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Corporate governance and firm performance in Arab equity markets: Does ownership concentration matter?

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  • Omran, Mohammed M.
  • Bolbol, Ali
  • Fatheldin, Ayten
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    Abstract

    The paper works with a sample of 304 firms from different sectors of the economy, and from a representative group of Arab countries (Egypt, Jordan, Oman and Tunisia) where related data could be gathered. We first present crucial descriptive statistics on the firms' corporate ownership, identity, and their performance and market measures, and then use unstructured but credible equations to capture the relationship between these variables. Specifically, we study the determinants of ownership concentration; the effect of ownership concentration on firms' performance and market measures, after controlling for the endogeneity of ownership concentration through the use of country and firm characteristics as instrumental variables; and, the effects of ownership identity and blockholdings. The broad conclusion that emerges is that ownership concentration is an endogenous response to poor legal protection of investors, but seems to have no significant effect on firms' performance.

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    Bibliographic Info

    Article provided by Elsevier in its journal International Review of Law and Economics.

    Volume (Year): 28 (2008)
    Issue (Month): 1 (March)
    Pages: 32-45

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    Handle: RePEc:eee:irlaec:v:28:y:2008:i:1:p:32-45

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    Web page: http://www.elsevier.com/locate/irle

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    References

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    1. Rafael La Porta & Florencio Lopez-De-Silanes & Andrei Shleifer, 1999. "Corporate Ownership Around the World," Journal of Finance, American Finance Association, vol. 54(2), pages 471-517, 04.
    2. Demsetz, Harold & Lehn, Kenneth, 1985. "The Structure of Corporate Ownership: Causes and Consequences," Journal of Political Economy, University of Chicago Press, vol. 93(6), pages 1155-77, December.
    3. Rafael LaPorta & Florencio Lopez-de-Silanes & Andrei Shleifer & Robert W. Vishny, . "Law and Finance," Working Paper 19451, Harvard University OpenScholar.
    4. Omran, Mohammed, 2004. "The Performance of State-Owned Enterprises and Newly Privatized Firms: Does Privatization Really Matter?," World Development, Elsevier, vol. 32(6), pages 1019-1041, June.
    5. Rafael LaPorta & Florencio Lopez-de-Silanes & Andrei Shleifer & Robert W. Vishny, . "Legal Determinants of External Finance," Working Paper 19443, Harvard University OpenScholar.
    6. Denis, Diane K. & McConnell, John J., 2003. "International Corporate Governance," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 38(01), pages 1-36, March.
    7. Rafael LaPorta & Florencio Lopez-de-Silanes & Andrei Shleifer & Robert Vishny, . "Investor Protection and Corporate Governance," Working Paper 19455, Harvard University OpenScholar.
    8. Claessens, Stijn & Djankov, Simeon & Lang, Larry H. P., 2000. "The separation of ownership and control in East Asian Corporations," Journal of Financial Economics, Elsevier, vol. 58(1-2), pages 81-112.
    9. Charles P. Himmelberg & R. Glenn Hubbard & Darius Palia, 2000. "Understanding the Determinants of Managerial Ownership and the Link Between Ownership and Performance," NBER Working Papers 7209, National Bureau of Economic Research, Inc.
    10. Lins, Karl V., 2003. "Equity Ownership and Firm Value in Emerging Markets," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 38(01), pages 159-184, March.
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    Cited by:
    1. Loukil, Nadia & Yousfi, Ouidad, 2010. "Does corporate governance affect stock liquidity in the Tunisian Stock Market?," MPRA Paper 28697, University Library of Munich, Germany, revised Feb 2011.
    2. Hashem Valipour & Javad Moradi & Ladan Zare, 2012. "Examining the Effects of Non-Bound Board members and Ownership Structure as Corporate governance Mechanisms on Firm Value," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 2(2), pages 55-68, April.
    3. Jenifer Piesse & Roger Strange & Fahad Toonsi, 2012. "Is there a distinctive MENA model of corporate governance?," Journal of Management and Governance, Springer, vol. 16(4), pages 645-681, November.

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