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Ownership Structure and Performance of Listed State-Owned Enterprises
Vis-à-Vis Comparable Private Enterprises: Evidence from India
--Malla Praveen Bhasa
There are multiple reasons for state to own control of industry. Profit making may or may not be one of them. Researchers have conducted empirical studies on the performance of State-Owned Enterprises (SOEs) vis-à-vis private ones and to a large degree concur that SOEs underperform in comparison. The Indian government has realized that SOEs are a drag on the economy and hence have engaged in privatization and sell-out efforts. Still, the Indian state owns about 277 enterprises, of which 46 are listed on Bombay Stock Exchange (BSE). Theoretically, listed SOEs are subject to the same market scrutiny and discipline as are the private listed companies. This study at first explains the rationale behind the state’s ownership of industry and how SOEs are organized in India, following which it compares the performance of the listed SOEs with their private competitors. For a better comparison, private firms that mimic SOEs in terms of ownership concentration are picked for the study. The findings show that the SOEs perform marginally better than their private counterparts. It is concluded that their better performance could be due to the oligopolistic conditions they operate in and as also possibly because of their business age.
© 2015 IUP. All Rights Reserved.
The Relationship Between Board Diversity and Firm Performance:
Evidence from the Banking Sector in Pakistan
--Sumbul Sajjad and Kashif Rashid
This study examines the relationship between board diversity and firm’s performance in the developing financial market. The studies relevant to the developing market show inconsistent findings regarding board diversity and firm value relationship. The study seeks to fill this gap in the literature by using the panel data of 20 commercial banks listed on Karachi Stock Exchange (KSE), Pakistan for the years 2007 to 2012. The results suggest that a higher proportion of female and young board of directors leads to lower firm value. On the other hand, higher representation of foreign directors improves the firm value as measured by Tobin’s Q. Therefore, to take advantage of this finding, the board of directors should include trained and mature female, foreign and qualified young directors. The results related to control variables suggest that board size does not play any role in affecting the firm value, whereas the value of firm decreases with an increase in the firm size. Finally, market capitalization and price-to-book value ratio of the firm play a positive role in affecting the shareholder’s value in the selected market.
© 2015 IUP. All Rights Reserved.
Corporate Governance and Disclosure Practices of MNC Subsidiaries
and Cross-Listed Firms: An Institutional Environment Perspective
--Pankaj M Madhani
Corporate governance and disclosure practices of listed firms having global exposure, such as subsidiaries of Multinational Corporations (MNCs) as well as domestic crosslisted firms, are different from firms having only domestic exposure. Domestic listed firms are listed only in the home country and are governed by the local environment of their home country. However, this may not be the case for globally-exposed firms as they are governed by the institutional, legal and regulatory environment of home country as well as the host country where they are listed. This study seeks to identify whether corporate governance and disclosure practices of MNC subsidiaries and cross-listed firms are significantly different, by studying a sample of firms listed on the Bombay Stock Exchange, India, comprising MNC subsidiaries listed in India as well as cross-listed firms listed in the US/Europe. The research provides insight into the question of how a country’s institutional, legal and regulatory environment may influence the effectiveness of firm-level corporate governance mechanisms. The findings shed light on the governance and disclosure practices of MNC subsidiaries and crosslisted firms, in the legal institutional environment of India versus US/Europe. © 2015 IUP. All Rights Reserved.
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