The Role of Market Control on the Relation between Ownership and Performance: Evidence from Turkish Market

16 Pages Posted: 25 Apr 2001

See all articles by Bengi Ozer

Bengi Ozer

Bogazici University

Sibel Yamak

Galatasaray University - Faculty of Administrative Sciences

Abstract

The evidence of highly concentrated ownership structure in companies that have exposed themselves to market discipline illustrates a confusing structure of corporate governance. The disciplinary effect of the market is questioned in a context with concentrated ownership structure and poor investor protection. We explore whether the presence and magnitude of market control leads to differences in performance in the case of concentrated ownership structure. We explore how the presence and the magnitude of widely held ownership influence the different dimensions of performance in companies with concentrated ownership. We further investigate whether the differences in the identity of the controlling shareholder influences impact of market control on the performance of these firms. Companies trading in the Istanbul Stock Exchange as of 1999 constitute the sample of the study. The findings indicate the presence of a highly concentrated ownership structure in the Turkish market. The results of the regression analyses seem to indicate that the market control (dispersed ownership percentage) influences certain dimensions of performance but not in the expected direction. Market control does not seem to have any disciplinary effects on performance in concentrated companies. Identity of the controlling shareholder seems to have a profound effect on the performance. Controlling shareholders types that operate through a portfolio of other companies seem to have favorable influence on performance. Significant relationship between debt pressure and performance might be indicating the disciplinary pressure of the debt holders. The findings imply a potential disciplinary impact of stakeholders rather than shareholders or market. The study also provides supportive evidence for the impact of context on the relation between ownership and performance.

Suggested Citation

Ozer, Bengi and Yamak, Sibel, The Role of Market Control on the Relation between Ownership and Performance: Evidence from Turkish Market. Available at SSRN: https://ssrn.com/abstract=268089 or http://dx.doi.org/10.2139/ssrn.268089

Bengi Ozer (Contact Author)

Bogazici University ( email )

School of Applied Disciplines Hisar Campus
80815 Bebek - Istanbul
Turkey
00 90 212 263 15 40 ext.1989 (Phone)
00 90 212 265 97 73 (Fax)

Sibel Yamak

Galatasaray University - Faculty of Administrative Sciences ( email )

Cyraoan Cad. 102
Ortakoy, 80840, Istanbul
Turkey
00 90 212 227 44 80 ext. 543 (Phone)
00 90 212 258 22 83 (Fax)

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