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Insider Ownership and the Performance of Firms in India: Evidence from a Panel Semi-parametric Regression Model

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Economics, Management and Sustainability

Abstract

This chapter examines the insider ownership–firm performance relationship in India for the period 2006–2013 by applying panel semi-parametric regression method. The results establish that the relationship is quartic for Tobin’s q. It is argued that the particular characteristics of corporate firms in India which are dominated by business groups and the particular characteristics of corporate governance, having the proactive role of the independent directors on the board, are responsible for such a relationship.

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Notes

  1. 1.

    Business groups are companies owned by a business family. Group-affiliated firms consist of groups of companies that are connected through a network of legal, financial and transactional relationships. Indian business groups are characterized by a substantial amount of intra-group financing (Gopalan et al. 2007).

  2. 2.

    Promoters are defined as all individuals and their relatives, corporate bodies/trusts/partnership or any other type of entity that either founded or acquired a controlling stake in the firm concerned, where the ownership stakes exceeds that of any external shareholder.

  3. 3.

    This section draws from the author’s previously published work titled ‘Does capital structure depend on group affiliation? An analysis of Indian firms’ published in Journal of Policy Modeling, 2013.

  4. 4.

    Unobservable heterogeneity arises if there are unobservable factors that affect both the dependent and explanatory variables. On the other hand, simultaneity arises if the independent variables are a function of the dependent variable.

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Author information

Authors and Affiliations

  1. Institute of Development Studies Kolkata, Bidhan Nagar, India

    Indrani Chakraborty

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  1. Indrani Chakraborty
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Correspondence to Indrani Chakraborty .

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Editors and Affiliations

  1. Indian Institute of Management (IIM) Calcutta, Kolkata, India

    Partha Ray

  2. Indian Institute of Management (IIM) Calcutta, Kolkata, India

    Runa Sarkar

  3. Indian Institute of Management (IIM) Calcutta, Kolkata, India

    Anindya Sen

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Chakraborty, I. (2018). Insider Ownership and the Performance of Firms in India: Evidence from a Panel Semi-parametric Regression Model. In: Ray, P., Sarkar, R., Sen, A. (eds) Economics, Management and Sustainability. Springer, Singapore. https://doi.org/10.1007/978-981-13-1894-8_11

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  • DOI: https://doi.org/10.1007/978-981-13-1894-8_11

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