Impact of ownership structure on company performance: A comparison of financial and non-financial sector of Pakistan

Abstract

This research has been done to identify the impact of ownership structure on company performance of Pakistanis companies listed on stock exchange. In this study ownership structure is taken as independent variable that included four different structures which are as, family ownership, foreign ownership, institution ownership and ownership concentration and dependent variable is firm performance. Return on asset is used as proxy variable to measure the firm performance. The data has been collected 202 companies listed on Pakistan stock exchange of all sectors. And the data is divided in to two sectors, financial sector and non-financial sector. For financial sectors data of 58 companies has been taken and for non-financial sector 154 companies. To find out the relationship between ownership structure and firm performance regression model has been used and the result shows that ownership structure has positive and significant impact on company performance. If we take financial sector then the results are: if 1% increases ownership concentration then there will be .418% increase in ROE. If 1% increases in institutional ownership then ROE will decrease by .198%. As in financial sector all the variables has significant impact on return on assets. Family ownership has significant impact to ROA with level of .039. Foreign ownership has positive impact to ROA with significant level of .043. Institutional ownership has level of significant of .03 with ROA. Ownership concentration has .048 levels with ROA as significant. While considering non-financial sector we have almost same results. If we increases of 1% in ownership concentration then there will be .435% increase in ROE. If 1% increases in institutional ownership then ROE will decrease by .165%. Family ownership has significant impact to ROA with level of .049. Foreign ownership has positive impact to ROA with significant level of .053. Institutional ownership has level of significant of .02 with ROA. Ownership concentration has .041 levels with ROA as significant.