Determinants of Ownership Concentration in the Middle East and North Africa (MENA) Region

Abstract

The purpose of this study is to investigate the determinants of ownership concentration in the Middle East and North Africa (MENA) region. The study highlights the importance of three main factors in shaping ownership structure: country, industry, and firm level. Annual data was collected from 912 firms in eight MENA countries over a seven-year period (2008–2014). Our sample consists of 5,521 observations. Due to the longitudinal nature of data, the study uses a random effects regression model. Also, 2SLS is used to control the endogeneity issue between ownership concentration and firm performance. The study finds that both firm size and firm age have a significant, positive relationship with ownership concentration. However, regarding financial performance, only Tobin’s Q has an impact on ownership concentration, while the return on assets and the return on equity have no significant effects. Country-level factors, such as the rule of law index and corruption control, have a significant, negative relationship with ownership concentration. Moreover, the Arab Spring has a significant, negative influence on ownership concentration. This study is the first to investigate determinants of ownership concentration in the MENA region and the effects on ownership concentration by a significant political event: the Arab revolution, popularly known as the Arab Spring, a revolutionary wave that started at the end of 2010 to change the rule of local governments.