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Impact of Family Ownership Concentration on the Firm’s Performance (Evidence from Pakistani Capital Market)

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  • Shahab-u- Din
  • Attiya Y Javid

Abstract

This study evaluates the impact of family ownership on the firm’s performance during 2004 and 2009 considering a sample of 29 manufacturing firms listed at KSE-100 index in the Pakistani capital market. The dependent variable is performance which is measured by Return on Asset (ROA), Return on Equity (ROE) and Tobin’s Q of the sample firm and the independent variable is family ownership. Linear regression model is used for estimation along correlation analysis. The study reported positive relation between the ownership variable and performance variables. The results indicate negative association between the ownership variable and firm’s dividend payment, concluding that family control firms prefer to retain earning and investment opportunities rather to distribute the earnings. The empirical analysis reveal that the overall better governance practices have positive affect on financial decisions. However, the firms with more family ownership do not adopt good practices and disclose less.

Suggested Citation

  • Shahab-u- Din & Attiya Y Javid, 2012. "Impact of Family Ownership Concentration on the Firm’s Performance (Evidence from Pakistani Capital Market)," Journal of Asian Business Strategy, Asian Economic and Social Society, vol. 2(3), pages 63-70.
    • Handle: RePEc:asi:joabsj:v:2:y:2012:i:3:p:63-70:id:4022
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    References listed on IDEAS

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    1. Qi, Daqing & Wu, Woody & Zhang, Hua, 2000. "Shareholding structure and corporate performance of partially privatized firms: Evidence from listed Chinese companies," Pacific-Basin Finance Journal, Elsevier, vol. 8(5), pages 587-610, October.
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    4. Jayesh Kumar, 2004. "Does Ownership Structure Influence Firm Value? Evidence from India," Finance 0406008, University Library of Munich, Germany.
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    Cited by:

    1. Naeem Tabassum & Satwinder Singh, 2020. "Corporate Governance and Organisational Performance," Springer Books, Springer, number 978-3-030-48527-6, April.
    2. Wang, Kun Tracy & Shailer, Greg, 2017. "Family ownership and financial performance relations in emerging markets," International Review of Economics & Finance, Elsevier, vol. 51(C), pages 82-98.

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    More about this item

    Keywords

    Family ownership; Return on asset; Return on equity; Tobin’s Q; Agency theory; Entrenchment theory;
    All these keywords.

    JEL classification:

    • A1 - General Economics and Teaching - - General Economics

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