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Corporate Ownership Structure and Firm Performance: Evidence from Greek Firms

Author

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  • Panayotis Kapopoulos

    (Emporiki Bank)

  • Sophia Lazaretou

    (Bank of Greece, Economic Research Department)

Abstract

The Berle-Means thesis (1932) implies that diffuse ownership adversely affects firm performance. This paper tries to investigate whether there is strong evidence to support the notion that variations across firms in observed ownership structures result in systematic variations in observed firm performance. We test this hypothesis by assessing the impact of the structure of ownership on corporate performance, measured by profitability, using data for 175 Greek listed firms. Following Demsetz and Villalonga (2001) we model ownership structure, first, as an endogenous variable and, second, we consider two different measures of ownership structure reflecting different groups of shareholders with conflicting interests. Empirical findings suggest that a more concentrated ownership structure positively relates to higher firm profitability. We also find that higher firm profitability requires a less diffused ownership.

Suggested Citation

  • Panayotis Kapopoulos & Sophia Lazaretou, 2006. "Corporate Ownership Structure and Firm Performance: Evidence from Greek Firms," Working Papers 37, Bank of Greece.
    • Handle: RePEc:bog:wpaper:37
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    References listed on IDEAS

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    More about this item

    Keywords

    Money demand; Ownership structure; Firm performance;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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