The Relationship Between Ownership Structure and Performance in Listed Australian Companies

This paper examines the relationship between ownership structure and corporate performance in Australian listed companies. The study applies the models advanced by Demsetz and Villalonga (2001), examining the relationship between ownership and performance when ownership is modelled as a multi-dimensional endogenously determined variable. OLS results suggest that ownership is significant in explaining performance. However, when endogeneity is taken into account, ownership is not statistically dependent on the performance measure. Finally, previous research by authors including Morck, Schleifer and Vishny (1988) suggests that the relationship between ownership and performance is nonlinear. We fit a generalised nonlinear model that nests models advanced previously. Results provide limited evidence of a nonlinear relationship between managerial share ownership and firm performance.