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Summary: The Importance Of Ownership Structure

1110 Words5 Pages

Being one of the effective mechanisms in corporate governance, ownership structure enables efficient functions of a firm and directly or indirectly influences firm performance for long term. While developing corporate governance model of a firm, ownership structure plays vital role. The ownership concentration has its benefits in the corporation structure, since huge range of shareholdings permits monitoring of managers in better way that eventually leads enhanced performance (Jensen & Meckling 1976). On the other hand, the conflicts of interest between owners and managers can be significantly minimized if there is no separation between ownership and control. This as a result optimizes the shareholders’ value (Morck, Shleifer & Vishny 1988). …show more content…

Taking into consideration of the significance of ownership pattern and its impact on the firm performance, in last few years extensive efforts have been made to identify optimal ownership patterns, hierarchical model and form performance, corporate governance and its relation with ownership patter etc. Non-deniably, in many developed economies and in emerging markets, the impact of ownership structure on firm performance has been widely discussed. However, due to dynamic market characteristics and competition assessing it regularly is must. Unfortunately, as per our present knowledge there is no significant research done in recent years to assess the impact of organizational structure of stakeholder pattern on firm performance. Examining the relationship between corporate governance, stakeholder structure and associated firm performance can be of paramount significance for an investor to ensure ROI and secure investment. Interestingly, major difference among the various counties corporate governance systems is the difference in the ownership and control pattern of firms that exist across …show more content…

On the contrary, assessing various stakeholders and their cumulative impact on the firm performance in compliance with the corporate governance can play vital role in understanding future prospects of the allied firm. The contemporary analysis of the impact of shareholding pattern on the firm performance can play vital role for investors to understand organizational business process and associated performance. It can help investors to make ROI oriented business decision etc. In this study, we aimed at investigating various key constructs characterizing relationship between the shareholding pattern and the form performance. To perform a case study, NIFTY-50 companies are considered where the annual data of the selected population or sample companies are taken for five years (i.2., from 2011 to 2016). Using the data from annual reports of Indian NIFTY-50 companies from 2011 and 2016, we examined the extent to which insider shareholding may have impact on the firm performance. In addition, the impact of governance in creation of shareholders value has also been studied in this paper. Our empirical results provide evidence that insider shareholding is positively and significantly related to the firm performance

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