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Eduardo Schiehll



This study gathers additional evidence on the association between ownership concentration and firm performance, as measured by the firm’s Q ratio. Using panel data from a sample of 159 Canadian public firms over a three-year period, I focus on the distinction between large inside shareholders, who directly participate in the management of the firm, and large outside shareholders, who do not. I examine whether direct and indirect monitoring on the part of large shareholders has an impact on the association between ownership concentration and firm performance. Along with the distinction between large inside and outside shareholders, this study also investigates whether concentration of voting rights is associated to firm performance, and whether the identity of the owner affects this association. The findings suggest that large inside shareholdings tend to be negatively associated to firm performance, while no association is found in firms with a majority of large outside shareholdings or firms combining large inside and outside shareholdings in its ownership structure. Concentration of voting rights is negatively associated to firm performance only in firms with a majority of large outside shareholders, suggesting that the market may not discriminate between voting rights and ownership concentration in owner-managed firms. Although the results for the identity of large shareholders are not conclusive, there is evidence that family and institutional large shareholders wield different performance impacts.

Keywords: Firm Performance, Ownership Concentration, Large Shareholders, Canada

How to cite this paper: Schiehll, E. (2006). Ownership structure, large inside/outside shareholders, and firm performance: evidence from Canada. Corporate Ownership & Control, 3(3), 96-112. http://doi.org/10.22495/cocv3i3p8