Ownership Structure and Firm Performance: A Pragmatic Evidence From Pakistan

Abstract

Agency theory suggests that allowing managers to participate in firm’s ownership assists as an operative instrument to cut agency costs and augment performance of the firm. While the managerial ownership’s role in corporate performance has been profoundly scrutinized for the firms in developed countries, there is a lack of such research, in black and white, on the non-financial firms in developing countries. The study aims seeks to inspect the impression of managerial ownership on the performance of Pakistani firms. This observational investigation endeavours to look for a connection between managerial ownership and firm execution on the 75 firms from 2009 to 2013 in Pakistan. Using panel data models, this study finds mixed results in different methods. We find no strong evidence for the managerial ownership as a significant determinant of the corporate performance for the given sample of Pakistani firms. Besides, the connection is vigorous to various procedures of firm.