OWNERSHIP STRUCTURE AND STOCK PERFORMANCE DURING FINANCIAL CRISIS: EVIDENCE FROM FINNISH STOCK MARKET

Abstract

This study aims to identify how corporations' different ownership structures affect their stock performance under the financial crisis period of 2008-2010. In this study, ownership structure is defined by its six dimensions: family ownership, concentrated ownership, foreign shareholders, dispersed ownership, government ownership and institutional ownership. The thesis uses a dataset of Finnish non-financial companies listed on the Helsinki Stock Exchange (NASDAQ OMX Helsinki) during the years 2008-2010.

Among the firm-specific characteristics, financial structure, size and industry are found to be the most important determinants of corporate performance. The effect of ownership structure on crisis period returns is studied by a regression analysis of the crisis period returns and different specifications of ownership and control of sector and size.

The results reveal that concentrated ownership was negatively related to stock performance during the crisis period 2008-2010. Corporations with concentrated ownership had, on average, more than 27.00% lower performance compared to corporations with dispersed ownership. Furthermore, the results indicate that investors consider the ownership structure of a corporation after adjusting for size and sector.