Ownership concentration and corporate performance on the Ghana stock exchange: A panel data analysis

Abstract

Corporate governance is linked to corporate performance. The study examines the effect of ownership concentration on corporate performance on the Ghana Stock Exchange. Panel data covering a period from 2001 to 2006 for 28 firms were analyzed within the framework of both the fixed and random effects techniques. The results indicate that the effect of ownership concentration on corporate performance varies with the performance measurement variable. The results indicate a significant positive relationship between ownership concentration and return on assets and Tobin's Q, whilst there is negative insignificant relationship with return on equity. We also document that insider system of corporate governance is practiced on the Ghana stock exchange as shareholding is highly concentrated in the hands of a few individuals or institutional investors. Other governance features such as board size, board composition and CEO duality are all essential in predicting corporate performance. The results of the study generally support existing literature on the impact of ownership concentration on corporate performance.