Abstract:
This study investigates the concentrated ownership impact on performance of firm with the sample of 60 listed non-financial companies of various sector of economy from Pakistan. The data is gathered from 2008 to 2013. This study also determines the ownership identity effect on firm performance. To conduct this research and to analyze the variables impact I used the common effect model. To measure the firm performance I take the indicators of Tobin’s Q, return on asset (ROA), and return on capital employed (ROCE). Firm performance is taken as dependent variables. While independent variables are includes concentrated ownership and different ownership type such as associated parties ownership, institutional ownership, foreign ownership, managerial ownership and individual ownership. Control variables included in this study are corporate governance index, firm size log and investment opportunity which is measured by market to book ratio. This study concluded that concentrated ownership is positively influenced by on ROCE, ROA and Tobin’s Q while corporate governance index is insignificant for Tobin’s Q so this is evidence of agency perspective confirmation that shareholder control and power to support shareholder and manager interest increased by higher concentration which leads to higher firm performance.
The statistics have showed that associated ownership is significant and direct effect on performance of the firm. It is also concluded from the study that foreign ownership has insignificant and positive influenced by performance of the firm. The result also showed that individual ownership has significant and negative relation with firm performance. This study suggests that larger sizes of firm with more concentrated ownership structures are due to poor legal protection of investors in country like Pakistan. The ownership concentration is used as a way to implement good corporate governance practices in Pakistan economy.
