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Ownership concentration in the Gulf Cooperation Council

Irma Martinez-Garcia (University of Oviedo, Oviedo, Spain) (Comision Nacional del Mercado de Valores, Madrid, Spain)
Rodrigo Basco (Sheikh Saoud Bin Khalid bin Khalid Al-Qassimi Chair in Family Business, American University of Sharjah, Sharjah, United Arab Emirates)
Silvia Gomez-Anson (University of Oviedo, Oviedo, Spain)
Narjess Boubakri (Bank of Sharjah Chair in Banking and Finance, American University of Sharjah, Sharjah, United Arab Emirates)

International Journal of Emerging Markets

ISSN: 1746-8809

Article publication date: 12 October 2020

Abstract

Purpose

This article attempts to answer the following questions: Who ultimately owns firms listed in the Gulf Cooperation Council (GCC) countries? Does ownership structure depend on the institutional context? How does ownership affect firm performance? Do institutional factors influence the ownership–performance relationship?

Design/methodology/approach

We apply univariate analyses and generalised methods of moments estimations for a sample of 692 GCC listed firms during 2009–2015.

Findings

Our results reveal that corporations are mainly controlled by the state or families, the ownership structure is highly concentrated and pyramid structures are common in the region. Ownership is more concentrated in non-financial than financial firms, and ownership concentration and shareholder identity differ by institutional country setting. Finally, ownership concentration does not influence performance, but formal institutions play a moderating role in the relationship.

Practical implications

As our findings reveal potential type II agency problems due to ownership concentration, policymakers should raise awareness of professional corporate governance practices and tailor them to GCC countries’ institutional contexts.

Social implications

Even with the introduction of new regulations by some GCC states to protect minority investors and promote corporate governance practices, ownership concentration is a rigid structure, and its use by investors to protect their economic endowment and power is culturally embedded.

Originality/value

Although previous studies have analysed ownership concentration and large shareholders’ identities across countries, this study fills a research gap investigating this phenomenon in-depth in emerging economies.

Keywords

Acknowledgements

The authors acknowledge the comments received at the 6th International Conference on Corporate Governance in Emerging Markets. The authors gratefully acknowledge the support of the Sheikh Saoud bin Khalid bin Khalid Al-Qassimi Chair in family business and the Spanish Ministry of Economy, Industry and Competitiveness, Secretariat for Research, Development and Innovation; project ECO2015-69058-R. Irma Martínez García acknowledges the grant from the Ministry of Education's Faculty Training Programme (FPU14/04758) and the Sheikh Saoud bin Khalid bin Khalid Al-Qassimi Chair in family Business at American University of Sharjah for her visiting period and for supporting her research on family business in the Arab world. We would like to thank our research assistants Simran Chowdhry, Raya Alhawandeh and Bilal Awan for their help during the data collection process.Funding: This work was supported by the Sheikh Saoud bin Khalid bin Khalid Al-Qassimi Chair in family business at the American University of Sharjah; the Spanish Ministry of Economy, Industry and Competitiveness, Secretariat for Research, Development and Innovation [ECO2015-69058-R]; and the Spanish Ministry of Education, Culture and Sport’s Faculty Training Programme [FPU14/04758].Disclaimer: The views expressed are those of the author(s) and do not necessarily reflect the views of the CNMV and American University of Sharjah.

Citation

Martinez-Garcia, I., Basco, R., Gomez-Anson, S. and Boubakri, N. (2020), "Ownership concentration in the Gulf Cooperation Council", International Journal of Emerging Markets, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/IJOEM-03-2020-0290

Publisher

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Emerald Publishing Limited

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