It can be observed from literature that the shareholding patterns of listed firms have gone through significant changes, affecting the ownership structure of firms which is tending towards concentrated ownership. The changes in the ownership structure are of interest to stakeholders, especially investors and traders as it provides information of holdings by significant or large owners, the proportion of holdings by different segments, and the changes in their holding. The stakeholders use this information for assessing the firm’s prospects, evaluate the associated risks, and decide on the risk and return of their investment, thereby influencing the firm’s market performance. Similarly, the ownership structures tend to influence decisions made with in the firm and shape the firm’s accounting performance. This study primarily focuses on evaluating the implications of owners’ identity and concentration on firm performance.
In addition to ownership structure, the firm’s board structure is a crucial aspect in assessing internal governance mechanism. The advisory and monitoring role of the board is significant in steering the firm’s strategic direction, thereby influencing the firm’s performance. The importance of the board is even higher in firms with concentrated ownership structures. However, the board’s relationship with ownership structure has received considerably less attention from the researchers in the domain. Therefore, the second objective of the study is to investigate the moderating role of ownership on the relationship between board structure and firm performance.
The findings of the study indicate that both ownership and board structure have an influence on firm performance with certain ownership types exerting more influence on performance as compared to others. Similarly, shareholding by owners are found to moderate the relationship between board structure and firm performance. The results of the study is expected to be beneficial to analysts, policymakers, and researchers. For an analyst, it is crucial to identify the factors that determine the performance of firms. Further, understanding the implications of internal governance mechanisms is of interest to policymakers to assess the firm’s governance quality and formulate the code of best practices. Similarly, the researchers can draw insights from the interplay between ownership structure, board structure, and performance and extend the research in the future.