Shareholder Types, Corporate Governance and Firm Performance: An Anecdote from Indian Corporate Sector

  • Namita Rajput University of Delhi
  • Bharti Joshi Guru Gobind Singh Indraprastha University


The issues regarding corporate governance have received major attention owing to their apparent importance for the economic health of companies especially after plethora of corporate scams and debacles in the recent times. High ethical values can reduce costs to achieve a high corporate governance standard and make it more sustainable. Improving corporate governance is an issue of critical importance to India today and for future developments. The Indian government has realized that good corporate governance is necessary to improve corporate competitiveness and to attract foreign investors. It is believed that with better corporate governance, listed firms can reduce agency costs, become more competitive in global markets, and fulfill their social responsibilities. There are no conclusive evidences so far in the literature in proving the linkages between shareholder types and firm performance, hence the present study will add and address the glaring knowledge gap in Indian literature. The typical shareholder types among listed companies in India are institutions, government, managers, foreigners and diverse shareholders. Using panel regression, the relationships between shareholder types and financial performance as measured by Tobin’s Q, ROA, ROE were tested taking a sample of BSE100 companies excluding banking and insurance companies. The analysis of the result shows significant positive influence of foreign institutional investors and family ownership on ROE whereas government and retail shareholder affect ROE negatively. Also, the  corporate governance index has a significantly negative impact on ROE. However, the relationship of CGI with ROA and Tobin's Q was not found to be significant.

Author Biographies

Namita Rajput, University of Delhi
Department of Commerce, Associate Professor
Bharti Joshi, Guru Gobind Singh Indraprastha University
University School Of Management Studies, Assistant Professor
Research Articles