Analysis of Ownership Structure and Firm Value in India

Abstract

Agency problems results from the divergence of interest between stockholders and management in publicly traded companies. The potentially significant losses from these conflicts can be harmful to the performance of the firm and its survival. Insider ownership is one of the internal controlling mechanisms that could theoretically reduce agency costs. Earlier researcher has investigated the effects of insider ownership on firm performance. We have attempted to add few more dimensions to it. Firstly, very few studies were undertaken to study this relationship after the implementation of revised corporate governance code in 2006 in India, and after the changes in the disclosures of insider ownership as per the clause 49 of the listing agreement. Secondly, earlier studies did not take into account the time lag for the studies on Indian markets. We have attempted time lag studies using panel data on the Indian Markets