Sustainable development: trend in ownership structure and financial performance in Thailand

Purpose: Exploring trends in ownership structure and financial performance contributes significantly to sustainability development. Distinct from developed markets, an emerging market like Thailand, characterised by high levels of family ownership and concentrated ownership structures, allows us to explore how emerging markets dynamics influence financial performance. Motivated by developments in Thai politics and economy in early 2000, we explore trends in ownership structure and financial performance, capturing both Thaksin rules (in 2002 and 2012) and the military government in 2007.

 Design/methodology/approach: Following Masulis et al. (2011) and relying on the Business Online (BOL) database for the year 2002, 2007 and 2012, we classify the largest 2,500 private and public firms into 5 ownership types including widely held, family (non-family) business firms and family (non-family) business groups, respectively. We then rely on fixed-effect pooled regressions and difference-in-difference analyses to investigate the relationship between these ownership types and firm performance. 

Findings: We detect a shift towards more business groups (both family and non-family), with a decline in widely held firms over the decade. The year 2007 under the military government presented unique challenges, providing short-term stability but creating long-term uncertainties. Non-family business firms/groups generally perform better. While being listed has a positive (negative) effect on the profitability of family (non-family) business firms, founder involvement provides support in the widely held and family group firms. Additionally, the military government has a positive (negative) effect on the profitability of widely held (family business) firms. Finally, our findings are consistent with the altruism hypothesis based on agency theory. Originality/value: To the best of the authors’ knowledge, this study is the first to use the Business Online (BOL) database to identify business groups and family businesses and cover both private and public firms. We also explore managerial ownership surrounding the rise and fall of the Thaksin era.