Do ownership Concentration and Leverage Influence Firms’ Value? Evidence from Panel Data in Jordan

Abstract

Elevating firm performance to optimal levels in order to maximize the firm value has been one of the concerns in corporate finance, due to the challenges accompanied with the failure in corporate control that led to successive financial scandals in the last decade worldwide. Hence, this study extends previous researches that were interested in the investigations of the effect of the key ownership structures in the emerging markets, by depending mainly on panel data analysis applied on a sample that consists of 83 non-financial firms listed at Amman Stock Exchange (ASE) during the period 2005-2013; to form two firm’s value equations by relying on two dependent variables which are; Return on Assets (ROA), and Market to Book value (M/B). Regarding the explanatory variables there are four indicators representing various measures of ownership concentration depending mainly on the percentages of shares held by block holders in firms. In addition, the control variables in the two models consists of indicators for leverage; size, tangibility, business risk, and liquidity. The empirical findings are consistent with many prior studies that were applied on both Jordan and many emerging markets; in that, the concluding remarks support the existence of relationship between corporate concentration, leverage and firm’s value.