Institutional Ownership and Firm Performance: Panel Evidence from Pakistan’s Listed Sugar Companies

Objective: This study aims to explore the relationship of domestic and foreign institutional ownership with firm's performance in the sugar sector of the listed companies in Pakistan. It examines if there is any difference in the ownership–performance relationship based on the institutional shareholders' origin and accounting-based and market-based outcomes.Methods: The materials used in the study were the sugar company lists that were examined in recent five years from 2018–2022 with quantitative non-experimental panel method. The original sample contains 135 firm-year observations, however, for regression model we can have 134 complete observations. ROA, ROE, NPM and Tobin's Q were estimated using pooled ordinary least squares models in Stata, controlling for firms size, liquidity, growth in assets, leverage and asset composition.Results: There was a positive relationship between foreign institutional ownership and ROA (coefficient = 0.580, p = .069) at 10% level of significance but not at 5%. There was a negative relationship between institutional domestic shares and the net profit margin (coefficient = −31.389, p = .036). There was no statistically significant relationship between either type of institutional ownership and ROE and the overall model was not significant (p = .989) when using the Tobin's Q model. There were variations in the pattern of findings for each performance indicator.Conclusion:The findings suggest that the ownership of different kinds of institutions can not be universally considered as financial performance indicator for the sugar industry of Pakistan. The origin and selection of the ownership and outcome variables is important for understanding the associations observed. These results provide insights into each sector, but do not allow for causal implications due to the observational design.