An empirical investigation of the influence of ownership concentration and identity on firm performance of Egyptian listed companies

Abdelmohsen M. Desoky and Gehan A. Mousa

Journal of Accounting in Emerging Economies, 2013, vol. 3, issue 2, 164-188

Abstract: Purpose - The paper aims to empirically investigate the influence of ownership concentration and identity on firm performance using a sample of 99 of the most active publicly listed companies on the Egyptian Exchange (EGX). Design/methodology/approach - Firm performance of the sampled companies was measured by two different accounting measures, namely return on assets “ROA”, return on equity “ROE”, then the ordinary least square (OLS) regression analysis and the two‐stage least square (2SLS) regression analysis were employed. Findings - OLS and 2SLS regression analyses show that ownership concentration has significant impact on firm performance when measuring by ROE. Regarding ownership identity, OLS regression analyses by both ROA and ROE show that the overall ownership identity has a significant impact on firm performance, as well as particular types of investors such as funds. Further, ownership identity and firm performance (when measured by ROA) had a significant endogeneity problem supporting the use of 2SLS as an effective analysis tool for such investigation. Research limitations/implications - Findings of such research may not be generalizable to different countries at different stages of development, or with different business environments and cultures. Also, the sampled companies, 99 Egyptian companies, may be a small number which needs to be extended in a future research. Originality/value - This paper provides an empirical investigation on the association between ownership structure and firm performance in the Egyptian context. It examines the role played by two aspects of ownership structure: the fraction of shares owned by the three largest shareholding interests (ownership concentration) and the fraction of shares owned by different type of shareholders (ownership identity) including seven separate groups of owners.

Keywords: Ownership structure; Ownership concentration; Ownership identity; Large shareholders; Firm performance; The Egyptian Exchange; EGX 100; Corporate ownership; Shareholders (search for similar items in EconPapers)
Date: 2013
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Persistent link: https://EconPapers.repec.org/RePEc:eme:jaeepp:20421161311320698

DOI: 10.1108/20421161311320698

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