ABSTRACT

The main objective of the study was to examine the effect of insider ownership, concentrated ownership and Block ownership on corporate performance of Information Communications Technology [ICT] quoted in the Nigeria Stock Exchange.Applying a purposive sampling technique, a sample of 4 out of a population 13 listed ICT firms and a correlational design was adopted. Secondary data were collected from annual reports and accounts were analysed using linear regression model (with SPSS 20). Performance was measured by return on assets, return on equity and earnings per share.The findings are that insider ownership, concentrated ownership, Block ownership have joint significant positive effect on corporate performance measured by return on assets and return on equity, while insignificant positive effect was found on earnings per share and performance growth as a performance indicator. Individually, insider ownership has insignificant negative influence on all the performance indicators used, concentrated ownership has insignificant positive influence on all the performance measures used, and Block ownership has significant positive influence on return on equity and insignificant positive influence on return on assets and earnings per share. We suggested that corporate organization should promote insider ownership (inside, concentrated, and block ownership) to send positive signals to potential investors. The Securities and Exchange Commission and Corporate Affairs Commission should not relent in ensuring best ownership structure by the boards of Nigeria listed ICT firms.

Keywords: Block ownership; concentrated ownership; corporate performance; insider ownership; Listed ICT.

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INTRODUCTION

Background and problems to the Study

From the late 1960s, Nigeria has adopted different and, sometimes, conflicting corporate ownership structures in an attempt to address, inter alia, the dismal performances of the state owned enterprises (SOEs). Ownership structure is one of the most vital subjects that have drawn the attention of researchers, policy makers, managers, investors and potential investors because of many high profile corporate failures such as well-publicized cases of Enron Corporation, Adelphia, Health South, Tyco, Global Crossing, Cendant and WorldCom, Parmalat, Vivendi, Hollinger, Ahold, Adecco, TV Azteca, Royal Dutch Shell, Seibu, China Aviation and that of Nigerian Banking Sector and also because of the decline in the profits of firms around the globe, therefore the credibility and influence of the existing insider ownership has been put to question. Today, it is one subject that is widely studied by researchers in order to find succour for firm performance. It have been agreed by various authorities that if corporate ownership is well structured by organizations there is a guarantee that the firm performance will greatly be enhanced (Shehu and Musa 2014).

The plan by the CBN in its reform agenda to limit government’s ownership in any bank to a maximum of 10 percent may not be unconnected with the apex banks’ belief that ownership of financial firms matter (Ezugwu and Itodo 2014). Besides, the possible impact of initial public offers, conversion to Plc, and mergers on ownership structure and the subsequent impact on the operating performance of companies, is an issue which has not received sufficient conclusive empirical attention in Nigeria. The consequences of these ownership restructuring exercises on the ownership structure and its impact on listed ICT firm’s Performance are the major issues addressed by this dissertation.

The literature on this subject, voluminous as it is, does not present conclusive evidence (see, for example, Demsetz& Lehn 1985; McConnel&Servaes 1990; Demsetz&Villalonga 2001; Pivovarsky 2003; Welch 2003; Chu &Cheah 2006; Farooqueet al. 2007; Aman (2011);Erni (2014); Ongore and K’Obonyo, (2011); Ongore, et al (2011); Sebastian et Al (2011); Nora and Anis (2015); Eric (2011); Roman and Persida (2012); Georgeta and Stefan (2014); Hakim and Reza (2013); Andreou, et al (2014); and Te-Kuang (2015), and many more). The majority, however, find either no relationship, positive or negative relationship or at best, conflicting results. Thus, an objective conclusion from the results of the vast research effort undertaken to date suggests that there is no strong, robust, and uniform support for the theoretical argument about the relationship between ownership and firm performance. Besides, it is generally conceded that the nature of the relationship between ownership and firm performance remains a major governance concern.

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