Concentration of ownership and corporate performance: evidence from the Zagreb Stock Exchange

Džanić, Alen

doi:10.3326/fintp.36.1.2.

Concentration of ownership and corporate performance: evidence from the Zagreb Stock Exchange

Alen Džanić

Abstract
This study examines the relationship between ownership structure and firm performance using a sample of firms listed on the Zagreb Stock Exchange in period 2003-2009. The results obtained using a panel estimation with fixed effects show a significant negative relationship between the existence of a block holder owning more than 30% of the equity and the value of the firm's Tobin's Q. However, if there is a family-type second block holder, the effect disappears. Further, the study gives evidence of the negative impact of the fraction of equity owned by management on labor efficiency confirming the quiet-life hypothesis from Bertrand and Mullainathan (2003). Finally, it is shown that foreign ownership is not significantly better than domestic.

Keywords: ownership structure, ownership concentration, Tobin's Q, return on equity, labor efficiency, block holder, management ownership, Croatia, Zagreb Stock Exchange

Year: 2012 | Volume: 36 | Issue: 1 | Pages: 29 - 52