Ownership structure and financial performance of small firms in Spain

Abstract

Ownership structure in companies are key to the performance, however, gaps still exist in the knowledge about the characteristics of ownership with financial performance. This study provides empirical evidence of the characteristics of ownership structure on firm’s performance. It examines 254 small and unlisted firms from the SABI database over the period 2000 to 2014. Using panel regression, the findings show that companies with family having majority ownership are more profitable and the market value such companies. The findings indicates that over performance of most firms depends on certain characteristics of their ownership. Companies with active founders perform better companies with passive founders. No significant relationship was found with respect to CEO or Chairman as founders. The presence of another block holder of ownership less than 5% is positive and significantly associated with the firm’s performance