Disentangling Country and Firm Level Effects on Firm Equity Ownership and Firm Financial Performance: An Exploratory Empirical Analysis

Abstract

This study attempts to disentangle firm and country level effects on firm performance and firm ownership using hierarchical linear modeling. I argue that distinguishing country and firm level effects is complex in that firm level characteristics and strategic decision making are not independent of the national context but are embedded in both the national context and firm level stakeholder pressures. The results suggest greater country level effects for ownership than for performance. This pattern of results is consistent with stronger national level influences on ownership structure than on performance outcomes. This finding may reflect trends toward homogeneity due to the globalization of financial markets. Although I found little evidence that the identity of the largest equity owner influenced performance outcomes, several ownership classes were significant for the equation predicting the size of the largest shareholding.