The Ownership Structure and Corporate Governance in Major Private Sector Companies of India (2000 -2010)

Abstract

The issue of ownership structure and its effect on corporate governance has invited interest and attention from researchers in the United States, Europe and the other parts of the world. The area remains under explored in the Indian context. This paper attempts to study the trend of changes in the ownership structure of the ten largest private sector companies (excluding public sector, banking and financial sector companies as these are regulated by a different set of philosophy, rules/norms) and its effects on the corporate governance in the studied companies over the period 2000 to 2010. The basic assumption behind studying the largest companies is that the top companies are first subjected to the changes in trend. For the purpose of analysis, the study uses the ownership format prescribed by the Securities and Exchange Board of India for submission by the companies to the stock exchange/s. The broad categories include- Promoters and Promoter group, Public Shareholding/Non-promoter Group comprising of Institutional Investors, and Non-Institutional Investors. Under these major categories the sub-category wise division of share-holding has also been analysed. To notice the corporate governance situation in the studied companies, a composite index comprising of Board-related, CAT-related (Complaints, Audit Fee, and Tax dues) and Finance-related aspects has been constructed.