Ownership concentration and firm performance in emerging markets

Abstract

The literature concerned with relations between ownership concentration and corporate performance in emerging markets presents conflicting theoretical predications and inconclusive empirical results. We use meta-analytical techniques to integrate the diverse empirical findings and investigate factors contribute to the inconsistencies in the empirical evidence. Using 419 correlations collected from 42 primary studies of listed corporations in 18 emerging markets, heterogeneity tests show that only a small proportion of the variation in reported ownership concentration-performance relations can be attributed to sampling error. Our meta-regressions reveal how population differences, researchers' modeling choices, and inadequate treatment of endogeneity explain a large portion of the true heterogeneity. After adjusting for these effects, we find ownership concentration has negative relation with firm performance across countries. Our results emphasize the importance of model specification and methods of addressing endogeneity, and support further comparative study of the ownership concentration-corporate performance relation between countries with seemingly similar corporate governance environments.