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Ownership Structure and Corporate Firm Performance

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  • Jayesh Kumar

    (Indira Gandhi Institute of Development Research)

Abstract

Corporate Governance deals with the issue, how suppliers of finance to corporations assure themselves of getting a return on their investment. Several Studies have examined the relationship between managerial ownership and firm performance. Using different samples most of the studies provide general support for the argument that increase in managerial ownership increases firm performance. However, these results have been questioned recently. This work examines empirically the effects of ownership structure on the firm performance for a large sample of Indian Corporate Firms, from an 'agency perspective'. We examine the literature on this topic by examining the effect of interactions between corporate, foreign, financial, institutional, and managerial ownership. We provide empirical evidence, which suggests that firm size and age is nonlinearly related to the firm performance. Using panel data framework, we show that a large fraction of cross-sectional variation, in performance, found in several studies, is explained by unobserved firm heterogeneity, rather than the share holders holding. We do not find any evidence that the differences in Ownership structure, affect firm performance; after controlling for observed firm characteristics and firm fixed effects.

Suggested Citation

  • Jayesh Kumar, 2003. "Ownership Structure and Corporate Firm Performance," Finance 0304004, University Library of Munich, Germany.
    • Handle: RePEc:wpa:wuwpfi:0304004
    Note: Type of Document - pdf; prepared on Linux pdflatex; to print on HP/PostScript/; pages: 42 ; figures: included. I would like to thank Dr. Kausik CHodhuri for his suggestion and help.
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    References listed on IDEAS

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    Cited by:

    1. Fabio Pieri & Enrico Zaninotto, 2010. "The Impact of Vertical Integration and Outsourcing on Firm Efficiency: Evidence from the Italian Machine Tool Industry," DISA Working Papers 1001, Department of Computer and Management Sciences, University of Trento, Italy, revised 11 Mar 2010.
    2. Anselm Komla Abots, 2015. "Foreign Ownership of Firms and Corruption in Africa," International Journal of Economics and Financial Issues, Econjournals, vol. 5(3), pages 647-655.
    3. Anjali Kumar & Manuela Francisco, 2005. "Enterprise Size, Financing Patterns, and Credit Constraints in Brazil : Analysis of Data from the Investment Climate Assessment Survey," World Bank Publications - Books, The World Bank Group, number 7330.
    4. Oleg Badunenko, 2010. "Downsizing in the German chemical manufacturing industry during the 1990s. Why is small beautiful?," Small Business Economics, Springer, vol. 34(4), pages 413-431, May.

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    More about this item

    Keywords

    corporate governance; share holding pattern and firm performance;

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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