Impact of Family Ownership on Organizational Performance With the Moderating Role of Active Versus Passive Control: A Case of Pakistan’s Private Sector

Abstract

Most of the businesses operations in the world are governed typically by a family or a government and in some other situations, sole person regulates the operations of several firms beneath a single umbrella. The main purpose of the study is to examine the association between ownership structure of the business and its performance. The sample of the study is based on 100 companies listed in KSA (Karachi stock Exchange). The data was gathered from secondary sources of financial reports of firm and the time period is based on 9 years from 2005 to 2013. Financial performance of the firm is calculated through the accounting based methods like as several ratios of Return on asset, Net Profit Margin, Return on Equity, Financial Leverage, Tobin’s Q and Earning per share. Several statistical tools (e,g Correlation, reliability, regression analysis and t-test) are used to measure the results on SPSS. Active and passive controls are used as moderator in the study. According to the result it is concluded that all hypothesis are accepted. Similarly, a significant difference is existed in firm performance under active and passive control. This study is very helpful for the investors and the business owners of family owned firms.