Determinants of ownership pattern

Abstract

Percentage of shares held is considered to be one of the primary measures of ownership structure as this ratio determines how a firm is owned and how the authority is distributed among owners. Studies have been conducted on interrelationships among corporate ownership and board structure characteristics and on the determinants and mechanism by which the ownership structure is formed. Broadly these studies only reflect on one or two governance characteristics with an exception by Agrawal and Knoeber, 1996. The inconclusive studies of ownership structure make it necessary to study the identity the determinants of ownership. Taking a proportionate sample of companies from the four major industries, this study tries to find the factors affecting ownership pattern. Captivating ownership as Indian and foreign promoters, financial performance measured using tobin’s q and duality (chairman and managing director being single person) positively and significantly affect ownership. However, financial leverage negatively impacts ownership. Keywords: ROA-Return on Assets, Tobin’s Q, Corporate Governance