The Impact of Ownership Structure on Firm Performance of Financial Firms: Evidence from Pakistan

Abstract

Purpose- The present study examines the impact of ownership structure on firm financial performance.

Study Design/Methodology/Approach - Primary data was collected through questionnaires distributed in Lahore and Islamabad stock exchanges. The sample included 613 investors, and data analysis was conducted using AMOS. The study analyzed the complete sample and further examined the two CSR dimensions for robustness across genders, distinguishing between male and female investors.

Findings- We find government ownership (GO) has a highly significant and positive impact on return on assets (ROA) as well as return on equity (ROE). Institutional ownership (IO) also has a positive and significant effect on ROE. Similarly, foreign ownership showed one of the most robust and strongest associations with Tobin’s Q and Market-to-Book Ratio, with a highly significant positive relation with both ratios, reflecting its influence on market valuation and growth potential. Our study finds no significant relationship between family ownership with any accounting and market-based variable.

Practical Implications- The findings of this study provide useful insights for investors, corporate managers, and the government sector about the ownership structure's impact on a firm’s performance. This research suggests an increase in Government and Foreign Ownership can significantly improve the performance of financial firms.

Originality/Novelty- Our study contributes to the existing literature on ownership structures and focuses on its impact on financial firms’ performance in the context of emerging markets like Pakistan.