Corporate Performance and Ownership Structure: Empirical Evidence for Chile
Quarterly Journal of Finance and Accounting, Vol. 50, No. 1,2011
Posted: 3 Nov 2013
Date Written: November 1, 2011
This article focuses on the relationship between performance and corporate diversification. The sample covers 70 Chilean public firms between 2000 and 2007. Our findings show a positive and statistically significant relation between performance and corporate diversification. Moreover, when separating the sample into two groups, namely, those that are less and those that are more diversified, a positive relationship between ownership concentration and performance is observed in the case of less diversified firms. On the other hand, for the more diversified group, we report a negative relationship between ownership concentration and performance for the main and the three largest shareholders. Another interesting result is the negative relationship between amount of fixed assets and performance. Finally, we are not aware of other studies that control for country risk premium, which we find to be a relevant variable since the higher the country risk premium the lower the corporate performance is. This may suggest that the marginal investor in Chile is not able to fully diversify country risk.
Keywords: Diversification, Ownership Structure, Panel Data
JEL Classification: C30, C33, G15
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