The Relationship between Ownership Structure and Firm’s Performance: An Empirical Evidence from Palestine

Dwaikat, Nizar; Queiri, Abdelbaset

doi:10.5539/ijbm.v9n12p49

Cited by 7 publications

(8 citation statements)

References 57 publications

(99 reference statements)

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“…For example, Warokka and Reddy et al argue that large shareholders are better able to monitor and control managers, thereby improving firm performance. However, other studies find a negative impact for ownership concentration (Shahab-u-Din and Javid, 2011;Ongore, 2011;Fauzi and Locke, 2012;Al-Saidi and Al-Shammari, 2014;Dwaikat and Queiri, 2014;Wang and Shailer, 2015;Buallay et al, 2017). For example, Ongore suggests that excessive large shareholder control can stifle managers" creativity, while Fauzi and Locke argue that increasing block holder ownership can interfere with managers" decisions, leading to greater agency problems.…”

Section: Ownership Concentrationmentioning

confidence: 99%

Corporate Governance Mechanisms and Firm Performance in Saudi Arabia

Boshnak¹

2021

IJFR

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This paper examines the impact of corporate governance mechanisms including board size, independence, and meeting frequency, audit committee size and meeting frequency, CEO duality and ownership concentration on the operational, financial and market performance of Saudi listed firms using a contingent theoretical-based framework drawing on agency theory, stewardship theory and resource dependence theory. This study examines 210 listed Saudi Stock Exchange firms over the timeframe 2017 to 2019. The paper applies both a manual content and regression analysis approach. The results show that firm performance deteriorates with board size and independence, audit committee and meeting frequency, and the presence of CEO role duality, while performance improves with board meeting frequency and ownership concentration. Thus, Saudi firms should respond by maintaining smaller boards and more frequent meetings, keeping the Chair and CEO roles separate, and maintaining smaller audit committees with more focused meetings. Further, the appointment of independent directors only makes a meaningful contribution to firm performance where they are truly independent. Finally, more concentrated ownership tends to encourage better firm performance due to the regime of monitoring and discipline concomitant with more powerful shareholders. The implications of this paper are threefold. First, the implementation by Saudi Arabia of the latest corporate governance regulations and IFRS adoption almost certainly impact firm performance markedly. Second, corporate governance regulations should recognize the role of more frequent board meetings and more concentrated ownership in enhancing corporate performance. Third, stakeholders should apply pressure on investee firms to maintain smaller boards, engage genuinely independent directors, separate the role of Chairman and CEO, and maintain smaller audit committees with fewer and more effective meetings. The results should help corporate boards when deciding on the best corporate governance mechanisms to enhance firm performance. Further, the study should provide policy makers with a better understanding of the corporate governance structures required to promote better performance by drawing on existing theories and the empirical modelling, in an emerging economy setting such as Saudi Arabia, a new and broader data set, thereby informing better future policy and protecting shareholders’ interests.

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Section: Ownership Concentrationmentioning

confidence: 99%

Corporate Governance Mechanisms and Firm Performance in Saudi Arabia

Boshnak¹

2021

IJFR

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“…The proxy for firm value is Tobin's Q (dependent variable) which captures market expectations of future earnings as against the various accounting measures of value which reflect a tangible balance sheet effect (Das, 2017;Dwaikat and Queiri, 2014;Alfaraih et al, 2012;Lin and Chang, 2010;Ragothaman and Gollakota, 2009;Shin Ping and Tsung Hsien, 2009;Klein et al, 2005;Demsetz and Villalonga, 2001;McConnell and Servaes, 1990). The following regression function is employed to examine the above stated hypothesis: Tobin's Q 5 f (foreign ownership, age, debt to equity ratio, current ratio, sales, beta, business risk, opportunities, asset structure) Tobin's Q ratio is a commonly accepted measure of efficiency and future opportunities of the firm (Chen et al, 2008).…”

Section: Variables Studiedmentioning

confidence: 99%

Relation between foreign ownership and firm value – Fixed-effect panel threshold regression analysis

Kansil

2021

WJSTSD

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PurposeThe paper examines the differential impact of various firm characteristics on firm value across various threshold levels of foreign ownership.Design/methodology/approachUsing a panel of 408 Indian publicly listed companies for the period during 2010–2018, a fixed-effect panel threshold regression model is adapted to study the threshold effects between foreign ownership and firm value. Tobin's Q is used as a proxy for firm value.FindingsThe study identifies three threshold levels, that is, four threshold regions in which foreign ownership changes its slope considerably. Various firm characteristics impact firm value differently in these four regions.Research limitations/implicationsThe study employs observations of the past nine years on variables identified as firm characteristics impacting firm value. Some variables are dropped due to the problem of multicollinearity. The employed variables may not be exhaustive in nature.Practical implicationsThe present study implies that there exists no impact of foreign ownership on the value of the firm. Foreign investors invest for financial considerations and not with the objective of governing the firms. The governance effect of foreign investments is negligible, so their activism in the firms needs to be encouraged.Originality/valueThe study employs a novel approach to study the impact of foreign ownership on firm value applying fixed effect panel data threshold regression, considering foreign ownership as a proxy of corporate governance.

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“…The independent variable is controlling shareholders (CS), who are mostly few in number but holding the majority of shares, which gives them a dominant position over the others (Thomsen & Pedersen, 2000;Dallas, 2004). Controlling shareholders are proxied with the level of the biggest share ownership either held by an individual or institution above 5% of all shares circulating (Earle et al, 2004;Dwaikat & Queiri, 2014;Jaafar & El-Shawa, 2015;Nguyen et al, 2015).…”

Section: Independent Variablementioning

confidence: 99%

Strategy to Improve Firm Performance Through Operational Efficiency Commitment to Environmental Friendliness: Evidence From Indonesia

Utomo

Wahyudi

Muharam

et al. 2018

Organizations and Markets in Emerging Economies

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The objective of this study is to examine the effect of controlling shareholders’ monitoring on firm performance through the implementation of operational efficiency commitment to environmental friendliness. Non-financial firms listed on the Indonesia Stock Exchange and joining the Environmental Performance Assessment Program (PROPER) are determined as the sample. Results indicate that controlling shareholders have a positive impact on operational efficiency commitment to environmental friendliness and also on firm performance. In addition, other key findings indicate that the controlling shareholders can improve firm performance through the implementation of operational efficiency commitment to environmental friendliness. The results of this study support the position of the agency theory, the stakeholder theory, and the legitimacy theory. Operational efficiency commitment to environmental friendliness is then suggested to be a meaningful strategy for the firms to obtain sustainable performance.

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The Relationship between Ownership Structure and Firm’s Performance: An Empirical Evidence from Palestine

Cited by 7 publications

References 57 publications

Corporate Governance Mechanisms and Firm Performance in Saudi Arabia

Corporate Governance Mechanisms and Firm Performance in Saudi Arabia

Relation between foreign ownership and firm value – Fixed-effect panel threshold regression analysis

Strategy to Improve Firm Performance Through Operational Efficiency Commitment to Environmental Friendliness: Evidence From Indonesia

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