Promoter Ownership and Firm Performance: Evidences from BSE Listed Companies

Shareholding pattern or ownership structure is perceived to play an important role in corporate governance, thus an enabler of improved financial performance. The purpose of the present paper is to investigate whether the shareholding pattern especially promoter holding influences financial performance of Indian corporate sector. The paper is based on 870 firm year observations of the companies listed on BSE 200 index. Panel regression shows that the financial performance of Indian corporates is most influenced by leverage and size. None of the ownership variables is found to be a cause of superior financial performance of Indian Corporates, when firm performance was measured through ROA, ROCE and Tobin's Q. But firm performance measured through RONW or ROE led to better explanation of firm performance through ownership variables. Indian promoter and foreign promoter ownership negatively impact firm performance whereas Indian corporate promoter and government promoter ownership positively impact firm performance. Institutional promoter ownership does not have significant impact on firm performance. The paper is limited in scope as we did limit our sample to non-financial companies for a pre Covid period of five years, i.e.; 2015-16 to 2019-20 only. As per our information the study is unique as it analyses the impact of promoter holdings on financial performance of Indian corporates as most of previous studies in Indian context studied effect of ownership concentration on firm performance. The findings may be useful for improving firm value by having appropriate ownership structures.