Abstract:
From more than two years, the debate over discrepancy lies between managers and
shareholders. The impact of ownership structure and firm performance has been extensively
measured by empirically as well as theoretically in literature. The substantive review of
literature suggested that ownership structure is considered as the one of the core corporate
governance mechanisms influencing the scale and growth of a firm’s agency costs. In the
modern organizations, there is separation between ownership and control of the firm. There is
lack of widely held corporations in Pakistan. The ownership is in few hands and large
shareholders have plenty incentives and ability to control. In Pakistan, the large shareholdings
are common. There is a divergence between the interests of the owners and managers. Due to
non-availability of ownership structure data in organized form, this area has attracted little
attention of empirical researcher in Pakistan. The purpose of study is to statistically examine
the relationship between ownership structure like ownership concentration and owner identity
on firm performance of non-financial listed firms of Pakistan with firm level control variables
of size, age, liquidity, financial leverage and growth of firm. Furthermore, the study analyzes
impact of ownership structure on firm performance.
The present study used the accounting base measure like return on assets, return on
equity and return on investment as performance measure. The present study has examined the
impact of ownership structure on firm performance by using panel data of 65 non-financial
listed firms from year 2008 to year 2012. The least square dummy variable model followed
by random effect model has been used to statistically determining the impact of ownership
structure on firm performance. The results of least square dummy variable model reveal that
the ownership concentration has positive significant impact on firm performance according to
t statistic and probability approach to signify the casual relationship. The owner identity like dispersed, family, institutional and government ownership has significant casual impact on
firm performance but negative t value presenting the inverse casual relationship with firm
performance. The firm level control variables like size, liquidity, financial leverage, firm age
and growth reveal mixed results with firm accounting performance measure.
