Impact of Ownership Concentration on firm Risk and Value: A Comparative Study of USA and China

Muhammad Sajid Shehzad; Zahid Irshad Younis; Shahid Manzoor Shah

doi:10.63056/

Authors

Muhammad Sajid Shehzad M.Phil Scholar, Lahore School of Accountancy and Finance, The University of Lahore Author
Zahid Irshad Younis Lecturer, Berlin School of Business and Innovation, Berlin, Germany Author
Shahid Manzoor Shah Assistant Professor, Lahore School of Accountancy and Finance, The University of Lahore Author

DOI:

https://doi.org/10.63056/

Keywords:

Firm risk, firm value, ownership concentration, firm size, liquidity and leverage

Abstract

This study examined the impact of ownership concentration on firm risk and firm value in two major global economies the USA and China using panel data from 191 firms in each country over the period 2000–2019, sourced from the Thomson Reuters Assets IV database. Employing the Generalized Method of Moments (GMM) through STATA software, the results revealed that ownership concentration has an insignificant impact on firm risk in the USA, while firm size significantly and positively influences it. In contrast, for China, ownership concentration and control variables such as firm size and leverage show significant negative effects on firm risk, whereas liquidity has a significant positive effect. The second model found that ownership concentration and all control variables positively and significantly affect firm value in both economies. Policy recommendations suggest periodic reviews of corporate governance to maintain optimal ownership structures, reduce agency costs, and enhance performance. Moreover, private firms, particularly in China, should be encouraged to adopt stronger governance practices to boost efficiency, firm value, and overall economic growth.