Relationship Between Ownership Structure and Financial Performance of Quoted Consumer Goods Companies in Nigeria

Abstract

This study examines the relationship between ownership structure and financial performance of listed companies in Nigeria. Drawing from agency theory, the study investigates how managerial ownership and blockholder ownership influence firm performance, proxied by return on assets (ROA). The separation of ownership and control in modern corporations creates agency conflicts between managers and shareholders, potentially leading to managerial opportunism and expropriation of minority interests. Ownership structure is therefore considered a key corporate governance mechanism capable of mitigating agency problems. Using an ex-post facto research design, panel data were collected from 74 companies listed on the Nigerian Exchange Group covering the period 2012–2021, yielding 740 firm-year observations. Data were sourced from annual financial statements and analyzed using multiple regression techniques. The findings reveal that blockholder ownership has a significant negative effect on financial performance, suggesting that excessive ownership concentration may enable controlling shareholders to pursue private benefits at the expense of firm value. Conversely, managerial ownership exhibits a significant positive relationship with financial performance, supporting the alignment hypothesis that managerial equity participation reduces agency costs and enhances firm outcomes.The study concludes that ownership structure plays a significant role in shaping corporate performance in emerging markets such as Nigeria. The findings provide policy implications for regulators and investors regarding optimal ownership design and minority shareholder protection.