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Does Ownership Structure Influence Firm Value? Evidence from India

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Author Info
Jayesh Kumar (Xavier Institute of Management)

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Abstract

This paper examines the effect of ownership structure on the firm performance for an unbalanced panel of 2478 Indian corporate firms from 1994 to 2000. We examine the effect of interactions between corporate, foreign, institutional, and managerial ownership on firm performance. Using panel data framework, we show that a large fraction of cross- sectional variation, in firm performance can be explained by unobserved firm heterogeneity. We provide evidence that the shareholding by institutional investors and managers affect firm performance non- linearly, after controlling for observed firm characteristics and unobserved firm heterogeneity. We also find that the equity ownership by foreign and corporate shareholders do not influence firm performance. We find no evidence in favor of endogeneity of ownership structure.

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Paper provided by EconWPA in its series Finance with number 0406008.

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Length: 48 pages
Date of creation: 20 Jun 2004
Date of revision:
Handle: RePEc:wpa:wuwpfi:0406008

Note: Type of Document - pdf; pages: 48
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Web page: http://129.3.20.41

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Related research
Keywords: Corporate Governance; Ownership Structure; Firm performance; Panel Data; India.;

Find related papers by JEL classification:
G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Capital and Ownership Structure
G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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    Other versions:
  4. Jayati Sarkar & Subrata Sarkar, 2000. "Large Shareholder Activism in Corporate Governance in Developing Countries: Evidence from India," International Review of Finance, International Review of Finance Ltd., vol. 1(3), pages 161-194. [Downloadable!] (restricted)
  5. Short, Helen & Keasey, Kevin, 1999. "Managerial ownership and the performance of firms: Evidence from the UK," Journal of Corporate Finance, Elsevier, vol. 5(1), pages 79-101, March. [Downloadable!] (restricted)
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  11. Morck, Randall & Shleifer, Andrei & Vishny, Robert W., 1988. "Management ownership and market valuation : An empirical analysis," Journal of Financial Economics, Elsevier, vol. 20(1-2), pages 293-315, January. [Downloadable!] (restricted)
  12. Rafael La Porta & Florencio Lopez-de-Silane & Andrei Shleifer, 1998. "Corporate Ownership Around the World," NBER Working Papers 6625, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  13. McConnell, John J. & Servaes, Henri, 1990. "Additional evidence on equity ownership and corporate value," Journal of Financial Economics, Elsevier, vol. 27(2), pages 595-612, October. [Downloadable!] (restricted)
  14. Claessens, Stijn & Djankov, Simeon & Lang, Larry H. P., 2000. "The separation of ownership and control in East Asian Corporations," Journal of Financial Economics, Elsevier, vol. 58(1-2), pages 81-112. [Downloadable!] (restricted)
  15. Cui, Huimin & Mak, Y. T., 2002. "The relationship between managerial ownership and firm performance in high R&D firms," Journal of Corporate Finance, Elsevier, vol. 8(4), pages 313-336, October. [Downloadable!] (restricted)
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    Other versions:
  17. Barbosa, Natalia & Louri, Helen, 2002. "On the determinants of multinationals' ownership preferences: evidence from Greece and Portugal," International Journal of Industrial Organization, Elsevier, vol. 20(4), pages 493-515, April. [Downloadable!] (restricted)
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  19. William L. Megginson & Jeffry M. Netter, 2001. "From State to Market: A Survey of Empirical Studies on Privatization," Journal of Economic Literature, American Economic Association, vol. 39(2), pages 321-389, June. [Downloadable!] (restricted)
  20. Himmelberg, Charles P. & Hubbard, R. Glenn & Palia, Darius, 1999. "Understanding the determinants of managerial ownership and the link between ownership and performance," Journal of Financial Economics, Elsevier, vol. 53(3), pages 353-384, September. [Downloadable!] (restricted)
    Other versions:
  21. Shleifer, Andrei & Vishny, Robert W, 1986. "Large Shareholders and Corporate Control," Journal of Political Economy, University of Chicago Press, vol. 94(3), pages 461-88, June. [Downloadable!] (restricted)
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