Ownership Structure, Diversification, and Corporate Performance Based on Structural Equation Modeling

Executive Summary Instead of disparately measuring relations between pairs of two measurements, in this study we use structural equation modeling to simultaneously measure the intricate inter-relationships amongst ownership structure, diversification, and corporate performance. We find that ownership concentration is positively related to corporate performance, the degree of diversification and corporate performance are negatively related, and that when examining the mediator effect of diversification between ownership structure and corporate performance, corporations decrease diversification to maintain corporate value.