Abstract

The current study aims to investigate the relationship between ownership concentration and firm performance. The study conducted the analysis on 262 non-financial listed firms on the Karachi stock exchange (KSE) for a time period of six years (2006-2011). The ownership concentration was measured through the percentage of shareholding by largest shareholder, five largest shareholders and ten largest shareholders, whereas firm performance was measured through market base performance parameters (Tobin’s Q) and accounting base performance parameter (ROA and ROE). The study employed multiple regression models to examine the relationship between ownership concentration and firm performance. The results revealed that ownership concentration has positive impact on firm performance for both accounting and market base performance parameters. The understanding of relationship dynamics of ownership concentration and firm performance helps investors and policy makers to better utilize the corporate governance internal control mechanisms for achieving the firm’s value maximization objective.