Controlling shareholders,board structure,and firm performance: Evidence from India |
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| Institution: | 1. University of Nevada - Las Vegas, Department of Finance, Lee Business School, 520 Beam Hall, Las Vegas, NV 89154-6008, United States;2. Department of Finance, College of Business, Ohio University, 236 Copeland Hall, Athens, OH 45701, United States;3. University of Nevada - Las Vegas, Department of Finance, Lee Business School, 537 Beam Hall, Las Vegas, NV 89154-6008, United States;1. EMLYON Business School — Department of Economics, Finance and Control and Research Center on Entrepreneurial Finance (ReCEntFin), France;2. Utrecht University — School of Economics, The Netherlands;1. Wharton School, University of Pennsylvania, 2012 Steinberg-Dietrich Hall, Philadelphia, PA 19104, USA;2. China Europe International Business School (CEIBS), 699, Hongfeng Road, 201206 Shanghai, PR China;3. NYU Stern School of Business, 40 West 4th St., New York, NY 10012, USA;1. Indian Institute of Management Calcutta, Diamond Harbour Road, Joka, Kolkata 700104, India;2. Lubin School of Business, Pace University, One Pace Plaza, New York 10038, USA;1. 70 Lien Hai RD, Department of Business Management, National Sun Yat-sen University, Kaohsiung 80424, Taiwan;2. 700 University RD Department of Finance, National University of Kaohsiung, Kaohsiung 81148, Taiwan;3. 415 Chien Kung RD, Department of Wealth and Taxation Management, National Kaohsiung University of Applied Sciences, Kaohsiung 80778, Taiwan;1. Vienna University of Economics and Business (WU), Department of Economics, Welthandelsplatz 1, Building D4, Entrance A, 1020 Vienna, Austria;2. University of Vienna, Department of Finance, Oskar-Morgenstern Platz 1, 1090 Vienna, Austria;3. Vienna University of Economics and Business (WU), Department of Finance, Welthandelsplatz 1, Building D4, Entrance A, 1020 Vienna, Austria |
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| Abstract: | We examine the prevalence and performance impact of controlling shareholders and study corporate board structures and ownership structures in 1796 Indian firms. Families (founders) are present on the boards in 63.2 (65.5) percent of the sample firms. On average, founders own over 50% of outstanding shares. In contrast to the findings of Anderson and Reeb (2003) in the U.S. context, we find that controlling shareholder board membership in Indian firms has a statistically significant negative association with Tobin's Q. Higher proportion of independent directors, higher institutional ownership or larger firm size does not appear to mitigate this relationship. Overall, board membership of controlling shareholders appears to be costly for minority shareholders. |
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