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

Abdelmohsen M. Desoky (South Valley University, Egypt)
Gehan A. Mousa (Benha University, Egypt)

Journal of Accounting in Emerging Economies

ISSN: 2042-1168

Publication date: 28 June 2013

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

Citation

Desoky, A. and Mousa, G. (2013), "An empirical investigation of the influence of ownership concentration and identity on firm performance of Egyptian listed companies", Journal of Accounting in Emerging Economies, Vol. 3 No. 2, pp. 164-188. https://doi.org/10.1108/20421161311320698

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Publisher

:

Emerald Group Publishing Limited

Copyright © 2013, Emerald Group Publishing Limited

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