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Examining the effect of ownership structure on firm financial performance in Egypt

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posted on 2023-04-13, 09:34 authored by Karim El Din El Nahas

 The study seeks to investigate the relationship between Business Ownership Structure (Managerial Ownership, Institutional Ownership, Block Holding Owning 5% or More, and Free Float Ownership) and Financial Performance (ROA, ROE, and Tobin Q) in the top 50 Egyptian stock exchange firms. To accomplish this goal, the literature was reviewed, and thus the research hypotheses were developed. Previous studies identified the Business Ownership Structure dimensions of managerial ownership, institutional ownership, block holding owning 5% or more, and free float ownership. On the other hand, earlier studies looked at metrics for a company's financial performance, including Tobin Q, ROA, and ROE. As a result, the deductive method was applied, and research hypotheses were created and put to the test using statistical methods. Using secondary data, the research hypotheses were evaluated. The relationship between the dimensions of the business ownership structure and each of the financial performance indicators—ROA, ROE, and Tobin Q—is the focus of the research hypotheses. Data was gathered from the official websites of Egypt's stock exchange for the most active fifty companies on the Egyptian stock exchange from 2004 to 2019. The data was then analyzed with SPSS, and the research results and findings were drawn. After using SPSS to analyze the data, conclusions and research findings were generated. The findings showed there was no evidence to support the first hypothesis, which claimed there was a connection between managerial ownership and financial performance (ROA, ROE, and Tobin Q). While the second hypothesis, which claimed that institutional ownership and financial performance (ROA, ROE, and Tobin Q) are significantly correlated, was fully supported. The fourth hypothesis, according to which there is a relationship between free float ownership and financial performance (ROA, ROE, and Tobin Q), was also fully supported. However, due to a multicollinearity issue, the third hypothesis, which claimed a connection between block holder ownership and financial performance (ROA, ROE, and Tobin Q), cannot be tested. 

History

School

  • School of Management

Qualification level

  • Doctoral

Qualification name

  • PhD

Publication year

2021

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