The IUP Journal of Corporate Governance
Exploring the Nexus Between Ownership Patterns and Corporate Performance in India

Article Details
Pub. Date : July, 2023
Product Name : The IUP Journal of Corporate Governance
Product Type : Article
Product Code : IJCG020723
Author Name : Shikha Mittal Shrivastav
Availability : YES
Subject/Domain : Management
Download Format : PDF Format
No. of Pages : 32



The paper investigates whether there is evidence to support the concept that variations in observed ownership structures across firms result in methodical variations in observed financial performance in the Indian market. The study assesses the impact of ownership structure on corporate performance measured by both the market-based measures (Tobin's Q, MBVR and MVA) and accounting-based measures (ROA, ROCE and ROE) of 178 NSE CNX listed nonfinancial companies for a period of 8 years from 2011 to 2018. Two different aspects of ownership structure are considered, i.e., concentration and owner identity. The results of the study could help the Indian companies, regulators, policymakers, and practitioners to adopt and sustain good corporate governance practices for value creation and for making them ready to meet the future changes.


The quality of corporate governance in a company is mostly dependent on the ownership structure and institutional setup in which the organization is rooted. Ownership structure is one of the key internal corporate governance mechanisms considered to mitigate problems in the organization. The theoretical postulates concerning the relationship between ownership structure and corporate performance were put forward by Jensen and Meckling (1979) and Shleifer and Vishny (1986). Shleifer and Vishny (1986) asserted that larger concentration of ownership results in better-controlled managers, which in turn helps in better performance of companies. These concerns were empirically tested by Morck et al. (1988), McConnell and Servaes (1990), Agarwal and Knoebar (1996), Thomson and Pederson (2000) and Campa (2017) in developed economies. Ownership has been given two broad dimensions, i.e., concentration and owner identity. Ownership concentration distinguishes between the stocks that are closely held and that are widely held. On the other hand, identity distinguishes between the owners who are influential.