The Influence of Ownership Structure on Corporate Performance; Evidence from selected Ethiopian companies

This paper explores the influence of ownership structure and firm performance among
selected Ethiopian companies. The data collected for this research is for the period
2008-2010 and the sample consists of 23 companies among which 5 are sole
proprietorship, 8 partnership and 10 share companies. Three specific research
questions are applied to explore the relationships between the ownership structure
(characterized by owners’ identity and ownership concentration) and firm
performance. Ownership concentration is measured by the percentage of shares
owned by the largest five shareholders and HHI while the performance measures
applied are ROA and ROE. While analyzing the linear regression, the ownership
structure measures were treated as independent variables and the firm performance
measures were treated as dependent variables controlling for firm size, firm age and
debt ratio. The results indicate that there is no statistically significant performance
difference between solely owned, partner controlled and diffused firms. However, the
linear regression analysis shows that young solely owned firms have better
performance compared to old solely owned firms. The other result shows that, there
are positive relationships between institutional and foreign ownership and firm
performance measures. Whereas, the correlation of government ownership and firm
performance measure reveals a negative sign