The relationship between ownership structure and firm performance: An empirical analysis of listed companies in Kenya

The study investigated the effects of ownership structure on performance of listed companies in Kenya using agency theory as an analytical framework. Ownership structure was operationalized in terms of ownership concentration (percentage of shares owned by the top five shareholders) and ownership identity (actual identity of shareholders). Measures of performance were return on assets, return on equity and dividend yield. Forty two (out of fifty four) listed companies were studied using both primary and secondary data. Reliability of data was tested using Cronbachʹs Alpha, while tolerance and variance-inflation factor were used to test multicolinearity. Using Pearsonʹs product moment correlation and logistic regression, the study found that ownership concentration and government ownership have significant negative relationships with firm performance. On the other hand, foreign ownership, diffuse ownership, corporation ownership, and manager ownership were found to have significant positive relationships with firm performance.