Ownership Structure, Corporate Governance Reform and Firm Performance in Kuwait

Abstract

This paper examines the link between ownership structure and firm performance in Kuwaiti firms in the context of recent corporate governance reform. Panel data robust regressions of firm performance against ownership structure specify variously the former using the returns on assets and equity, the debt to equity ratio, leverage, and Tobin’s Q and the latter as family, government and local and foreign institutional ownership. We find family ownership has the most influence on firm performance followed by government ownership, but disproportionately to their actual shares of ownership. Importantly, corporate governance reform appears to have had little effect in moving to a first voluntary then compulsory corporate governance code and guidelines, suggesting many firms had either adopted good governance principles under market pressure or exited the industry in anticipation of the more stringent regulatory controls.

Keywords: Family ownership, government ownership, institutional shareholders, corporate governance, firm performance

JEL Classification: G30, G32