Ownership Structure and Corporate Performance in India
DOI:
https://doi.org/10.1956/jge.v12i2.429Keywords:
Insider ownership, firm value, ownership structure, corporate performance, MVBR.Abstract
The ownership structure of a publicly held Corporation is one of the internal mechanisms of corporate governance. Insider ownership is one of the internal controlling mechanisms that could theoretically reduce agency costs. Earlier researcher has investigated the effects of insider ownership on firm performance. But we have attempted to add few more dimensions to it. Firstly, earlier studies did not attempt to study this relationship after the implementation of revised corporate governance code in 2006 in India and after the changes in the disclosures of insider ownership as per the clause 49 of the listing agreement. Secondly, earlier studies did not take into account the time lag for the studies on Indian markets. We have attempted time lag studies using panel data on the Indian Markets using MBVR ratio as a performance measure. The result shows that corporate performance is significantly influenced by insider ownership. Hence corporate governance issues needs to be dealt with great care.
Â
References
Ekta Selarka (2005), Ownership Concentration and Firm Value: A study from the Indian Corporate Sector’, Emerging Markets Finance and Trade, vol.41, no. 6, http://www.jstor.org/stable/27750475.
Jayati Sarkar and Subrata Sarkar (2000), Large Shareholder Activism in Corporate Governance in Developing Countries: Evidence from India International Review of Finance, 1(3), September 2000. DOI: 10.1111/1468-2443.00010.
Jayati Sarkar and Subrata Sarkar (2003), ‘Corporate Governance Reforms and Corporate Sector Developments in India’ in Darryl Reed and Sanjoy Mukherjee (eds), Corporate Governance, Economic Reforms and Development. New Delhi: Oxford University Press.
Jayesh Kumar (2003), Does Ownership Structure influence Firm Value? Evidence from India SSRN working paper 464521 DOI: 10.2139/ssrn.464521.
Khanna, T, & Palepu, K. (2000). Emerging market business groups, foreign investors, and corporate governance (No. w6955). National Bureau of Economic Research DOI: 10.3386/w6955.
Manoranjan Pattnayak (2008) “Insider Ownership and Firm Value: Evidence from Indian Corporate Sector “http://mpra.ub.uni. DOI: 10.2139/ssrn.962307.
Morck R, Andrei Shleifer and Robert W Vishny (1988) Management ownership and market valuation , Journal of Financial Economics, 20, 293-315 http://scholar.harvard.edu/files/shleifer/files/mgt-own-mkt-val.pdf.
McConnell, J. J., & Servaes, H. (1990). ‘Additional evidence on equity ownership and corporate value.’ Journal of Financial economics, 27(2), 595-612. http://faculty.london.edu/hservaes/jfe1990.pdf.
Morck, R., Wolfenzon, D., & Yeung, B. (2004). ‘Corporate governance, economic entrenchment and growth’ (No. w10692). National Bureau of Economic Research. http://www.nber.org/papers/w10692.pdf.
Shleifer & Vishny (1986). “Large Shareholders and Corporate Controlâ€. Journal of political economy, 94(3 part1) pp.461-88 DOI: 10.1086/261385.
Phani, Reddy, Ramachandran, Bhattacharyya, (2004) “Insider Ownership, Corporate Governance and Corporate performance†NSE Research initiative proposal SSRN No. 696462 http://papers.ssrn.com/sol3/papers.cfm?abstract_id=696462.