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Crown Jewels or Bleeding Ulcers: Ratnas of Indian Economy


Dr.D. Selva Kumar
Abstract

The study examines the congruity between capital structure and ownership structure on Indian CPSEs. Single equation econometric models are applied on a balanced panel of 43 CPSEs with 663 firm-year observations analyzed during 2001-2016 to examine the twin-effects. The findings clarify ownership indicators influence capital structure as CPSEs are able to compromise their immediate effects of ownership. They are entrusted to fulfil both the social and economic objectives laying emphasis on industry practices; stiff competition; managerial discrepancies; and political influences affecting the grey-earnings. Empirical results evident ownership structure exhibits statistically negative results on promoter concentration (shares); non-promoter concentration (shares); promoter shareholding (%); and non-promoter shareholding (%). The attempt to unlock the hidden values of CPSEs becomes successful when the market obtains a transparent view of their functioning. Business factors such as growth in sales volume or growth in profit after tax must drive the CPSEs towards fair pricing in the capital market and their ability to raise debt. The study supports corporate houses, academicians, and investors to effectively decide the pattern of investment decisions. A sound corporate governance framework can usher their economic performance and reduces agency costs.

Volume 11 | 11-Special Issue

Pages: 720-730

DOI: 10.5373/JARDCS/V11SP11/20193090