Factors Influencing Corporate Ownership Structure in an Emerging Market: Some Issues on Entrepreneurship

This paper models the determinants of ownership structure in Bangladesh, an emerging market economy. Of the two measures of ownership, board ownership is inversely related to the performance measures used while ownership concentration of Top 1 shareholder is positively associated with all performance measures. In addition, a number of substitute governance mechanisms are in operation to determine or replace ownership structure. However, the positive relationship between performance and Top 1 shareholder's ownership raises question on the validity of the policy decision taken by the Bangladesh Securities and Exchange Commission of limiting founder-family ownership level up to 10% as part of corporate governance reform measures. On the contrary this evidence justifies recent reversal of policy of the government of Bangladesh for not taking strict measures (i.e. criminal charges) against the top entrepreneurs and businessmen for the sound growth of the fragile economy. The study indicates that mere replication of Western governance model may not be suitable for emerging markets.