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What matters to ownership structure? Evidence from pre- and post-global financial crisis in an emerging market

What matters to ownership structure? Evidence from pre- and post-global financial crisis in an... The purpose of this paper is to ascertain determining factors of ownership concentration and institutional portfolio ownership in the listed firms of an emerging market during pre-crisis and post-crisis periods and find variations in determining factors between the two varying market conditions.Design/methodology/approachThis paper considers 316 listed firms for the pre-crisis period and 408 firms for the post-crisis period, from the NIFTY-500. Pre-crisis period ranges from FY2000-01 to FY2007-08 and post-crisis period ranges from FY2009-10 to FY2016-17. Two-step GMM is utilized to test the hypotheses by controlling the unobserved heterogeneity and endogeneity issues.FindingsHigher investment and stock market growth leads to ownership dispersion in both the market conditions. Industry information asymmetry leads to dispersion in pre-crisis, while improves concentration in post-crisis phase. Firm size, legal environment and economic growth are found to be a positive determinant of institutional ownership irrespective of market conditions. Institutional investment proliferates with higher stock liquidity and PE ratio, while declines with augmented firm risk, current ratio and stock market turnover during post-crisis phase.Practical implicationsPolicymakers should construct a robust legal environment and focus to improve economic conditions to boost institutional ownership. Corporate executives should concentrate to increase stock liquidity and earnings of the firms, and lower market risk to draw more institutional portfolio investments.Originality/valueThis study would enrich emerging governance literature since studies on the determining factors of ownership holdings are limited in the emerging world. It adds novelty by capturing two different market conditions such as pre-crisis and post-crisis phases to obtain the time-dependent and time-independent determinants. It adds uniqueness by considering the determinants of institutional ownership, which is scarce in ownership studies. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Managerial Finance Emerald Publishing

What matters to ownership structure? Evidence from pre- and post-global financial crisis in an emerging market

Managerial Finance , Volume 47 (5): 28 – Apr 22, 2021

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Publisher
Emerald Publishing
Copyright
© Emerald Publishing Limited
ISSN
0307-4358
DOI
10.1108/mf-03-2020-0099
Publisher site
See Article on Publisher Site

Abstract

The purpose of this paper is to ascertain determining factors of ownership concentration and institutional portfolio ownership in the listed firms of an emerging market during pre-crisis and post-crisis periods and find variations in determining factors between the two varying market conditions.Design/methodology/approachThis paper considers 316 listed firms for the pre-crisis period and 408 firms for the post-crisis period, from the NIFTY-500. Pre-crisis period ranges from FY2000-01 to FY2007-08 and post-crisis period ranges from FY2009-10 to FY2016-17. Two-step GMM is utilized to test the hypotheses by controlling the unobserved heterogeneity and endogeneity issues.FindingsHigher investment and stock market growth leads to ownership dispersion in both the market conditions. Industry information asymmetry leads to dispersion in pre-crisis, while improves concentration in post-crisis phase. Firm size, legal environment and economic growth are found to be a positive determinant of institutional ownership irrespective of market conditions. Institutional investment proliferates with higher stock liquidity and PE ratio, while declines with augmented firm risk, current ratio and stock market turnover during post-crisis phase.Practical implicationsPolicymakers should construct a robust legal environment and focus to improve economic conditions to boost institutional ownership. Corporate executives should concentrate to increase stock liquidity and earnings of the firms, and lower market risk to draw more institutional portfolio investments.Originality/valueThis study would enrich emerging governance literature since studies on the determining factors of ownership holdings are limited in the emerging world. It adds novelty by capturing two different market conditions such as pre-crisis and post-crisis phases to obtain the time-dependent and time-independent determinants. It adds uniqueness by considering the determinants of institutional ownership, which is scarce in ownership studies.

Journal

Managerial FinanceEmerald Publishing

Published: Apr 22, 2021

Keywords: Ownership concentration; Institutional ownership; Global financial crisis; Emerging market; Dynamic panel analysis

References