Abstract

Drawing upon prior empirical research on the potential endogeneity of both ownership structure and firm
performance in developed markets, this study examines the reverse causations that can exist between corporate
performance and ownership structure in Tunisian listed companies. The study was extended to include board
characteristics as a principal internal control mechanism for monitoring managers and an assessment of its
potential effects on firm performance and ownership structure. Our findings proved the existence of endogeneity
and a two-way causality between ownership variables and Market to book performance. However, our findings
also revealed that corporate governance in Tunisian firms needed to be more strengthened based on board
characteristics.

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