IDEAS home Printed from https://ideas.repec.org/p/hhb/cbsint/2001-009.html
   My bibliography  Save this paper

Equity Pattern, Corporate Governance and Performance: A Study of India’s Corporate Sector

Author

Listed:
  • Patibandla, Murali

    (Department of International Economics and Management, Copenhagen Business School)

Abstract

In the literature on corporate governance, large outside investors are generally observed to reduce agency costs of corporate governance by monitoring and disciplining managers. This paper separates large investors into foreign investors and government owned local financial institutions and argues that the later have higher degree of moral hazard. The empirical results of the paper, based on firm level panel data for 11 Indian industries, show that foreign investors contribute positively to corporate performance in terms of profitability while the government financial institutions contribute negatively. Reducing the role of government financial institutions and opening up of the equity markets to foreign investors under effective regulatory mechanisms should improve corporate governance in terms of increasing transparency in developing economies. This, in turn, contributes positively to economic growth.

Suggested Citation

  • Patibandla, Murali, 2001. "Equity Pattern, Corporate Governance and Performance: A Study of India’s Corporate Sector," Working Papers 9-2001, Copenhagen Business School, Department of International Economics and Management.
    • Handle: RePEc:hhb:cbsint:2001-009
    as

    Download full text from publisher

    File URL: http://openarchive.cbs.dk/cbsweb/handle/10398/6588
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Shleifer, Andrei & Vishny, Robert W, 1997. "A Survey of Corporate Governance," Journal of Finance, American Finance Association, vol. 52(2), pages 737-783, June.
    2. Shleifer, Andrei & Vishny, Robert W, 1986. "Large Shareholders and Corporate Control," Journal of Political Economy, University of Chicago Press, vol. 94(3), pages 461-488, June.
    3. La Porta, Rafael & Florencio Lopez-de-Silanes & Andrei Shleifer & Robert W. Vishny, 1997. "Legal Determinants of External Finance," Journal of Finance, American Finance Association, vol. 52(3), pages 1131-1150, July.
    4. Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October.
    5. Bhagwati, Jagdish, 1993. "India in Transition: Freeing the Economy," OUP Catalogue, Oxford University Press, number 9780198288473.
    6. Asli Demeirgüç-Kunt & Ross Levine (ed.), 0. "Finance and Growth," Books, Edward Elgar Publishing, number 17119.
    7. Beck, Thorsten & Levine, Ross & Loayza, Norman, 2000. "Finance and the sources of growth," Journal of Financial Economics, Elsevier, vol. 58(1-2), pages 261-300.
    8. Henry, Peter Blair, 2000. "Do stock market liberalizations cause investment booms?," Journal of Financial Economics, Elsevier, vol. 58(1-2), pages 301-334.
    9. Steen Thomsen & Torben Pedersen, 2000. "Ownership structure and economic performance in the largest european companies," Strategic Management Journal, Wiley Blackwell, vol. 21(6), pages 689-705, June.
    10. Stein, Jeremy C., 2003. "Agency, information and corporate investment," Handbook of the Economics of Finance, in: G.M. Constantinides & M. Harris & R. M. Stulz (ed.), Handbook of the Economics of Finance, edition 1, volume 1, chapter 2, pages 111-165, Elsevier.
    11. Jacques Crémer, 1995. "Arm's Length Relationships," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 110(2), pages 275-295.
    12. Patibandla, Murali, 1998. "Structure, organizational behavior, and technical efficiency: The case of an Indian industry," Journal of Economic Behavior & Organization, Elsevier, vol. 34(3), pages 419-434, March.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Patibandla, Murali, 2006. "Equity pattern, corporate governance and performance: A study of India's corporate sector," Journal of Economic Behavior & Organization, Elsevier, vol. 59(1), pages 29-44, January.
    2. Bernard Yeung & Randall Morck & Daniel Wolfenzon, 2004. "Corporate Governance, Economic Entrenchment and Growth," Working Papers 04-21, New York University, Leonard N. Stern School of Business, Department of Economics.
    3. La Porta, Rafael & Lopez-de-Silanes, Florencio & Shleifer, Andrei & Vishny, Robert, 2000. "Investor protection and corporate governance," Journal of Financial Economics, Elsevier, vol. 58(1-2), pages 3-27.
    4. Levine, Ross, 2005. "Finance and Growth: Theory and Evidence," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 12, pages 865-934, Elsevier.
    5. Rafael La Porta & Florencio Lopez‐De‐Silanes & Andrei Shleifer & Robert Vishny, 2002. "Investor Protection and Corporate Valuation," Journal of Finance, American Finance Association, vol. 57(3), pages 1147-1170, June.
    6. Goergen, Marc & Manjon, Miguel C. & Renneboog, Luc, 2008. "Recent developments in German corporate governance," International Review of Law and Economics, Elsevier, vol. 28(3), pages 175-193, September.
    7. Alberto Chong & Florencio Lopez-de-Silanes, 2006. "Corporate Governance and Firm Value in Mexico," Research Department Publications 4466, Inter-American Development Bank, Research Department.
    8. Almeida, Heitor & Campello, Murillo & Weisbach, Michael S., 2011. "Corporate financial and investment policies when future financing is not frictionless," Journal of Corporate Finance, Elsevier, vol. 17(3), pages 675-693, June.
    9. Attiya Y. Javid & Robina Iqbal, 2010. "Corporate Governance in Pakistan : Corporate Valuation, Ownership and Financing," Governance Working Papers 22830, East Asian Bureau of Economic Research.
    10. Carlin, Wendy & Mayer, Colin, 2003. "Finance, investment, and growth," Journal of Financial Economics, Elsevier, vol. 69(1), pages 191-226, July.
    11. Rafael La Porta & Florencio Lopez-de-Silanes & Andrei Shleifer & Robert Vishny, 1999. "Investor Protection: Origins, Consequences, Reform," Harvard Institute of Economic Research Working Papers 1883, Harvard - Institute of Economic Research.
    12. Claessens, Stijn & Yurtoglu, B. Burcin, 2013. "Corporate governance in emerging markets: A survey," Emerging Markets Review, Elsevier, vol. 15(C), pages 1-33.
    13. Ndikumana, Leonce, 2005. "Financial development, financial structure, and domestic investment: International evidence," Journal of International Money and Finance, Elsevier, vol. 24(4), pages 651-673, June.
    14. Tanweer Hasan & Palani-Rajan Kadapakkam & P. C. Kumar, 2008. "Firm Investments and Corporate Governance in Asian Emerging Markets," Multinational Finance Journal, Multinational Finance Journal, vol. 12(1-2), pages 21-44, March-Jun.
    15. Peter Blair Henry, 2007. "Capital Account Liberalization: Theory, Evidence, and Speculation," Journal of Economic Literature, American Economic Association, vol. 45(4), pages 887-935, December.
    16. Guidi, Marco G.D. & Hillier, Joe & Tarbert, Heather, 2008. "Maximizing the firm's value to society through ethical business decisions: Incorporating ‘moral debt’ claims," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 19(5), pages 603-619.
    17. Joseph P. H. Fan & Li Jin & Guojian Zheng, 2016. "Revisiting the Bright and Dark Sides of Capital Flows in Business Groups," Journal of Business Ethics, Springer, vol. 134(4), pages 509-528, April.
    18. Morck, Randall & Deniz Yavuz, M. & Yeung, Bernard, 2011. "Banking system control, capital allocation, and economy performance," Journal of Financial Economics, Elsevier, vol. 100(2), pages 264-283, May.
    19. Art Durnev & Kan Li & Randall Mørck & Bernard Yeung, 2004. "Capital markets and capital allocation: Implications for economies in transition," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 12(4), pages 593-634, December.
    20. Rafael La Porta & Florencio Lopez-deSilanes & Andrei Shleifer & Robert W. Vishny, 1999. "Investor Protection: Origins, Consequences, and Reform," NBER Working Papers 7428, National Bureau of Economic Research, Inc.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hhb:cbsint:2001-009. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Lars Nondal (email available below). General contact details of provider: https://edirc.repec.org/data/iicbsdk.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.