Equity Pattern, Corporate Governance and Performance: A Study of India’s Corporate Sector

Murali Patibandla
Additional contact information
Murali Patibandla: Department of International Economics and Management, Copenhagen Business School, Postal: Department of International Economics and Management, Copenhagen Business School, Howitzvej 60, 2nd floor , DK-2200 Copenhagen N, Denmark

No 9-2001, Working Papers from Copenhagen Business School, Department of International Economics and Management

Abstract: In the literature on corporate governance, large outside investors are generally observed to reduce agency costs of corporate governance by monitoring and disciplining managers. This paper separates large investors into foreign investors and government owned local financial institutions and argues that the later have higher degree of moral hazard. The empirical results of the paper, based on firm level panel data for 11 Indian industries, show that foreign investors contribute positively to corporate performance in terms of profitability while the government financial institutions contribute negatively. Reducing the role of government financial institutions and opening up of the equity markets to foreign investors under effective regulatory mechanisms should improve corporate governance in terms of increasing transparency in developing economies. This, in turn, contributes positively to economic growth.

Keywords: foreign equity; government financial institutions; corporate governance (search for similar items in EconPapers)
Pages: 26 pages
Date: 2001-10-01
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://openarchive.cbs.dk/cbsweb/handle/10398/6588 (application/pdf)

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:hhb:cbsint:2001-009

Access Statistics for this paper

More papers in Working Papers from Copenhagen Business School, Department of International Economics and Management Department of International Economics and Management, Copenhagen Business School, Howitzvej 60, DK-2000 Frederiksberg, Denmark. Contact information at EDIRC.
Bibliographic data for series maintained by Lars Nondal ().