Impact of foreign shareholdings on corporate governance score: evidence from Bombay Stock Exchange, India

Archana Singh and Ruchi Kansil

International Journal of Business and Globalisation, 2017, vol. 19, issue 1, 93-110

Abstract: The paper examines the effect of foreign shareholdings on corporate governance for a balanced panel of 201 publically traded firms from an emerging economy India, listed on the Bombay Stock Exchange (BSE) using the data for the end of financial years 2007-2008 and 2013-2014. We found that the non-controlling stake of foreign shareholdings affect corporate governance as against the controlling stake. It appears that when foreign shareholders buy large stakes, they favour weak governance because it allows them to exploit minority. Endogeneity is addressed by using the level of foreign shareholdings as an instrumental variable. The impact of market capitalisation, size and age on corporate governance score is significant for firms with non-controlling stake of foreign shareholders. The paper suggests that foreign investors can be instrumental in strengthening corporate governance framework of the firm's they have invested in by exerting the ownership rights which revolves around the type of investment and its time horizon.

Keywords: corporate governance; corporate governance score; ownership; foreign shareholdings; emerging economy; India; publically traded firms; institutional investors; controlling stake; institutional development; firm performance; emerging markets; market for corporate control. (search for similar items in EconPapers)
Date: 2017
References: Add references at CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://www.inderscience.com/link.php?id=85116 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ids:ijbglo:v:19:y:2017:i:1:p:93-110

Access Statistics for this article

More articles in International Journal of Business and Globalisation from Inderscience Enterprises Ltd
Bibliographic data for series maintained by Sarah Parker ().