Does Ownership Structure Influence Firm Value? Evidence from India

45 Pages Posted: 7 May 2004 Last revised: 8 Mar 2012

See all articles by Jayesh Kumar

Jayesh Kumar

Kotak Securities; Manappuram Finance Limited

Date Written: September 1, 2003


Corporate Governance deals with the issue of how the suppliers of finance to various corporations assure themselves of getting a return on their investment. Several Studies have examined the relationship between ownership structure and firm performance. Using different data samples from different countries, most of the studies provide evidence that ownership in uence firm performance. This study examines empirically the effects of ownership structure on the firm performance for a panel of Indian corporate firms, from an 'agency perspective'. 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, found in several studies, can be explained by unobserved firm heterogeneity. We also provide some evidence that the shareholding by institutional investors and managers affect firm performance, after controlling for observed firm characteristics and unobserved firm heterogeneity and the effect is non-linear.

Keywords: Corporate governance, Shareholding pattern, Firm performance, India.

JEL Classification: G32, G34

Suggested Citation

Kumar, Jayesh and Kumar, Jayesh, Does Ownership Structure Influence Firm Value? Evidence from India (September 1, 2003). The Journal of Entrepreneurial Finance and Business Ventures, Vol. 9, No. 2, pp. 61 –93, October 2004, Available at SSRN: or

Jayesh Kumar (Contact Author)

Manappuram Finance Limited ( email )

Thrissur, 680567

Kotak Securities ( email )

Mumbai, 400050