Empirical Study on Ownership Structure and Financial Performance of Indian Steel Industry
Keywords:
Shareholding Pattern, Promoters holdingsAbstract
Ownership structure of companies in India is mostly held by promoter groups and individuals, in addition to foreign investors and public sector undertakings. As an approximation, around 55000 unlisted public companies would be virtually wholly managed by promoter and ownership structure can mediate firm strategy and behavior. These have their direct impact on the financial performance, as top management decisions result in financial performance. This paper attempts to investigate the effect of ownership structure on financial performance of the 85 steel Indian listed companies using judgmental sampling technique over a period of 13 years between 2005 and 2017. The data is collected from capital line data base and regressed to investigate the null hypothesis that there is a statistically significant positive relationship between share holdings and performance of selected companies in India. The study uses the Share of the Indian promoter(IP), Foreign promoter(FP), institutional holdings, and non-institutional holding as ownership structure variables, ROE& ROCE(accounting based ratios), P/E ratio, EPS, Tobin Q(Market based ratios) as performance variables, and Divided , Debt , firm age as control variables. For variables, first panel unit root test and Hausman tests were made and then panel data analysis were applied for ROE,ROCE, EPS fixed effect model were developed, and for P/E ratio & Tobin Q random effect model were developed. According to the result of analysis, only P/E ratio has negative significant on ownership structure. ROE, ROCE, TobinQ, and EPS has no significant on ownership structure, and null hypothesis is rejected.
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