Ownership Structure and the Likelihood of Financial Distress: Evidence from Joint-Stock Companies in Sétif, Algeria

Abstract

The study aims to shed light on the importance of ownership structure indicators represented by: ownership concentration, ownership of members of the board of directors and members of executive management in predicting the financial failure of companies, by collecting and analyzing data for 16 companies with shares in the state of Setif for a period of 6 consecutive years, using the logistic regression method. The study found that there is no statistically significant effect for ownership concentration, ownership of members of the board of directors, and members of executive management in predicting the financial failure of companies, which is attributed to the nature of the ownership structure of most of the companies under study, which are characterized by high ownership concentration due to the state’s control over all shares, which makes these oversight mechanisms weak in impact.