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Does Ownership Structure Influence Firm Value? Evidence from India

  • Jayesh Kumar

    (Xavier Institute of Management)

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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File URL: http://econwpa.repec.org/eps/fin/papers/0406/0406008.pdf
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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
Contact details of provider: Web page: http://econwpa.repec.org

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  4. 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.
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  9. Wiwattanakantang, Yupana, 2001. "Controlling Shareholders and Corporate Value: Evidence from Thailand," CEI Working Paper Series 2001-4, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University.
  10. Shleifer, Andrei & Vishny, Robert W., 1986. "Large Shareholders and Corporate Control," Scholarly Articles 3606237, Harvard University Department of Economics.
  11. 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.
  12. 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.
  13. Chen, Carl R. & Guo, Weiyu & Mande, Vivek, 2003. "Managerial ownership and firm valuation: Evidence from Japanese firms," Pacific-Basin Finance Journal, Elsevier, vol. 11(3), pages 267-283, July.
  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.
  15. Majumdar, Sumit K, 1998. " Assessing Comparative Efficiency of the State-Owned Mixed and Private Sectors in Indian Industry," Public Choice, Springer, vol. 96(1-2), pages 1-24, July.
  16. Qi, Daqing & Wu, Woody & Zhang, Hua, 2000. "Shareholding structure and corporate performance of partially privatized firms: Evidence from listed Chinese companies," Pacific-Basin Finance Journal, Elsevier, vol. 8(5), pages 587-610, October.
  17. Fama, Eugene F & Jensen, Michael C, 1983. "Separation of Ownership and Control," Journal of Law and Economics, University of Chicago Press, vol. 26(2), pages 301-25, June.
  18. 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.
  19. 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.
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