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Impact and mechanisms of ownership structure on firm performance

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  • Zhang, Minqiang
  • Cheng, Jiayuan
  • Bai, Yuehua

Abstract

This study investigates how internal control mechanisms affect the financial performance of Chinese family firms, with a focus on ownership concentration and ownership balance in corporate governance. Drawing on agency theory, it examines internal control and agency costs as dual mediating channels linking governance structure to firm outcomes. Using data from Chinese family firms, the results show that strong internal controls enhance financial performance by lowering agency costs and strengthening oversight. In firms with concentrated ownership, effective internal controls and balanced ownership help mitigate agency conflicts, improving performance. Moreover, the integration of digital technology into management processes enhances control effectiveness, amplifying its positive effect on financial outcomes. Overall, the findings underscore the role of internal control and digital innovation in strengthening governance and performance in family enterprises.

Suggested Citation

  • Zhang, Minqiang & Cheng, Jiayuan & Bai, Yuehua, 2025. "Impact and mechanisms of ownership structure on firm performance," Finance Research Letters, Elsevier, vol. 86(PE).
    • Handle: RePEc:eee:finlet:v:86:y:2025:i:pe:s1544612325019245
    DOI: 10.1016/j.frl.2025.108670
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    References listed on IDEAS

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