Ownership Structure and Performance Among Entrepreneurial Firms: The Growth-Control Trade-Off

48 Pages Posted: 18 Mar 2015

See all articles by Zilong Liu

Zilong Liu

Kent State University

Xiaoling Pu

Kent State University - Department of Finance

Xinlei Shelly Zhao

Government of the United States of America - Office of the Currency Comptroller - Risk Analysis Division

Date Written: March 17, 2015

Abstract

Roughly one-third of our sample firms show substantial ownership structure changes over time. Growth potential, risk sharing, and demand for external capital seem to be the main reasons behind dilutions of ownership structures, and these firms show strong growth in the following five years. After controlling for the unobserved firm fixed effects or the sample selection bias, we do not find any evidence suggesting a link between ownership structure and other dimensions of firm performance. Therefore, the trade-off between growth aspiration and retention of dominant control of the firms may be critical in ownership structure decisions among entrepreneurial firms.

Keywords: ownership-performance relation, change in ownership structure, propensity score matching, difference-in-difference regression

JEL Classification: G21, G32

Suggested Citation

Liu, Zilong and Pu, Xiaoling and Zhao, Xinlei, Ownership Structure and Performance Among Entrepreneurial Firms: The Growth-Control Trade-Off (March 17, 2015). Available at SSRN: https://ssrn.com/abstract=2579873 or http://dx.doi.org/10.2139/ssrn.2579873

Zilong Liu

Kent State University ( email )

Kent, OH 44242
United States

Xiaoling Pu

Kent State University - Department of Finance ( email )

College of Business Administration
P.O. Box 5190
Kent, OH 44242-0001
United States

Xinlei Zhao (Contact Author)

Government of the United States of America - Office of the Currency Comptroller - Risk Analysis Division ( email )

250 E Street, SW
Washington, DC 20219
United States

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