The relationship between ownership structure and the value of firms listed at the Nairobi stock exchange
Abstract
This paper sought to establish whether there is a relationship between ownership structure
and the value of firms listed at the Nairobi Stock Exchange. The study focused on the
concentration of ownership in order to test the monitoring and expropriation hypothesis and
on insider ownership in testing of the convergence-of-interest and entrenchment hypothesis.
Empirical evidence in this study supports a quadratic relationship between firm value and
ownership concentration. These results confirm not only the monitoring but also the
expropriation effect for the very highest concentration values. Additionally, the insider
ownership model provides results that support a cubic specification for the value-insider
ownership relation. This evidence therefore is interpreted to be consistent with both the
convergence-of-interests and the entrenchment effect hypotheses.
Citation
MBAPublisher
University of Nairobi School of Business, University of Nairobi
Description
Master of Business Administration