Ownership Structure and Financial Stability of Selected Listed Companies in Nigeria

Abstract

Financial stability of firms is a topical issue that is attracting global attention. High profile corporate failures in recent decades have heightened concern for corporate financial stability. The study investigated ownership structure (foreign ownership, managerial ownership and institutional ownership) and financial stability of selected listed companies in Nigeria. This study adopted ex-post facto research design. The population comprised 170 listed companies on Nigerian Stock Exchange (NSE) as at December 2018. Foreign ownership had positive and significant effect on asset turnover (R²= 51.6%, β₁= 22.58, t₍₁₂₄₎ = 3.243, P<0.05); and Managerial Ownership had positive significant effect on Working Capital (R²=76.5%, β₁=42.67, t₍₁₂₄₎ = 2.912, P<0.05). In addition, there was substantial evidence of a positive and significant relationship between Institutional Ownership and Return on Asset (R²=8.52%, β₁=25.57, t₍₁₂₄₎= 3.793, P<0.05). The study concluded that ownership structure affected financial stability of selected listed companies in Nigeria. The study therefore recommended that government should make a policy that will encourage a balanced ownership structure of listed companies that will enhance financial stability and create value for stakeholders.