Capital structure and performance: Evidence from a transition economy on an aspect of corporate governance

This paper examines the relationship between the levels of debt in the capital structure and performance for a sample of Indian firms. Existing theory posits a positive relationship; however, analysis of the data reveals the relationship for Indian firms to be significantly negative. The structure of capital markets in India, where both short-term and long-term lending institutions are government-owned, is hypothesized to account for the finding of this relationship, and it asserted that corporate governance mechanisms which work in the West will not work in the Indian context unless the supply of loan capital is privatized.Peer Reviewedhttp://deepblue.lib.umich.edu/bitstream/2027.42/45524/1/11127_2004_Article_133280.pd

Foreign Ownership and Profitability: Property Rights, Strategic Control and Corporate Performance in Indian Industry

This study examines the influence of foreign ownership on the performance of fmtis operating in India. Foreign ownership is categorized according to the control exercisable at different levels of ownership. These categories are, in turn, determined by the institutional structure of the Indian environment which helps define define the property rights accruing at different levels of ownership. Firms' performance is measured as return on sales and return on assets. The results show that, after controlling for a variety of fin-n and environment-specific factors, only when property rights devolve to foreign owners, at ownership levels providing unambiguous control at 51 percent, do firms in which there is foreign ownership display relatively superior performance. Implications for managers of foreign firms contemplating investments, either de-novo or augmenting already-existing stakes, in India and for policy are also discussed.http://deepblue.lib.umich.edu/bitstream/2027.42/39454/3/wp64.pd