Market concentration, promoter ownership and firm performance: evidence from Indian corporate firms

Ujjayini Roy () and Indrani Chakraborty
Additional contact information
Ujjayini Roy: Laksmibai College, Delhi University
Indrani Chakraborty: Institute of Development Studies Kolkata

Indian Economic Review, 2024, vol. 59, issue 1, No 2, 27-85

Abstract: Abstract This paper explores the relationship between market concentration, promoter’s ownership and firm performance using an unbalanced panel of 1911 publicly listed manufacturing firms in India for the period 2001–2020. The study evaluates performance using Tobin’s Q and RoA and captures ownership concentration by equity shareholding of promoters. It investigates how promoter’s ownership, product market competition, and their interaction affect performance while also attempting to investigate the endogeneity of ownership and examine how performance, product market competition, and their interaction influence promoter ownership of firms for the entire period and for sub periods as well. Using a 2SLS technique to estimate two simultaneous equation models, the study finds that even after controlling for endogeneity, not only firm value is a determinant of the promoter’s ownership, but the promoter’s ownership is also a predictor of firm value. Additionally, it reveals that market competition: (a) negatively affects firm performance and positively impacts promoter ownership; (b) complements promoter ownership to improve performance and (c) reduces promoter ownership if firm value increases. The study also finds cross-section dependence in the panel units and applies the EC2SLS estimation technique in response to that. The study has several policy implications.

Keywords: Ownership concentration; Industry concentration; Price cost margin; Tobin’s Q; Returns on assets; Corporate firms (search for similar items in EconPapers)
JEL-codes: C33 C36 D22 L22 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1007/s41775-024-00217-z Abstract (text/html)
Access to the full text of the articles in this series is restricted.

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:spr:inecre:v:59:y:2024:i:1:d:10.1007_s41775-024-00217-z

Ordering information: This journal article can be ordered from
https://www.springer.com/economics/journal/41775

DOI: 10.1007/s41775-024-00217-z

Access Statistics for this article

Indian Economic Review is currently edited by Uday Bhanu Sinha, Abhijit Banerji, Shreekant Gupta and J.V. Meenakshi

More articles in Indian Economic Review from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().