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The Relationship Between Ownership Structure and Performance in Listed Australian Companies

Author

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  • Emma Welch

    (School of Finance and Applied Statistics, Australian National University, Canberra, ACT, 0200, AUSTRALIA)

Abstract

This paper examines the relationship between ownership structure and corporate performance in Australian listed companies. The study applies the models advanced by Demsetz and Villalonga (2001), examining the relationship between ownership and performance when ownership is modelled as a multi-dimensional endogenously determined variable. OLS results suggest that ownership is significant in explaining performance. However, when endogeneity is taken into account, ownership is not statistically dependent on the performance measure. Finally, previous research by authors including Morck, Schleifer and Vishny (1988) suggests that the relationship between ownership and performance is nonlinear. We fit a generalised nonlinear model that nests models advanced previously. Results provide limited evidence of a nonlinear relationship between managerial share ownership and firm performance.

Suggested Citation

  • Emma Welch, 2003. "The Relationship Between Ownership Structure and Performance in Listed Australian Companies," Australian Journal of Management, Australian School of Business, vol. 28(3), pages 287-305, December.
    • Handle: RePEc:sae:ausman:v:28:y:2003:i:3:p:287-305
    DOI: 10.1177/031289620302800304
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    References listed on IDEAS

    as
    1. Morck, Randall & Shleifer, Andrei & Vishny, Robert W., 1988. "Management ownership and market valuation," Scholarly Articles 29407535, Harvard University Department of Economics.
    2. Clifford G. Holderness & Randall S. Kroszner & Dennis P. Sheehan, 1999. "Were the Good Old Days That Good? Changes in Managerial Stock Ownership Since the Great Depression," Journal of Finance, American Finance Association, vol. 54(2), pages 435-469, April.
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    Citations

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    Cited by:

    1. Christian Weiss & Stefan Hilger, 2012. "Ownership concentration beyond good and evil: is there an effect on corporate performance?," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 16(4), pages 727-752, November.
    2. Ducassy, Isabelle & Guyot, Alexis, 2017. "Complex ownership structures, corporate governance and firm performance: The French context," Research in International Business and Finance, Elsevier, vol. 39(PA), pages 291-306.
    3. Hussein Abedi Shamsabadi & Byung-Seong Min & Richard Chung, 2016. "Corporate governance and dividend strategy: lessons from Australia," International Journal of Managerial Finance, Emerald Group Publishing Limited, vol. 12(5), pages 583-610, October.
    4. Lai Trung Hoang & Cuong Cao Nguyen & Baiding Hu, 2017. "Ownership Structure and Firm Performance Improvement: Does it Matter in the Vietnamese Stock Market?," Economic Papers, The Economic Society of Australia, vol. 36(4), pages 416-428, December.
    5. Zheng, Changjun & Moudud-Ul-Huq, Syed & Rahman, Mohammad Morshedur & Ashraf, Badar Nadeem, 2017. "Does the ownership structure matter for banks’ capital regulation and risk-taking behavior? Empirical evidence from a developing country," Research in International Business and Finance, Elsevier, vol. 42(C), pages 404-421.
    6. Zorica Kalezić, 2015. "Ownership Concentration and Firm Performance in Transition Economies: Evidence from Montenegro," Journal of Central Banking Theory and Practice, Central bank of Montenegro, vol. 4(3), pages 5-64.
    7. Otniel Safkaur & Nunuy Nurafiah & Sugiono Paulus & Muhammad Dahlan, 2019. "Good or Bad Financial Reporting Can Cause Changes in Company Management," International Journal of Economics and Financial Issues, Econjournals, vol. 9(4), pages 250-258.
    8. Sylvain Marsat & Yves Mard & Fabien Roux, 2014. "Ownership structure and corporate financial performance: evidence from France [Structure de l’actionnariat et performance financière de l’entreprise : le cas français]," Post-Print hal-02156607, HAL.
    9. Mohammad I Azim, 2012. "Corporate governance mechanisms and their impact on company performance: A structural equation model analysis," Australian Journal of Management, Australian School of Business, vol. 37(3), pages 481-505, December.
    10. Nada Kobeissi, 2004. "Ownership Structure and Bank Performance: Evidence from the Middle East and North Africa," Working Papers 0413, Economic Research Forum, revised 06 Mar 2004.
    11. Abdallah, Abed Al-Nasser & Ismail, Ahmad K., 2017. "Corporate governance practices, ownership structure, and corporate performance in the GCC countries," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 46(C), pages 98-115.
    12. Shahchera , Mahshid & Taheri , Mandana, 2017. "Liquidity Coverage Ratio, Ownership, Stability: Evidence from Iran," Journal of Money and Economy, Monetary and Banking Research Institute, Central Bank of the Islamic Republic of Iran, vol. 12(2), pages 175-191, April.
    13. Fatemi, Ali & Glaum, Martin & Kaiser, Stefanie, 2018. "ESG performance and firm value: The moderating role of disclosure," Global Finance Journal, Elsevier, vol. 38(C), pages 45-64.
    14. Husam Aldamen & Keith Duncan & Simone Kelly & Ray McNamara & Stephan Nagel, 2012. "Audit committee characteristics and firm performance during the global financial crisis," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 52(4), pages 971-1000, December.
    15. Spencer, Andrew J. & Buhalis, Dimitrios & Moital, Miguel, 2012. "A hierarchical model of technology adoption for small owner-managed travel firms: An organizational decision-making and leadership perspective," Tourism Management, Elsevier, vol. 33(5), pages 1195-1208.

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