Ownership Concentration, Firm Performance, and Dividend Policy in Hong Kong

The relations among ownership concentration in family firms, firm performance, and dividend policy in Hong Kong are explored. Three questions are investigated: (1) Is firm operating performance and value affected by concentrated family ownership? (2) Is dividend policy affected by concentrated family ownership? (3) What impact does corporate governance have on performance, value, and dividends in family-controlled firms? Published data on 412 publicly listed Hong Kong firms were collected for the years 1995-1998. Three main findings were reported: (1) analysis shows no positive relationship between family ownership and firm performance (measured as return on assets, return on equity, and market-to-book ratio); (2) family ownership had little relationship to dividend policy; and (3) composition of the board of directors (proportion of independent non-executive directors, presence of audit committee) has little impact on firm performance and dividend policy. Finally, several policy implications derived from the analysis are presented. (TNM)