Relationships between Ownership Structures and Corporate Performance: Evidence from Malaysia

Abstract

This study aims to examine the impacts of ownership structures (foreign ownership, linearity of foreign ownership, state ownership, and linearity of state ownership on corporate performance using a panel data from Malaysia listed companies over a period of 2000 to 2009. Weighted Least Square (WLS) models are used to test the relationships. The results show that the impact of foreign ownership is positive and significant on corporate performance while the impact of state ownership is negative and significant on corporate performance. These results suggest that foreign ownership enhance corporate performance while state destroys corporate performance. Furthermore, the results also show that foreign and state ownerships have linear relationship with corporate performance. This study concludes that an increase in foreign ownership states may enhance corporate performance as linear relationship exists. Finally, this study provides evidence that investors may make appropriate investment decisions to invest in the companies linked with foreign ownership.

DOI: 10.5901/mjss.2015.v6n3s1p70