The Market Value of Non-Family Firms: A Study on Ownership Concentrations, Financial Policy and Profitability

Abstract

This study investigates the market valuation effect of ownership concentration, financial policy and profitability in a sample of 109 non-family over the period 2012 to 2019. Hence, we used balance panel data to investigate the market value and possible effect of the variables identified using the General Method of Moment (GMM) estimator. The results market value is dynamic in nature, implying that last year's market value significantly affects the current market value. Although the major shareholders are not family members, ownership concentration still has significant negative effects on market value. However, the financial decision shows that leverage gives a positive and significant effect while investment and dividend policy seems to have a negative effect on market value, although the investment is insignificant. Lastly, profitability is positive and has significant effects. Lastly, profitability is positive and significant effects. This study concluded that ownership concentration, leverage and profitability have important factors affect market value. This study contributes to non-family firm’s literature and provides new empirical findings and policy implications of regulators to enhance the market value.JEL: G11, G30, G32.