Title: An empirical study on the relationship between ownership and firm performance: Taiwan evidence

Authors: Yu-Chih Lin, Shaio Yan Huang, Shu-Chao Young

Addresses: Department of Accounting, National Yunlin University of Technology, Taiwan. ' Department of Accounting, Feng Chia University, Taiwan. ' Department of Accounting, Feng Chia University, Taiwan

Abstract: This study is to investigate the relationship between ownership and firm performance in the environment in which collateralising shares by directors and supervisors is a common practice. The sample includes firms that are listed on the Taiwan Stock Exchange from 1998 to 2002 except those in the financial industry. We find that a significant positive relationship (alignment) exists between ownership and firm performance (measured by ROA and ROE) when the net ownership is high. However, when the net ownership is low, the negative relationship (entrenchment) between ownership and performance is not significant. Besides, there is a significant negative relationship between collateralised shares of directors and supervisors and performance.

Keywords: agency costs; director ownership; firm performance; Taiwan.

DOI: 10.1504/AAJFA.2008.016891

Afro-Asian Journal of Finance and Accounting, 2008 Vol.1 No.1, pp.67 - 80

Published online: 26 Jan 2008 *

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