OWNERSHIP CONCENTRATION AND FINANCIAL PERFORMANCE OF MANUFACTURING FIRMS IN SUB-SAHARA AFRICA

ABSTRACT

The study investigates the effect of ownership concentration on financial performance of manufacturing firms in Nigeria. The study employs secondary data from the various Financial Reports of listed sampled manufacturing firms in the selected countries and Bloomberg. employing the use of descriptive statistics, correlation analysis, panel unit root analysis, co-integration test, and the system-GMM for a period 2008-2017 the data were estimated with the aid of Eview 9.0 econometric statistical package using dependent variables (return on asset, and tobin-Q), explanatory variables (government ownership concentration, block ownership concentration, and institutional ownership concentration), and moderating variables of Total Assets and firm’s Age respectively. The empirical results revealed that government ownership concentration, block ownership concentration and institutional ownership concentration all have significant effect (positive and negative) on the performance indicators (ROA, TOBIN Q) used in the study. All the explanatory variables (government ownership, block ownership, institutional ownership) were all significant at 1% and 5% significance level. The result of robustness check also revealed that government ownership concentration has predominately negative effect on financial performance for the respective countries. The coefficient of block ownership concentration is also largely positive for most of the manufacturing firms, while that of institutional ownership concentration is largely negative. Based on these, the study recommends that the policy makers and government should create favorable policies to encourage balanced investment from all categories of investors and ensure that ownership does not only grow among spread owners but rather few owners who have the where withal to diversify and attract skills and competencies to improve firm performance. Government should also retain some ownership in foreign and local firms to enhance shareholders confidence. This study included only listed firm and a further study is recommended to include un-listed firms and evaluate how ownership structures affects their financial performance.