Ownership Concentration and Firm Performance: A Case of Non-financial Sector Family Firms in Pakistan

The present examined the effect of ownership concentration on family firms’ performance in Pakistan. The performance measures included both accounting and market performance variables. The estimation technique employed in the study was Generalized Method of Moments. The findings clearly indicate that concentrated ownership is harmful for family firms’ performance. Although, the results are contradictory to previous studies in Pakistani context, these were consistent with the entrenchment effect. The results suggest that dominant family shareholders are forceful and they are engaged in tunneling firms’ resources for their personal gains at the costs of external shareholders that is detrimental for firms’ performance.