Empirical Study on Ownership Structure and Firm Performance

Abstract

Researchers have come up with varied assertions with regard to the relationship between ownership structure and firm performance. Studies show positive, negative as well as both positive and negative relationship at differing levels of equity holdings by managers. Majority findings argued about owner controlled firm's performance being better than manager controlled ones, yet lacking statistical assertion for the same. This research work is empirically investigating the efficiency of ownership groups in enhancing corporate performance by analyzing firms traded on Bombay Stock Exchange (BSE). We are using BSE – 500 index firms to create an unbalanced annual panel data from 2001 to 2008. By using fixed and random effect techniques of panel data analysis, we wish to contribute towards the enduring debate of corporate governance as to which ownership group maximizes firm performance. This debate has so far, largely remained inconclusive with different researchers advocating varied view points.