DOES OWNERSHIP MATTER? A STUDY OF FAMILY AND NON FAMILY FIRMS IN PAKISTAN

Researchers have been trying to find out whether ownership makes any difference to a firm's performance. The purpose of this article is to analyse whether family or non-family firms perform better. It focuses on comparison only and does not indulge in finding out reasons of the results. A sample of 100 randomly selected firms from Karachi Stock Exchange (KSE), Pakistan were examined for six years (2004-2009). Ownership variable is taken as a dummy variable besides two other independent variables: age and size. Return on Asset (ROA), Return on Equity (ROE) and Tobin's Q are used to measure firm performance. Fixed Effect Model along with statistical analysis were used to examine the effects of the variables. The statistical analysis showed that non-family firms had greater mean values for performance variables. Correlation matrix showed that the size of a firm will be small in case a family is running it. The correlation coefficient between family ownership and age is also negative. Family ownership had a negative β in every regression. Log of asset and log of age had positive βs in every model. The results thus obtained from empirical data of firms listed on KSE clearly reflect that non-family firms outperform family firms with every performance variable included in the study. This can serve as a guideline in determinig ownership structure for firms in Pakistan.