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Ownership Structure and Financial Performance - Essay Example
Author : deliaschaefer
Pages 7 (1757 words)
The basic aim of the paper is to conduct a detailed exploring the impact of ownership structure on firm’s performance. In order to develop a discussion on this relation corporate governance practices from two Anglo-American countries that are UK and US have been discussed. …
The paper talks about the measurement of the ownership structures with respect to financial performances and finally generates an understanding of US and UK based companies by distinguishing them on the basis of ownership identities and level of concentration. The development in corporate governance practices and regulations pertaining to disclosures of ownership are also discussed. Various measures of financial performance are highlighted and discussed in relation with the research topic. It has been concluded that ownership structure has an impact on financial performances, but with varying interests as there are other internal and external factors that may play a vital role in reducing or increasing productivity. It has been identified in this report that the relationship between ownership structure and financial performance of firms is not observed to have a similar trend in different countries.
Corporate governance comprises of control mechanisms through which corporations are governed and directed to perform their duties effectively. The ownership structure needs to be directed by corporate governance because lack of transparency of ownership structure may have an adverse impact on financial performances. In other words, it can be said that ownership structure shows the types and compositions of different shareholders that have an influence on company’s key decisions areas so they need to be administered by corporate governance in order to carry out their processes in ethical and transparent manner. The purpose of this paper is to generate an understanding of the relationship of ownership structure and company’s performance. In this regard, investigation of UK and United companies is carried out in this paper.