Effect of Ownership Structure on Firm Performance Evidence From Non-Financial Listed Firms

Abstract

In modern organizations, there is a separation between ownership and control of the firm. On the lenses of agency theory, this study statistically examines the relationship between ownership structure (i.e., ownership concentration and owner identity) and firm performance of non-financial listed firms of Pakistan by taking firm-level control variables of size, age, liquidity, financial leverage, and growth of the firm. Secondary data is collected from annual reports of 65 non-financial listed firms for the year 2008 to 2012. The least-square dummy variable model followed by the random effect model has been employed to statistically determining the impact of ownership structure on firm performance. The results of the least square dummy variable model reveal that the ownership concentration has a significant positive impact on firm performance. The owner identity (such as dispersed, family, institutional, and government ownership) has a significant causal effect on firm performance as indicated from t and p values.