Corporate Profile, Shareholding Position and Firm Profitability: Empirical Results from Pharmaceutical and Chemical Companies of Bangladesh

Abstract

The study inspects the effect of corporate profile and shareholding position on firm profitability studying 31 listed pharmaceutical and chemical companies of Bangladesh. The analysis uses five measurements—earning per share (EPS), net profit margin (NPM), return on assets (ROA), return on equity (ROE) and basic earning power (BEP)—along with four moderating variables to define firm profitability. The findings demonstrate a positive association of independent directors and firm profitability, while female board-members generate negative results. Board size and the participation of sponsors-promoters produce no meaningful effect. The existing shareholding patterns reveal negative impacts on firm profitability. While public investors and institutes negatively affect the most, the foreign investors and sponsors-directors affect the least. The study suggests to increase the proportion of foreign shareholding and independent directors, decrease the portion of public shareholding and female directors, and opt for the new investment sources to align with positive profitability.

Keywords: Profitability, Performance, Corporate profile, Shareholding structure, Corporate governance, Board structure.

DOI: 10.7176/EJBM/13-20-05

Publication date:October 31^st 2021