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Impact of Family Ownership concentration on the Firm’s Performance: Evidence from Pakistani Capital Market

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  • Din, Shahab-u-Din
  • Javid, Attiya Yasmin

Abstract

This study evaluates the impact family ownership on the firm‟s performance for the period of 2004 to 2009 considering a sample 29 manufacturing firms listed at KSE-100 index in the Pakistani capital market. The dependent variable is performance which is measured by ROA, ROE and 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 decision. However, the firms with more family ownership do not adopt good practices and disclose less.

Suggested Citation

  • Din, Shahab-u-Din & Javid, Attiya Yasmin, 2011. "Impact of Family Ownership concentration on the Firm’s Performance: Evidence from Pakistani Capital Market," MPRA Paper 37566, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:37566
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    References listed on IDEAS

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    1. Agrawal, Anup & Mandelker, Gershon N., 1990. "Large Shareholders and the Monitoring of Managers: The Case of Antitakeover Charter Amendments," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 25(2), pages 143-161, June.
    2. Demsetz, Harold & Villalonga, Belen, 2001. "Ownership structure and corporate performance," Journal of Corporate Finance, Elsevier, vol. 7(3), pages 209-233, September.
    3. Cubbin, John S & Leech, Dennis, 1983. "The Effect of Shareholding Dispersion on the Degree of Control in British Companies: Theory and Measurement," Economic Journal, Royal Economic Society, vol. 93(37), pages 351-369, June.
    4. 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.
    5. Jayesh Kumar, 2004. "Does Ownership Structure Influence Firm Value? Evidence from India," Finance 0406008, University Library of Munich, Germany.
    6. Michael S. Rozeff, 1982. "Growth, Beta And Agency Costs As Determinants Of Dividend Payout Ratios," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 5(3), pages 249-259, September.
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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, February.
    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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