Thesis Open Access

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

Belay, Mikael

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. Key Words: Ownership Structure; Ownership Concentration; Ownership Identity; Firm Performance

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