Controlling Owners and Firm Performance: Empirical investigation from India

This study aims to examine the impact of controlling owners on firm performance. The novelty of this study stems primarily from its focus on multiple shareholder identities and the impact of their respective shareholding on financial and market performance. We use a sample of 1,072 NSE-listed non-financial firms from 2010-11 to 2021-22, a balanced panel of 12,864 firm-year observations. Panel Corrected Standard Error Model (PCSE) is used to test the hypothesis of this research. Three findings emerge from this study. Firstly, a non-linear relationship (cubic) exists between the largest owner’s ownership concentration and the firm’s market performance. Secondly, it was observed that the identity of the controlling owner influences firm performance, and firms with individuals as the controlling owners report adverse influence on firm performance compared to the other ownership identities. Thirdly, the results indicate that compared to non-individual owners, increasing shareholding concentration by individuals is associated with adverse effects on a firm’s market performance.