The Effect of Ownership Structure on Firm’s Financial Performance: An Empirical Study on the Most Active Firms in the Egyptian Stock Exchange

Abstract

This paper seeks to examine the effect of ownership structure on firm financial performance in Egypt. Using a sample of 50 more active Egyptian companies listed on the Egyptian Stock Exchange of the non-financial sector covering the period of three financial years from 2007 to 2009. Ownership Structure is represented by Managerial Ownership, Institutional Ownership, Block holder Ownership and Free Float Ownership. Return on Assets (ROA) and Return on Equity (ROE) are used as a proxy for Firm financial Performance. Using multiple linear regressions as method of estimation, the results provide evidences that there is no significant relationship between ownership structure variables and firm financial performance measures by (ROA and ROE). This study provides many recommendations to the regulatory authorities in Egypt regarding ways to strengthen and reinforce the internal governance structure of companies especially ownership structure.

Keywords: Corporate governance, Ownership structure, Firm Financial Performance, Egypt