Hidden ownership and firm performance

The previous empirical study excludes hidden ownership structure from their research. Consequently, their ownership calculation could give biased results. This study develops a novel methodology to trace the hidden ownership of each firm to its controlling owners and investigate the effects of hidden ownership on firm performance. The results show the existence of hidden ownership in Thai firms. We found the presence of hidden ownership is positively related to firm performance. Firms with hidden ownership have a higher proportion of foreign shareholders, who are more likely to be institutional investors. The presence of institutional investors might lead to better governance, active monitoring, and result in stronger firm performance. The results dispel the traditional hypothesis of wealth expropriation from minority shareholders to the ultimate owner. In addition, the results provide new avenues of focus for further studies on the motive of hidden ownership that may include price manipulation, foreign quota reserve and tax management.