An Inquiry into the Impact of Domestic Promoters’ Ownership on Performance of Indian Manufacturing Companies

This empirical study made a serious attempt to examine the influential role of domestic promoters towards the decisions and actions of the managers in running a company. A balanced panel data is constructed taking 56 manufacturing companies from BSE 100 indices for the period of 2011 to 2016. The percentage of Domestic Promoters’ Ownership (DPO) is taken as our independent variable whereas the Return on Assets (ROA) and Return on Capital Employed (ROCE) are taken as dependent variables in the study. Panel data analysis has been employed to establish the empirical relationship among the variables. Under panel data analysis, results of ordinary least square model, fixed affect model and random effect model are presented and restricted-F test, Breusch and Pagan Lagrange Multiplier test and hausman test have been introduced to choose the appropriate model of regression. Finally, the study tests confirm the fixed effect model to be the best fit model for our dataset. The model shows a highly significant and positive impact of Domestic Promoters’ Ownership on the performance of our sample companies. Our findings in this study go with the line of the generally accepted monitoring and supervisory role of promoters in influencing firm performance.