Ownership structure and firm performance in non-listed firms: Evidence from Spain

Are There Non-linear Relationships between Ownership Structure and Operational Performance? Empirical Evidence from Portuguese SMEs Using Dynamic Panel Data

“…This means that the expropriation hypothesis prevails for low levels of control rights and the supervision hypothesis for high levels. The results have revealed themselves significant, unlike what happened in Arosa et al (2010) and Westhead and Howorth (2006), and establish a contrary relationship to that obtained by Miguel et al (2004) for Spanish listed companies. Nevertheless, they are in consonance with the findings of Hu and Izumida (2008) for small family businesses in Japan.…”

“…The results are in line with those obtained by Hu and Izumida (2008) for Japanese family businesses. They confirm the relationship Arosa et al (2010) formulated and which we were unable validate it in the context of unlisted Spanish companies and suggest a U-shaped relationship between ownership concentration and performance -the inverse of that obtained by Miguel et al (2004) on listed companies context. Nevertheless, for family businesses, the relationship differs depending on age -young companies show a negative relationship between ownership concentration and operational profitability for low levels of control rights, so that the expropriation hypothesis prevails; and they show a positive relationship for high levels of ownership concentration, as a consequence of the supervision hypothesis.…”

“…In a more recent study of unlisted Spanish SMEs, Arosa et al (2010) report that no relationship was identified between ownership concentration and performance. No evidence was found to corroborate the expropriation and supervision hypothesis for the companies analyzed.…”

“…The inverse relationship between operational profitability and insider ownership suggests that -as a result of expropriation practices performed by the controlling owner and by allocating managerial/directorial positions to people appointed by him -operational profitability is not a sufficient incentive to induce greater participation by managers/directors in corporate ownership. The absence of a clear distinction between individual and corporate property, the propensity to give up, in the short run, income (safeguarding the business for future generations) and reduced professionalism of the management/administration can contribute to operational profitability not being considered an sufficiently relevant incentive for the participation of managers/directors in the ownership (Anderson & Reeb, 2003, Wang, 2006, Arosa et al, 2010. The estimation results of the model and the negative coefficients of the ERA it and ERA i(t-1) support Hypothesis 5, but with an opposite impact (negative) to what was formulated.…”

Effects of Family Ownership, Debt and Board Composition on Mexican Firms Performance

“…Other studies have shown a non-linear relationship between ownership and performance. This is demonstrated by an inverse U-shaped form as ownership concentration moves from a low to a high concentration [37,38].…”