Firm Performance and Corporate Governance Through Ownership Structure: Evidence from Bangladesh Stock Market

International Review of Business Research Papers, Vol. 3, No.4, pp. 88-110, October 2007

23 Pages Posted: 26 Apr 2013

See all articles by Mahmood Osman Imam

Mahmood Osman Imam

University of Dhaka

Mahfuja Malik

Sacred Heart University; Boston University

Date Written: January 30, 2007

Abstract

This paper examines how corporate governance is practiced through ownership structure and how firm’s performance as well as its dividend payout policy is influenced by different ownership pattern. In doing so, this paper attempts to investigate the pattern of ownership mix and ownership concentration scenario towards sponsorship in Bangladesh, the relationship between the ownership structure and firm performance and finally the impact of ownership structure upon firm’s dividend payout policy. An analysis has been made as evidence taking all listed non-financing firms from the Dhaka Stock Exchange. There are several alternative corporate governance mechanisms, which may play an important role to improve firm’s performance. Here ownership structure has been considered as an effective tool of corporate governance. In this study, the relations between firm’s return and value with ownership variables along with firm’s specific variables controlling the industry effects have been examined. Using the data from two sample points of 2000 and 2003, it is shown that a large fraction of cross-sectional variation in performance, found in several studies, is explained by unobserved firm heterogeneity, rather than the shareholders holding. Our empirical results provide evidence that foreign holding is positively and significantly related to the firm performance as measured by firm’s holding period returns and Tobin’s Q, and the relationship is a monotonic one. We also provide empirical evidence that firms with high institutional ownership and firms with concentrated ownership pay high and less dividend payout respectively.

Keywords: corporate governance, ownership structure, Tobin’s Q, dividend payout ratio

JEL Classification: G30, M10, M40

Suggested Citation

Imam, Mahmood Osman and Malik, Mahfuja, Firm Performance and Corporate Governance Through Ownership Structure: Evidence from Bangladesh Stock Market (January 30, 2007). International Review of Business Research Papers, Vol. 3, No.4, pp. 88-110, October 2007 , Available at SSRN: https://ssrn.com/abstract=2256480

Mahmood Osman Imam

University of Dhaka ( email )

Department of Finance
University of Dhaka
Dhaka, 1000
Bangladesh

Mahfuja Malik (Contact Author)

Sacred Heart University ( email )

5151 Park Ave
Fairfield, CT 06432
United States

Boston University ( email )

595 Commonwealth Avenue
Boston, MA 02215
United States

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