| Pub. Date | : October, 2021 |
|---|---|
| Product Name | : The IUP Journal of Accounting Research and Audit Practices |
| Product Type | : Article |
| Product Code | : IJARAP131021 |
| Author Name | : D Satish |
| Availability | : YES |
| Subject/Domain | : Finance |
| Download Format | : PDF Format |
| No. of Pages | : 10 |
Promoters play a very important role in the performance of companies. In India, the average holding of promoters is very large at around 54%. These promoters are either government or private individuals and business houses. India started the privatization process in a big way in the early 1990s and also started disinvesting stakes in major public sector companies, while retaining a minimum of 51% stake in a majority of companies, in effect keeping the control. The paper with an objective to study whether there exists a significant difference in the performance of government promoted firms and private firms and found a significant difference in the performance between them using both independent sample t-test and pooled panel data regression. The paper is based on the data of public listed companies in India over a period of 11 years (2008-2019).
Investors around the world are often curious to know whether there exists a relationship
between promoter holding and firm performance and whether a government promoter or a
private promoter holding would result in better performance of the firm. This research
question has attracted researchers from various streams, including finance, accounting,
economic and strategic management.
Need and Importance of the Study
The study on the relationship between the type of promoter ownership and the performance
of the firm is very important to understand many issues, especially in the Indian context. In
a country like India, where a majority of the firms are owned by promoters belonging to
family-owned businesses or by the government, the retail investors have just started to
participate in stock markets and financial institutions like banks cannot invest in stock markets
directly. In this setting, the promoters end up holding a large proportion of the shares and