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Foreign institutional investment, business groups and firm performance: Evidence from India
Published in Elsevier Ltd
Volume: 39
Pages: 454 - 465
The article tries to examine the relationship between equity ownership held by the foreign institutional investors and firm performance both in a static and a dynamic framework. We also examine how the relationship differs between group-affiliated and stand-alone firms. By employing the 2SLS panel data estimation technique on 137 BSE listed Indian firms, the study finds that foreign institutional investment has a positive influence on the firm performance as measured through Tobin's Q and ROA.Application of linear dynamic panel data estimation in a dynamic framework also yields similar results.The latter method also shows that FII has a positive significant effect on Tobin's Q in group-affiliated firms. The results are analysed from the perspective of a multi-theoretic approach consisting of agency theory, information asymmetry theory, institutional theory and resource dependency theory. © 2016 Elsevier B.V.
About the journal
JournalData powered by TypesetResearch in International Business and Finance
PublisherData powered by TypesetElsevier Ltd