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

Abstract

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.

Banks’ credit risk, systematic determinants and specific factors: recent evidence from emerging markets

“…This negative relationship can be explained by the fact that banks with high CARs, are more likely to avoid imprudent lending to sustain the capital set aside, usually used as a buffer against excessive risks (Salas and Saurina, 2002;Us, 2017). This research confirms the moral hazard STATA 14, while the random effect model is estimated using the STATA 14 command; xtreg re (Baker et al, 2017;Jabbouri and El Attar, 2018a;Jabbouri and Jabbouri, 2020;Jabbouri and Farooq, 2021). 9 whitetst computes the White (1980) general test for heteroscedasticity in the error distribution by regressing the squared residuals on all distinct regressors, cross-products, and squares of regressors.…”

Identity in Family Firms: Toward an Integrative Understanding

“…Thus, many scholars dichotomize firm identity based on a family ownership percentage cut-off (Biscotti et al, 2018; Cannella et al, 2015; Martinez-Garcia et al, 2022; Wei et al, 2020), or on criteria that account for both family ownership and management (Bingham et al, 2011; Dibrell et al, 2019; Jain & Prakash, 2017; Magistretti et al, 2020; Thiele & Wendt, 2017). Others instead consider the percentage of family ownership to study the firm owners’ identity (Cho & Lee, 2020; García-García et al, 2020; Jabbouri & Jabbouri, 2021), or the extent of the family and business identity fit/overlap (Block & Wagner, 2014; Dou et al, 2019), assuming that larger percentages of family ownership equal larger family and business identity fit/overlap.…”

Does ownership concentration affect banks’ credit risk? Evidence from MENA emerging markets

“…(2012) document that Latin American and Asian firms suffered the most expropriation, where assets and profits were tunneled out of companies by controlling shareholders following the 1997 Asian and 2001 Argentinean financial crises. This deceitful behavior could be motivated by the desire to boost their returns drastically erased by financial slumps (Bae & Jeong, 2007; Baek et al., 2004; Jabbouri, & Jabbouri, 2021; Jabbouri & Naili, 2019b). Following the prior empirical evidence and conventional wisdom, we hypothesize that H2a: Following periods of economic downturns, ownership concentration increases banks’ credit risk. …”