Firm Characteristics and Foreign Institutional Ownership: Evidence from India

Ruchi Kansil () and Archana Singh ()
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Ruchi Kansil: Delhi School of Management, Delhi Technological University
Archana Singh: Delhi School of Management, Delhi Technological University

Institutions and Economies (formerly known as International Journal of Institutions and Economies), 2017, vol. 9, issue 2, 35-53

Abstract: The Government of India has taken various initiatives in recent years to improve its investment regime to attract foreign investments. The objective of this paper is to study the effect of firm characteristics on controlling stake and non-controlling stake of Foreign Institutional Ownership (FIO) in an emerging market - India. Binary and multinomial logistic regression models are applied to the dataset that cover financial years 2008 to 2014. A total of 496 publicly listed Indian non-financial firms listed on the two major stock exchanges of India (Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) as at March 31, 2014 were examined. Findings show that profitability, growth, size and risk of the firm significantly increase the probability of controlling stake of foreign institutional investors. Results also highlight that the stakes of foreign institutional investors would increase in relatively profitable, growing and larger firms. Additionally, there is a need for policy intervention to attract more and more foreign investment. With the series of reforms initiated by the Government of India, much more needs to be done to boost and maintain investor confidence.

Keywords: Firm Characteristics; Foreign Institutional Ownership; India; Panel data (search for similar items in EconPapers)
JEL-codes: G23 G32 L25 O24 (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (1)

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