An investigation of the association between ownership structure and corporate performance Empirical evidence from Tehran Stock Exchange (TSE)

摘要

Purpose-The main purpose of the present research is to study the relationship between ownership concentration and the type of ownership, i.e. state, firm (legal persons), individual, family, institutional - on the value of the companies listed in Tehran Stock Exchange (TSE). Design/methodology/approach-The study applies panel data regression analysis to a sample of companies listed in TSE during the period 2005-2009. Two-stage least-squares analysis is conducted. Findings-The paper finds that ownership concentration is positively related to ROE, and that ownership concentration is negatively related to ROA. Moreover, state, family, and individual ownership are negatively related to performance, and firm (legal person) and institutional ownership are positively related to performance. The paper also finds that higher firm profitability requires a more diffused ownership structure. Research limitations/implications-The results of the present research support agency theory and efficient monitoring hypothesis. The results strongly suggest the failure of state ownership in increasing companies' value and underline the importance of accelerating privatization in Iran. Practical implications-To improve the performance and consequently the value of companies, the process of privatization in Iran must be accelerated and public ownership must be transferred to the private sector. Further, investors must pay special attention to the type of ownership and ownership concentration of companies when deciding to buy their shares. Originality/value-The study builds on prior research in several ways. First, the paper offers new insights into the relationship between corporate governance and economic performance by using data from Iranians listed firms, this new evidence from an emerging market enhances the understanding of corporate governance in Asian countries. Second, the study focuses on five dimensions: ownership concentration, state, firm, individual, family, and institutional ownership which allow one to get a more accurate picture of the ownership structure-firm value relationship.