Ownership Structure Investigating the Impact of Ownership Concentration on Financial Performance of Swedish Firms

Abstract

This thesis investigates the impact of ownership concentration on ROA of Swedish firms listed on Nasdaq Stockholm from 2005 to 2023. The research question posed was: “Does ownership concentration influence the performance (ROA) of Swedish firms?” Data from Capital IQ and Datastream covering the final sample of 595 firms and 5,207 observations was analyzed using an estimation model in form of an OLS regression model, with ROA as the dependent variable and NOSHFF (ownership concentration) as the independent variable. The results show a significant positive linear relationship, indicating higher ownership concentration correlates with higher ROA, contrary to the initial hypothesis of this thesis and much of the previous research, which typically found no significant or negative relationship. These findings align with some studies, such as those by Thomsen and Pedersen (2000) and Ogabo, Ogar, and Nuipoko (2021), which reported a positive correlation up to a certain threshold. However, this thesis does not find any significant nonlinear relationship, therefore suggesting that no such threshold exists. Future research is recommended to explore why nonlinear modeling show insignificant results in studying the relationship between ownership concentration and firm performance in the Swedish context along with considering including fixed effects for the specific exchange to mitigate confounding factors.