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Ownership Structure and Firm Performance

In: Business and Management

Submitted By f11pankajg
Words 1842
Pages 8
Changing ownership and its impact on Firm performance: A detailed pre and post crisis study on Indian firms
Several studies are available establishing relationship between firm performance and ownership structure and the results are mixed. Several authors have found significant relationship while others have not found any significant relationships. In Indian context also, there are several studies which propagates to have both kind of results.
The way literature is linking the owner ship with performance has always been via addressing the agency (outsiders and insiders) problem, board structure, size, leverage etc. but, literature is sparse to identify these variables as moderating the relationship between ownership and firm performance.
The purpose of this study is to establish and study the relationship between ownership and performance in Indian context. Considering following points, I recommend a framework to study the changing ownership and firm performance under the premise that agency costs and information asymmetry acts as moderating variable, which increases/decreases performance when ownership changes. * In India, it is confirmed by several authors that concentrated and complex ownership structure is found which creates problem of heterogeneity and opacity. * India has agency type 2 problems; few studies are available addressing type 2 problem and variables to measure this. * Opacity and complexity creates Information asymmetry and tunneling respectively between different agents and thus have implications upon firm performance. * Agency costs (type 2) also affects firm performance.

Changes in Ownership Structure
(Complex and concentrated)
Changes in Ownership Structure
(Complex and concentrated)
Agency cost type 2
Agency cost type 2
Firm Performance
(+/-)
Firm Performance
(+/-)…...

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