Corporate Ownership Structure and Its Effect on Capital Structure: Evidence from BSE Listed Manufacturing Companies in India

The study aims to examine the relationship between corporate ownership structure and capital structure of BSE listed manufacturing firms in India. The study has included the sample of 357 companies which covers 16 major sectors during the period of 2006–2015. Considering the dynamic panel nature of the data relating to the capital structure and the ownership structure variables. The analysis undertakes a novel approach of examining the determinants both single equation and reduced equation models. In order to determine the most appropriate model, based on the F test, the Breusch Pagan LM test and finally the Hausman Test is conducted. The Hausman test result has been estimated by the fixed effect model is better than the other two models such as pooled OLS and random effect estimation. Based on the fixed effects results, size, risk and profitability have a highly significant relationship with leverage. Meanwhile, the growth opportunities and tangibility represent insignificant values. The study found that the explanatory variables of the promoters’ ownership and the institutional ownership have a negative impact on leverage, while the corporate ownership has a positive influence on the capital structure decision. The individual or public ownership has a negative and significantly related to the capital structure, whereas the effect of the foreign ownership inversely related to the firm’s leverage.

CORPORATE OWNERSHIP STRUCTURE AND FIRM VALUE: EMPIRICAL EVIDENCE OF JSE-LISTED FIRMS, SOUTH AFRICA

This paper examines the relationship between corporate ownership structure and firm value of JSE-listed firms in the phase of the Black Economic Empowerment program in South Africa. Since the end of the apartheid era, corporate governance practices have evolved and the enactment of the BBE Act has altered ownership and control in the South African corporate sector. Using data from 187 firms between 2004 and 2016, we observed that ownership concentration measured by five large shareholders and foreign ownership has a negative impact on firm value proxied with Tobin’s Q and return on assets, while domestic share ownership has a positive relationship with corporate performance. Contrary to the agency theory notion on the role of large shareholders in minimizing losses that arise from the separation of ownership and control and significant foreign investors corporate governance practices in the host countries, the results obtained in this study suggest that local shareholders in the host capital market are important in strengthening corporate governance practices and improve corporate performance. This study contributes to the ownership-firm value relationship literature by offering new evidence on the impact of ownership concentration, foreign ownership, and domestic ownership in an emerging market undergoing transformation through programs addressing its historical inequalities.

The Simultaneous Effect of Corporate Ownership on Dividends and Capital Structure: Malaysian Evidence

Most of the researchers analyzed the impact of ownership structure on dividends and capital structure decisions separately. Drawing upon preceding empirical studies, the interdependence between dividends and capital structure raises the potential of the endogeneity bias when interdependent factors are segmented. Therefore, this study examined the effect of corporate ownership structure on capital structure and dividend policy simultaneously. This study utilized 407 Malaysian-listed firms over the period from 2012 to 2016 and adopted simultaneous modelling using 2SLS and 3SLS regression techniques. The results changed markedly in sign, magnitude and significance when moving from OLS estimator to 2SLS and 3SLS estimators. The findings show that both dividend and capital structure policies have positive interdependence. The substantial, family, government and foreign ownership affect dividends positively and capital structure negatively. The study provides various theoretical and practical implications to improve corporate governance and corporate financial policies. This study contributes to the growing literature on corporate finance and corporate ownership. Particularly, it provides simultaneous investigation on the effect of family, government and foreign ownership on dividends and capital structure for Malaysian firms.