relevant literature will be discussed. This study aims to examine the efficiency of ownership concentration as a corporate governance mechanism, and to explore relevant policy implications to improve firm performance. The main focus of this study is to examine the relationship between family ownership and firm. Therefore we attempt to indentify the relationship between ownership concentration and the firm. Results the results of this study is the ownership concentration positively and significantly influences firm performance in indonesia and it acts as a substitute for shareholder protection. The effect of ownership concentration on a firm s performance is an important issue in the literature of finance theory. The results indicate that firm specific factors affect in concentration of ownership, that is more investment opportunities. The results, however, present highly conflicting evidence. Our findings fit squarely within a long tradition of agency theorists who argue that ownership concentration helps solve the free. Based on the above discussions, the hypothesis is thus developed as follows.
Ownership concentration and firm performance acar index. Article information, pdf download for the impact of ownership concentration on firm. The aim of this research is to identity the influence of ownership concentration and ownership identity in firm performance. The findings show that ownership concentration has a statistically positive effect on firm performance.
Ownership structure is divided into two categories. Ownership concentration, ownership identity and firm. The relationship between capital structure, ownership. After adjusting for these effects, we find ownership concentration has negative relation with firm performance. The literature on ownership concentration pays more attention to the ability of the owners to monitor and. This study seeks to examine the effect of ownership concentration on firm financial performance in saudi arabia, using pooled crosssectional observations from the listed saudi firms for three years between 2006 and 2008. Impact of family ownership concentration on the firms. Ownership concentration and corporate performance on the. Introduction in the corporate finance literature, a lot of discussion is prevalent with reference to the association that exists between corporate governance, ownership concentration and firm performance.
This paper analyzes the relationship of ownership concentration and firm performance in the context of different institutional environments in 28 central and eastern european transition economies. Board independence, firm performance and ownership. The relationship between ownership structure and firm. Pdf metaanalyzing ownership concentration and firm. In addition, this study also examines the existence of reverse causality of the relation between capital structure and performance of firms in three asean countries. Ownership concentration, csr and fp the aim of this study is to investigate the causes of ownership concentration and the association among ownership concentration and firm performance in the framework of an economy undertaking significant variations in its. Holmstrom and tirole 1993 explored the tradeoff between ownership concentration and liquidity which may affect the informational role of the stock market. The paper extends previous research on the topic of intellectual capital ic and the relationship between ownership concentration oc and firm performance. In this research the researcher investigatedrelationship between ownership concentration and performance, of the banking sector in pakistan. Zeynep onder bilkent university, faculty of business administration, ankara 06533 turkey. Using a large dataset of ownership concentration from the mena region during the period between 2004 and 2008, we document that ownership concentration does not have a significant impact on firm performance. This study aims to find out the impact of ownership structure on firm s performance. Purpose of this study is to investigate the impact of ownership concentration on the performance of the firms operating in the.
This study examines the effects of ownership concentration and managerial ownership on the profitability and the value of nonfinancial firms listed on the istanbul stock exchange ise in the context of an emerging market. Ownership structure refers to the control of a company, it might be in few peoples hands, government, management, and family owned business etc. It is, rather, the way concentrated firms govern themselves that determine their performance. It has been also stressed that high ownership concentration limits diversification. Theory and research on concentrated ownership ownership concentration and firm performance in asia the empirical corporate governance literature offers no unequivocal answer to the costs and benefits of concentrated ownership. The firm performance increases up to 50% ownership. Ownership concentration, board characteristics and firm. In a recent study, jadoon and bajuri 2015, studied the effects of ownership concentrations on the performance of the listed firms in pakistan. Keywords keywordscorporate governance, ownership structure, firm.
Ownership concentration is a significant internal governance mechanism in which owners can control and influence the management of the firm to protect their interests. The family, foreign and director ownership has positive affect on firm performance. It is also define as the distribution of equity with regards to vote and capital, the relationship of equity ownership and performance. Ownership concentration is significantly related to dividend payout. Pdf impact of ownership concentration and ownership mix. This paper examines the determinants of ownership concentration and the relationship between ownership structure and firm performance in turkish firms.
The effects of ownership concentration on firm performance are theoretically complex and empirically ambiguous. The impact of ownership concentration on firm performance. Pdf ownership concentration and firm performance in. Based on panel data from 19951997, the paper focusses on the impact of ownership concentration on the performance of russian nonfinancial privatised. At the crossnational level of analysis, we find a small but significant positive association between both variables. Ownership concentration, uncertainty, and firm performance. Wong department of economics and finance, city university of. It is assumed that concentration of outside ownership increases the likelihood that such control will be exercised. Third, after controlling for state and sasac ownership, ownership concentration is a strong positive factor in firm performance.
The ambitious goal of this work is to answer three questions. Pdf ownership concentration impact on firm financial performance. The table reports descriptive statistics for a sample of 412 publicly listed hong kong firms during 19951998 1648 firm years. The family, foreign and director ownership also has positive affect on firm performance.
Abstract we present a metaanalysis of the relationship between concentrated ownership and firm financial performance in asia. Ownership concentration, intellectual capital, and firm. Pdf ownership concentration, choice of auditors, and. They found a ushaped relationship between ownership concentration and firm performance. Ownership concentration, managerial ownership and firm performance. Pdf disentangling the relationship between ownership. This study analyzed 19 commercial banks listed in the pakistan stock exchange psx, for a time period of 10. Disentangling the relationship between ownership concentration and firm performance in emerging markets. Metu studies in development, 30 december, 2003, 181203 ownership concentration and firm performance. Ownership concentration and firm performance in indian. Ownership concentration and firm financial performance. After adjusting for these effects, we find ownership concentration has negative relation with firm performance across countries. Little evidence is provided on the impact of general ownership concentration, including multiple large shareholders, on firm performance.
In this study, firm performance will be measured by the use of four different variables. The identity of ownership matters more than the concentration of ownership. Family ownership, corporate governance and performance. Having an external chair and independent board members with an educational level beyond a bachelors degree also have a positive effect on firm performance while ceo duality has a statistically negative impact instead.
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