Author(s)

Bernard Ogabo¹, Godspower Ogar², Tasha Nuipoko³

¹Coventry University, Coventry, UK.
²Department of Accounting, Faculty of Management Sciences, University of Calabar, Calabar, Nigeria.
³University of Dundee, Dundee, UK.

The separation between ownership and control has been identified as the main cause of the agency problem, resulting in a disparity between the interests of the agents and those of the principals, and consequently, there is an impact on performance. Corporate governance mechanisms are the main ways of resolving the agency problem at all levels. This study examines the impact of ownership structure on firm performance of the United Kingdom’s FTSE 350 companies from the 2008-2018 fiscal years. Specifically, the impact of managerial and institutional ownership on return on asset, return on equity, and Tobin’s Q as measures of performance were investigated. A panel data set of 48 companies with 432 observations was analysed using descriptive statistics, correlation matrix, and regression analysis. The results revealed that there is a significant positive impact of managerial ownership on firm performance without any entrenchment effect at managerial ownership above 5%. The regression results showed that the control variables of the percentage of independent directors on the board increase firms’ performance, while the percentage of women on the board as a control variable decreases firms’ performance. These results are succinct contributions to the extant literature on the impact of ownership structure and performance.

Corporate Governance, Agency Problem, Managerial Ownership, Institutional Ownership, Entrenchment Hypothesis, Endogeneity

Ogabo, B. , Ogar, G. and Nuipoko, T. (2021) Ownership Structure and Firm Performance: The Role of Managerial and Institutional Ownership-Evidence from the UK. American Journal of Industrial and Business Management, 11, 859-886. doi: 10.4236/ajibm.2021.117053.