Abstract
This study aims to examine the impacts of ownership structures (foreign ownership, linearity of foreign ownership, state ownership, and linearity of state ownership on corporate performance using a panel data from Malaysia listed companies over a period of 2000 to 2009. Weighted Least Square (WLS) models are used to test the relationships. The results show that the impact of foreign ownership is positive and significant on corporate performance while the impact of state ownership is negative and significant on corporate performance. These results suggest that foreign ownership enhance corporate performance while state destroys corporate performance. Furthermore, the results also show that foreign and state ownerships have linear relationship with corporate performance. This study concludes that an increase in foreign ownership states may enhance corporate performance as linear relationship exists. Finally, this study provides evidence that investors may make appropriate investment decisions to invest in the companies linked with foreign ownership. DOI: 10.5901/mjss.2015.v6n3s1p70
Highlights
Relationship of ownership structures and corporate performance is discussed widely in corporate governance literatures
This study examine the relationship between foreign ownership, linearity of foreign ownership, state ownership, and linearity of state ownership using a panel data of 190 Malaysian listed companies during a period of 2000 to 2009
The results of WLS show that foreign ownership is positively related to corporate performance while state ownership is negatively related to corporate performance which indicates that foreign ownership enhance corporate performance while state ownership destroys corporate performance
Summary
Relationship of ownership structures and corporate performance is discussed widely in corporate governance literatures. Morck, Shleifer, and Vishny (1988) use a cross-section of 371 Fortune 500 companies in 1980 to re-examine the relation between ownership structure and performance. They use Market to Book Value Ratio (MTBVR) as a performance measure and board ownership as a minimum stake of 20% owned by shareholdings of all board members. They show no significant relation in the linear regressions using either MTBVR or accounting profit rate as performance measures. Benson and Davidson (2009) and Coles, Lemmon and Felix Meschke (2012) find that inside ownership has a significant linear relationship with corporate performance in their recent studies
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