OWNERSHIP CONCENTRATION IMPACT ON FIRM FINANCIAL PERFORMANCE

Background: Purpose of this study is to investigate the impact of ownership concentration on the performance of the firms operating in the financial and logistics sector of Pakistan. Impact of corporate governance practices on performance is under discussion for many years. Ownership structure has a significant effect on the performance of the firms either positively or negatively. Performance of the firms operating under the financial sector becomes more critical due to the reason that a well-functioning financial sector is vital for the economic development of any Country or Nation, in all areas especially in such crucial ones as logistics. The underline empirical study investigated the impact of ownership concentration on the performance of the firms operating in the financial sector of Pakistan, which has a strong influence on other sectors including logistics one. Methods: There are 36 firms those have been considered for data collection process. These firms are listed on Karachi stock exchange (KSE) of Pakistan. Last five years' data from annual reports has been analyzed. Quantitative data descriptive statistics, correlation matrix and regression models are used for data analysis. Results: Ownership concentration has a significant negative impact on ROA, Family-based ownership concentration has a significant negative impact on ROA, and Nonfamily based ownership concentration have a significant positive impact on Tobin's Q and ROA. Findings of this study are consistent with the agency theory. Conclusions: Concentrated ownership can influence firm performance either positively or negatively. Study shows that the agency theory is applicable in the context of Pakistan. The power of decision-making is held by top shareholders in the concentrated ownership structure. Shareholders will make such decisions those are beneficial for them but not for the firm.