RELATIONSHIP BETWEEN OWNERSHIP STRUCTURE AND FINANCIAL PERFORMANCE

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Abstract

A firm’s ownership structure is important in gauging its market value, These structures have major impacts on the financial performance of firms in either positive or negative way as demonstrated in previous studies. This study aims to identify the relationship between ownership structure (i.e. family, foreign, managerial and institutional ownership) and Jordanian companies’ financial performance. In doing so, we used a sample consisted of 114 companies listed in ASE from 2009 to 2015 (seven years). Using multiple regression using to test whether there are relationships between ownership structure and firms’ financial performance. The results showed a positive relationship among managerial, institutional and family ownership and financial performance, while there is no significant relationship between foreign ownership and firm’s financial performance. Additionally, the result of the current study has documented that the firm size enhances its financial performance, while the leverage has negative relationship to the company’s financial performance. The implication of these findings is important in many ways, i.e. the existence of ownership forms is vital for a company performance, hence, the prospective investors should consider these forms when investing in companies the results show that R2 value is average which opens up possible research areas in the future to explore new explanatory variables to expand the literature on these issues especially in developing countries.

Keywords: Institutional Ownership, Foreign Ownership, Family Ownership, Managerial Ownership, Financial Performance

Received: 25.01.2017

Accepted: 02.04.2017

How to cite this paper: Abu Haija, A. A., & Alrabba, H. M. (2017). Relationship between ownership structure and financial performance. Corporate Ownership & Control, 14(3-2), 393-398. https://doi.org/10.22495/cocv14i3c2art13