Ownership Structure and Financial Performance of Quoted Building Materials Firms in Nigeria
- January 11, 2019
- Posted by: RSIS
- Category: Social Science
International Journal of Research and Innovation in Social Science (IJRISS) | Volume II, Issue XII, December 2018 | ISSN 2454–6186
Samuel B. Adewumi, Yakubu A Acca, Olumuyiwa Afolayan
Department of Economics, University of Nigeria, Nsukka, Nigeria
Abstract:-Various studies on Ownership structure and firm’s financial performance have been conducted in different parts of the globe with different findings that are mixed and inconclusive and in Nigeria, studies conducted in this area are mostly focused on the financial sector which is a gap that needs to be filled. This study fills the gap by examining the impact of ownership structure on financial performance of quoted building material firms in Nigeria. The population of the study consists of six (6) firms quoted on the Nigerian stock exchange as at 31st December 2016 out of which four (4) firms were selected using two criteria as the sampling technique which are Cement Company that made available their annual report of thirteen (13) years and Cement Company quoted on the Nigerian stock exchange before 2004. The study uses multiple regressions as a tool for analysis. The study reveals that institutional ownership, managerial ownership and ownership concentration showed a positive significant impact on financial performance of building materials firms in Nigeria.The study concludes that ownership structure affects financial performance of building materials firms in Nigeria and therefore recommends that Security and Exchange Commission should encourage more potential managers, Institutional shareholders, concentrated owners to invest in long term investment in building materials industry as both managers, Institutional shareholders and concentrated owners enhances financial performance of building materials firms in Nigeria.
Keywords: Ownership structure, Managerial ownership, Institutional ownership, Ownership concentration and financial performance.
Ownership structure forms effects on financial performance of firms have been of particular research interest in the literature of corporate finance. Generally, interest of managers and shareholders are not aligned which result to problems that reduce a firm’s value and financial performance (Tatiana &Stela, 2013). Shareholders are always regarded as the corporate owners, while directors are agents or representatives of shareholders who are supposed to allocate business resources in a way to increase their wealth (Benjamin, Love and Kabiru 2014).Beni and Alexander (1999) found that owner-managers firms are more efficient than non-owner managers firms because owner-managers have stakes in the firm while non-owner managed firms are less efficient because they seek after their own personal interests at the expense of other shareholders.