Does ownership concentration have an impact on financial performance of firms?

Abstract

Abstract Ownership concentration is widely recognized as a crucial corporate governance technique. It enables owners with significant shareholdings to exert a notable impact on how an organization operates and manages. This study investigates the effects of ownership concentration on corporate financial performance of publicly traded non-financial corporations for an emerging market perspective. The current investigation utilized system GMM to analyze the correlation between ownership concentration and firm performance. The study used a sample size of 741 observations obtained from 84 publicly listed companies having nine years data set between January 2013 and December 2021. The overall test results document that there was a statistically significant negative relationship between ownership concentration and firm performance. In the same view, the alternative measures of concentration, such as the percentage of shares held by the top two, three, and five entities, negatively impact firm performance. The study's results have substantial implications for regulatory bodies in the market, because they assist in protecting the welfare of investors and encouraging the expansion of investors' investment portfolios.

Keywords

• Ownership concentration
• Firm performance
• Corporate governance
• System GMM
• Bangladesh