Ownership Structure, Corporate Governance, and Firm's Performance in Emerging Markets: Evidence from Bangaldesh

Abstract

This study examines whether differences in ownership structure across firms can explain their performance differences in an emerging economy, like Bangladesh, where corporate governance variables have been testified whether they exert any influence on firm performance. The empirical evidence of this study suggests that sponsor holding and government holding are significantly positively related to firm performance, whereas institutional holding is insignificantly related to performance. However, board size and existence of audit committee chaired by sponsor director are significantly negatively related to firm’s performance. Using the data for the period of 2002-2004, it is observed that a large fraction of cross-sectional variation in performance, found in several studies, is explained by unobserved firm heterogeneity, rather than the shareholders holding pattern alone.