CORPORATE OWNERSHIP STRUCTURE AND FIRM PERFORMANCE: EVIDENCE FROM THE NETHERLANDS

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Abstract

This paper examines the relationship between corporate ownership structure and firm performance. For a sample of 100 Dutch firms listed on the Amsterdam stock exchange, we collect data on the shareholdings of the 5 largest shareholders and the total fraction of shares held by insiders. In addition, we collect information on the type of largest shareholder. Using a simultaneous equation model, estimated by three-stage least squares, to control for a potential endogeneity bias, we find a significant positive relationship between the holdings of the largest shareholder and firm performance. Likewise we find a significantly positive relationship for the stake held by insiders. Further testing provides some evidence that this relationship is nonlinear, i.e. at lower stakes insider ownership aligns management with shareholder, whereas at higher stakes entrenchment of management depresses performance. Splitting the sample into different types of owners provides some evidence that financials have a negative impact on performance, while other firms have a positive impact.

Keywords: Ownership Structure, Ownership Type, Firm Performance

How to cite this paper: Frijns, B., Gilbert, A., & Reumers, P. (2008). Corporate ownership structure and firm performance: Evidence from the Netherlands. Corporate Ownership & Control, 6(2-3), 382-392. https://doi.org/10.22495/cocv6i2c3p5