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Firm Characteristics and Foreign Institutional Ownership: Evidence from India

Author

Listed:
  • Ruchi Kansil

    (Delhi School of Management, Delhi Technological University)

  • Archana Singh

    (Delhi School of Management, Delhi Technological University)

Abstract

The Government of India has taken various initiatives in recent years to improve its investment regime to attract foreign investments. The objective of this paper is to study the effect of firm characteristics on controlling stake and non-controlling stake of Foreign Institutional Ownership (FIO) in an emerging market - India. Binary and multinomial logistic regression models are applied to the dataset that cover financial years 2008 to 2014. A total of 496 publicly listed Indian non-financial firms listed on the two major stock exchanges of India (Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) as at March 31, 2014 were examined. Findings show that profitability, growth, size and risk of the firm significantly increase the probability of controlling stake of foreign institutional investors. Results also highlight that the stakes of foreign institutional investors would increase in relatively profitable, growing and larger firms. Additionally, there is a need for policy intervention to attract more and more foreign investment. With the series of reforms initiated by the Government of India, much more needs to be done to boost and maintain investor confidence.

Suggested Citation

  • Ruchi Kansil & Archana Singh, 2017. "Firm Characteristics and Foreign Institutional Ownership: Evidence from India," Institutions and Economies (formerly known as International Journal of Institutions and Economies), Faculty of Economics and Administration, University of Malaya, vol. 9(2), pages 35-53, April.
    • Handle: RePEc:umk:journl:v:9:y:2017:i:2:p:35-53
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    References listed on IDEAS

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    More about this item

    Keywords

    Firm Characteristics; Foreign Institutional Ownership; India; Panel data;
    All these keywords.

    JEL classification:

    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • O24 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Trade Policy; Factor Movement; Foreign Exchange Policy

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