Ownership identity and firm performance: Pre‐ and post‐crisis evidence from an African emerging market

This paper attempts to document the value relevance of the largest shareholders' identity across the recent financial crisis of 2008 in Morocco, one of the most important emerging markets in the Middle East and North Africa (MENA). To examine the impact of ownership identity on firm performance, this study employs panel data analysis. It uses data of non‐financial firms listed on Casablanca Stock Exchange (CSE) between 2004 and 2017. To uncover the hidden facets of the aforementioned relationship and examine how it is shaped by the financial crisis, a pre‐ and post‐crisis analysis is performed. The findings reveal that institutional ownership affects positively firm performance in both, pre‐ and post‐crisis periods. Compared to the pre‐crisis period, investors further recognize and reward the value‐enhancing role of institutional ownership during post‐crisis period. Our analysis suggests that the incentives to expropriate minority shareholders within family‐controlled firms increase during financial market turmoil. Family‐owners switched from protecting to misusing the firm's resources for the sake of preserving their private interests. This research raises awareness for managers of family‐controlled firms to review their corporate governance practices and align them with shareholders' value maximization. Our study suggests that Moroccan authorities must strengthen country‐level governance mechanisms. The failure to accomplish this objective could have severe implications ranging from the inefficient allocation of resources in the economy to the destruction of shareholders' value.