Institutional ownership and firm performance: the case of Morocco

Harit Satt, Sarah Nechbaoui, M. Kabir Hassan and Zairihan Abdul Halim

Macroeconomics and Finance in Emerging Market Economies, 2025, vol. 18, issue 1, 7-23

Abstract: PurposeExtant literature, which mostly focused on the context of developed economies, provides competing evidence on the role of institutional investors in the capital market. This paper aims to investigate the relationship between institutional ownership and firm performance.Design/methodology/approachEmploying 396 firm-year observations, we conduct multiple panel data regressions to test our hypotheses on the impact of institutional ownership on firm performance. Specifically, we test whether the effect of institutional ownership differs between governmental and privately held institutions.FindingsOur results show that, overall, institutional ownership has a negative impact on firm performance. This result remains intact regardless of the governmental affiliation of the institutional owners. Interestingly, the negative impact of institutional ownership on firm performance is economically stronger for privately held institutions.Research Limitations and ImplicationsOur findings overall highlight the urgent need for improved regulatory framework in emerging economies to reduce exploitation by major shareholders which impairs firm performance.Originality/ValueWe claim that issues such as communication, information transparency, regulatory framework, and corporate governance ought to be improved to attract foreign investors, whose involvement in the Moroccan market decreased since 2016.

Date: 2025
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DOI: 10.1080/17520843.2021.1979327

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