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Volume :47 Issue : 182 2021      Add To Cart                                                                    Download

Ownership Structure and Firm Performance of Kuwaiti Non-Financial Listed Firms

Auther : Dr. Mejbel Th. Al-Saidi

Objectives: This study aims to examine the relationship between ownership structure and firm performance in the framework of agency theory.
Method: This study tested the linear relationship between ownership structure and firm performance, the non-linear relationship, the impact of ownership composition, and endogeneity and causality issues by using a dataset of 100 non-financial listed firms from 2009 to 2018 in Kuwait Stock Exchange (KSE). Firm performance is measured using Tobin's Q and ROA.
Results: The study found that ownership concentration positively impacts firm performance, which supports the monitoring hypothesis. In terms of ownership composition, the study found that only government ownership positively impacted firm performance, while other large shareholders had an insignificant impact on firm performance. However, after controlling for the endogeneity problem, the study found that ownership concentration negatively impacts firm performance not the other way around, and no evidence confirmed the non-linear relationship in Kuwait.
Conclusion: This study concluded with highlighting its importance and value that it can be very useful for Kuwaiti regulators-namely, Capital Markets Authority, Central Bank, and Ministry of Trade Kuwaiti-in determining the importance of ownership structure and how to protect small shareholders. In addition, Kuwait listed firms should give more consideration for the ownership composition because not all large shareholders positively impact firm performance. Moreover, the results of this study are important for academics studying the impact of ownership structures and may give them good guidelines for any further studies. However, the results of this study are limited by the sample used, which is relevant for the Kuwaiti environment only. Results may differ for developed and developing countries. Thus, it is difficult to generalize to other countries.

Keywords: Structure, Ownership concentration, Firm performance, Kuwait.

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Dec 26, 2021

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