Open AccessCORPORATE OWNERSHIP STRUCTURE AND FIRM VALUE: EMPIRICAL EVIDENCE OF JSE-LISTED FIRMS, SOUTH AFRICA
Author(s) -
Adeyanju Adebiyi Sunday,
Farai Kwenda
Publication year - 2021
Publication title -
eurasian journal of economics and finance
Language(s) - English
Resource type - Journals
ISSN - 2148-0192
DOI - 10.15604/ejef.2021.09.02.003
Subject(s) - corporate governance , shareholder , business , foreign ownership , emerging markets , accounting , empowerment , enterprise value , principal–agent problem , agency cost , control (management) , market value , value (mathematics) , finance , economics , foreign direct investment , economic growth , management , machine learning , computer science , macroeconomics
This paper examines the relationship between corporate ownership structure and firm value of JSE-listed firms in the phase of the Black Economic Empowerment program in South Africa. Since the end of the apartheid era, corporate governance practices have evolved and the enactment of the BBE Act has altered ownership and control in the South African corporate sector. Using data from 187 firms between 2004 and 2016, we observed that ownership concentration measured by five large shareholders and foreign ownership has a negative impact on firm value proxied with Tobin’s Q and return on assets, while domestic share ownership has a positive relationship with corporate performance. Contrary to the agency theory notion on the role of large shareholders in minimizing losses that arise from the separation of ownership and control and significant foreign investors corporate governance practices in the host countries, the results obtained in this study suggest that local shareholders in the host capital market are important in strengthening corporate governance practices and improve corporate performance. This study contributes to the ownership-firm value relationship literature by offering new evidence on the impact of ownership concentration, foreign ownership, and domestic ownership in an emerging market undergoing transformation through programs addressing its historical inequalities.