Ownership Concentration and Performance: JSE-TOP40 Perspective
Abstract
This study aims to address the problem of agency cost by examining the impact of ownership concentration on the performance of the JSE-TOP40 listed companies, using the profitability and market variable. The effectiveness of ownership concentration in alleviating the agency cost issue was investigated over a period from 2010 to 2018. The findings revealed that company performance deteriorated with managerial ownership for JSE-TOP40 companies. Likewise, results showed that foreign ownership concentration negatively impacted performance. The persistence of agency costs in these companies imply that companies should continue to monitor them vigorously and apply corporate governance to the detriment of the poor performance. Further, corporate governance implication should be questioned as to its benefit extracted towards these companies.
References
Ali, A. Qiang, F. and Ashraf, S. 2018. Regional dynamics of ownership structure and their impact on firm performance and firm valuation: A case of Chinese listed companies. Review of International Business and Strategy, 28(1), p.129-147.
Al-Saidi, M. and Al-Shammari, B. 2015. Ownership concentration, ownership composition and the performance of the Kuwaiti listed non-financial firms. International Journal of Commerce and Management, 25(1), p.108-132.
Briano-Turrent, G. C. and Rodriguez-Ariza, L. 2016. Corporate governance ratings on listed companies: An institutional perspective in Latin America. European Journal of Management and Business Economics, 25(1), p.63-75.
Buthelezi, L. 2020. A disciplinary hearing for Deloitte’s auditors of African Bank took 2 years, and it’s finally over.
[online] Available from:
[Accessed: 21 January 2022]
De-la-Hoz, M. C. and Pombo, C. 2016. Institutional investor heterogeneity and firm valuation: Evidence from Latin America. Emerging Markets Review, 26(1). p. 197-221.
Gyimah, A. G. Addai, B. and Asamoah, K. 2021. Macroeconomics determinants of mutual funds’ performance in Ghana. Cogent Economics & Finance, 9(1), p.1-20.
Jensen, C. J. and Meckling, W. H. 1976. THEORY OF THE FIRM: MANAGERIAL BEHAVIOUR, AGENCY COSTS AND OWNERSHIP STRUCTURE. Journal of Financial Economic, 3(1), p.305-360.
Khoza, R. J. 2013. Let Africa Lead: African Transformational Leadership for 21st Century Business.2nd Edition. South Africa: Kirkpatrick & Associates.
Lazonick, W. 2017. Innovative Enterprise Solves the Agency Problem: The Theory of the Firm, Financial Flows, and Economic Performance. Institute for New Economic Thinking, 62(1), p.1-43.
Lepore. L. Paolone, F. Pisano, S. and Alvino, F. 2017.A cross-country comparison of the relationship between ownership concentration and firm performance: does judicial system efficiency matter? Corporate Governance: The International Journal of Business in Society. 17(2), p. 321-340.
Mangena, M. and Chamisa, E. 2008. Corporate governance and incidence of listing suspension by the JSE Securities Exchange of South Africa: An empirical analysis. The International Journal of Accounting. 43(1), p.28-44.
Mollah, S. Al Farooque, O. and Karim, W. 2012. Ownership structure, corporate governance and firm performance: Evidence from an African emerging market. Studies in Economic and Finance. 29(4), p. 201-319.
Mosimanyane, L. and Marozva, G. 2023. Ownership concentration and agency cost on the performance of Johannesburg Stock Exchange listed companies. Acta Universitatis Danubius, 19(2),
Palaniappan, G. 2017. Determinants of corporate financial performance relating to board characteristics of corporate governance in Indian manufacturing industry: An empirical study. European Journal of Management and Business Economics, 26(1), p.67-85.
Rossi, F. Barth, J. R. and Cedula, R. J. 2018. Do shareholders coalition affect agency costs? Evidence from Italian-listed companies. Research in International Business and Finance, p. 1-20.
Rossouw, G. J. and Styan, J. 2019. Steinhoff collapse: a failure of corporate governance. International Review of Applied Economics, 33(1), p.163-170.
Rossouw, G. J., van der Watt and Malan, D. P. 2002. Corporate Reforms in Developing Countries. Journal of Business Ethic, 37(3), p. 289-302
Saleh, A. S. Halili, E. Zeitun, R. and Salim, R. 2017. Global financial crisis, ownership structure and firm financial performance: An examination of listed firms in Australia. Studies in Economics and Finance, 34(4), p. 447-465.
Sutton, C., Veliyath, R. Pieper, T. M. Hair JR, J.F. Caylor, M. 2017. Secondary agency conflicts: A synthesis and proposed measurement model. Long Range Planning xxx, p.1-16.
Tawfeeq, T. and Alabdullah, Y. 2018. The relationship between ownership structure and firm financial performance: Evidence from Jordan. Benchmarking: An International Journal, 25(1), p.319-333.
Tshipa, J. Brummer, L. Wolmarans, H. and Du Toit, E. 2018. The impact of flexible corporate governance disclosure on value relevance. Corporate Governance: The International Journal of Business Society.
Tuggle, C. S. Sirmon, D. G. Reutzel, C. R. and Bierman, L. 2010. COMMANDING BOARD OF DIRECTORS ATTENTION: INVESTIGATING HOW ORGANSISATIONAL PERFORMANCE AND D CEO DUALITY AFFECT BOARD MEMBERS ATTENTION TO MONITORING. Strategic Management Journal, 31(1), p. 946-968.
Van Wyk, P. 2021. VBS liquidator looks to claw back the money by suing KPMG for R864 million.
[online] Available from:
[Accessed: 21 January 2022]
Waweru, N. M and Prot, N. P. 2019. Corporate governance compliance and accrual earnings management in eastern Africa: Evidence from Kenya and Tanzania. Managerial Auditing Journal, 33(2), p.171-191.
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2024 Lethabo Mosimanyane, Godfrey Marozva
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.
The author fully assumes the content originality and the holograph signature makes him responsible in case of trial.
