Concentration of Ownership in Iranian Listed Firms

Abstract

An important mechanism to monitor the firm’s activities and assure investors to get an appropriate return on their investment is corporate governance (CG). In fact, corporate ownership structure is the most major and determining factor in CG mechanism influencing the scope of a firm performance. Therefore, the aim of this study is to answer this question: ''is there any relationship between ownership concentration and firm performance?'' Based on stratified random sampling of listed firms on Tehran Stock Exchange and applying the panel least squared with cross-section weights as the underlying statistical test, it is found that firm performance is negatively related to ownership concentration of Iranian listed firms. In addition, the impact of ownership structure on firm performance depends on industry.

Keywords: corporate governance, firm performance, ownership concentration, agency theory

JEL Classification: G34