The Effect of Ownership Structure on Share Price Volatility of Listed Companies in Amman Stock Exchange

Abstract

This dissertation investigates the effect of different ownership structure (The largest, Five Greatest, Institutional and Individual Shareholder Structure) on a share price volatility of listed companies in Amman Stock Exchange. The research has four hypotheses. To test each hypothesis; a model was defined based on dependent variables employed to measure share price volatility. A panel data procedure is applied to the dataset that includes 51 Jordanians companies from 2005 to 2009. Two empirical models are used OLS (Ordinary Least Square) and SUR (Seemingly Unrelated Regression), and we found that SUR shows better and accurate result than OLS. The results provide evidence of positive statistically significant relationship between the largest shareholder and share price volatility .Also; the results reveal a positive and significant relationship between the five greatest shareholder and share price volatility. The study, however, could not provide a significant relationship between the individual and institutional shareholder in one hand and share price volatility on the other. These results are consistent with prior empirical studies. This dissertation helps managers and investors to have insight into the nature of ownership structure and is it possible for companies’ ownership structures to influence firms’ risk and the stocks’ return.