Shareholder Ownership, Financial Performance and Institutional Quality : A Quantitative Study on East Capital Group’s Global Frontier Markets Fund

This study examines the relationship between largest shareholder ownership (LSO) and financial performance of firms in frontier markets, and explores whether this relationship is moderated by country-level institutional quality. Using panel data from 2021 to 2023 on firms included in East Capital Group’s Global Frontier Markets Fund, the study applies a pooled OLS regression with return on assets (ROA) as the measure of financial performance. The results indicate a weak positive relationship between LSO and financial performance. This relationship weakens further when controlling for firm-specific characteristics such as firm size, revenue growth and leverage. The positive impact of LSO is found to be stronger in environments with higher institutional quality, suggesting that LSO is more effective in stronger institutional settings. The findings of this study highlight the role institutional quality plays in shaping the effectiveness of ownership-based governance mechanisms and contribute to the literature on corporate governance in frontier markets.