Ownership Structure And Return On Assets Of Listed Firms In Nigeria

Abstract

This study investigated the effect of ownership structure on the return on assets of firms listed on the Nigerian Exchange Group. Data on four components of ownership structure (institutional ownership, ownership concentration, foreign ownership, and managerial ownership) and Return on Assets (ROA) were extracted from published financial statements of 79 firms for a period of eleven years (2010 to 2020). Data on the Debt to Equity ratio was also extracted and used to control for financial leverage in the study. An ex post facto research design was adopted, while panel data Generalized Method of Moments Regression was used in analyzing the data based on the outcome of various data screening and diagnostic tests. The results revealed that institutional ownership, managerial ownership, and ownership concentration had significant effects on the return on assets (ROA), while foreign ownership had no significant effect on the return on assets of listed firms in Nigeria. The study concludes that ownership structure components substantially influence the ROA of listed firms in Nigeria and recommends encouraging institutional ownership as it has a significant positive trade-off on the return on assets of listed firms in Nigeria