Ownership structure and corporate performance : A pragmatic evidence from Nasdaq OMX Helsinki 2014-2018
Sihvonen, Aki (2020-05)
Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi-fe2020051838206
https://urn.fi/URN:NBN:fi-fe2020051838206
Tiivistelmä
The purpose of this thesis is to investigate whether a certain type of ownership structure can increase corporate performance, measured by using the relationship between market valuation and intrinsic value, Tobin’s Q. An examination of 89 Nasdaq OMX Helsinki listed companies in 2014-2018 provides evidence of a direct relationship between the ownership structure and corporate performance. Specifically, this thesis aims to answer the controversial question of how different ownership types, voting power and CEO ownership behave with respect to corporate performance. The ownership types are separated into corporations, families, foreign investors, foundations, investment advisors, pension and insurance companies, and the state.
A growing body of literature have examined the association between ownership structure and corporate performance, while the geographic concentration has limited mostly to large market economies and emerging markets. As a geographic area, Northern Europe is still quite unexplored. Due to the gap of existing literature concerning the relationship between ownership structure and corporate performance in Finnish capital markets, this thesis contributes to earlier research by concentrating on the latest evidence of ownership structures in Finnish listed companies. The theoretical framework of this thesis is built around earlier academic know-how, which argues that companies seek to adjust their ownership structures to enhance monitoring and controlling possibilities, and at the same time, to lower agency costs. Evidently, this leads to efficient operational performance.
The main results of this thesis propose that, typically, investment advisors and pension and insurance companies as a major owner enhance company performance, whilst foundations have an inverse relationship with respect to forward-looking financial ratio, Tobin’s Q. The voting rights of a company have a negative impact on corporate performance, though the significance abates as the percentage of voting rights increases. Consistent with existing literature, CEO ownership and company performance have an inverse relationship. The results of this thesis suggest that companies with higher leverage ratios tend to underperform, whilst companies with rapid sales growth outperform.
A growing body of literature have examined the association between ownership structure and corporate performance, while the geographic concentration has limited mostly to large market economies and emerging markets. As a geographic area, Northern Europe is still quite unexplored. Due to the gap of existing literature concerning the relationship between ownership structure and corporate performance in Finnish capital markets, this thesis contributes to earlier research by concentrating on the latest evidence of ownership structures in Finnish listed companies. The theoretical framework of this thesis is built around earlier academic know-how, which argues that companies seek to adjust their ownership structures to enhance monitoring and controlling possibilities, and at the same time, to lower agency costs. Evidently, this leads to efficient operational performance.
The main results of this thesis propose that, typically, investment advisors and pension and insurance companies as a major owner enhance company performance, whilst foundations have an inverse relationship with respect to forward-looking financial ratio, Tobin’s Q. The voting rights of a company have a negative impact on corporate performance, though the significance abates as the percentage of voting rights increases. Consistent with existing literature, CEO ownership and company performance have an inverse relationship. The results of this thesis suggest that companies with higher leverage ratios tend to underperform, whilst companies with rapid sales growth outperform.