The Dynamics of Corporate Ownership on Corporate Governance: Indian Evidence

This paper discusses the influence of ownership segments and disciplining devices on the quality of Corporate Governance (CG) in the Indian context. The ultimate objective of the study is to identify the determinant ownership segment and their disciplining device that would explain the CG performance of the firm. The main goal is to prove the influence of majority shareholding segment in influencing the CG quality. Main attention was paid to usage of Herfindahl-Hirschman Index to find the combined ownership concentration of minority shareholder segments. Ordinary Least Squares (OLS) regression is the predominant technique that finds application to determine critical ownership segment and disciplining device. This topic was chosen because of the evergreen ambiguity on the role and intensity of shareholders on CG in India. The major findings of the paper are, there exists no statistical evidence to prove that CGPI is under the influence of any ownership segment. With coalition majority HHI dominates in most CG categories except category 5. HHI displays support for debt as controlling device in most CGPI categories. However, study also finds HHI supporting dividend in top two categories including CG category 1 and IP also favoring the same device for the same two categories. The above findings suggest that in totality HHI favors debt and IP supports dividend.