Effect of ownership structure and political connection on financial performance of marble industry in KP, Pakistan

Abstract

This study estimates the effect of ownership structure and political connection on the financial performance of marble industry. Structure interviews were conducted to collect data from a sample of 90 privately owned marble firms. The study considers ROA (Return on Assets) as a proxy for financial performance and is used as dependent variable whereas the independent variables include size, age, ownership structure, political affiliation and number of employees. Outcomes display that family owned firms are healthier in financial performance than non-family owned firms. The outcomes furthermore show that firms which are politically affiliated through ownership have positive association with financial performance, indicating that link between owner and politician is beneficial for financial performance of firms because they can take benefits from each other. These findings imply that creating political ties in companies would increase the financial performance of the firms; irrespective of the fact that the firm is family or non-family owned.