Ownership Structure and the Risk: Analysis of Indian Firms
Considering the positive relationship between ownership and firm performance in the corporate finance literature, the paper aims to investigate the effect of ownership structure on the risk associated with the firm. Portfolio theories state that an investment with a high return is expected to be ass...
Main Authors: | , |
---|---|
Format: | Article |
Language: | English |
Published: |
Sciendo
2020-10-01
|
Series: | Acta Universitatis Sapientiae: Economics and Business |
Subjects: | |
Online Access: | https://doi.org/10.2478/auseb-2020-0003 |
id |
doaj-34fc0939408048acbc0c70c5a522935c |
---|---|
record_format |
Article |
spelling |
doaj-34fc0939408048acbc0c70c5a522935c2021-09-06T19:41:24ZengSciendoActa Universitatis Sapientiae: Economics and Business2360-00472020-10-0181395210.2478/auseb-2020-0003auseb-2020-0003Ownership Structure and the Risk: Analysis of Indian FirmsKumari Ranjita0Kumar Nishant1Research Scholar, Department of Business Administration, University of LucknowAssistant Professor, Department of Business Administration, University of LucknowConsidering the positive relationship between ownership and firm performance in the corporate finance literature, the paper aims to investigate the effect of ownership structure on the risk associated with the firm. Portfolio theories state that an investment with a high return is expected to be associated with high risk; so, it can be argued that ownership should have a positive relation with risk too. However, another explanation is that since large shareholders, such as promoters and financial institutions, have a significant stake in firms, in developing countries like India they will avoid excess risk taking, and so there should be a negative relationship between ownership and risk associated with firms. Analysing Nifty-500 companies for the period of 2006/07–2015/16, the study has found that Indian blockholders are in general risk-averse. Results also suggest that profitability and growth opportunities have negative effects on risk, which again establishes the positive association between ownership structure and profitability.https://doi.org/10.2478/auseb-2020-0003promotersinstitutionsbetanifty-500g32 |
collection |
DOAJ |
language |
English |
format |
Article |
sources |
DOAJ |
author |
Kumari Ranjita Kumar Nishant |
spellingShingle |
Kumari Ranjita Kumar Nishant Ownership Structure and the Risk: Analysis of Indian Firms Acta Universitatis Sapientiae: Economics and Business promoters institutions beta nifty-500 g32 |
author_facet |
Kumari Ranjita Kumar Nishant |
author_sort |
Kumari Ranjita |
title |
Ownership Structure and the Risk: Analysis of Indian Firms |
title_short |
Ownership Structure and the Risk: Analysis of Indian Firms |
title_full |
Ownership Structure and the Risk: Analysis of Indian Firms |
title_fullStr |
Ownership Structure and the Risk: Analysis of Indian Firms |
title_full_unstemmed |
Ownership Structure and the Risk: Analysis of Indian Firms |
title_sort |
ownership structure and the risk: analysis of indian firms |
publisher |
Sciendo |
series |
Acta Universitatis Sapientiae: Economics and Business |
issn |
2360-0047 |
publishDate |
2020-10-01 |
description |
Considering the positive relationship between ownership and firm performance in the corporate finance literature, the paper aims to investigate the effect of ownership structure on the risk associated with the firm. Portfolio theories state that an investment with a high return is expected to be associated with high risk; so, it can be argued that ownership should have a positive relation with risk too. However, another explanation is that since large shareholders, such as promoters and financial institutions, have a significant stake in firms, in developing countries like India they will avoid excess risk taking, and so there should be a negative relationship between ownership and risk associated with firms. Analysing Nifty-500 companies for the period of 2006/07–2015/16, the study has found that Indian blockholders are in general risk-averse. Results also suggest that profitability and growth opportunities have negative effects on risk, which again establishes the positive association between ownership structure and profitability. |
topic |
promoters institutions beta nifty-500 g32 |
url |
https://doi.org/10.2478/auseb-2020-0003 |
work_keys_str_mv |
AT kumariranjita ownershipstructureandtheriskanalysisofindianfirms AT kumarnishant ownershipstructureandtheriskanalysisofindianfirms |
_version_ |
1717766310381748224 |