Title: Impact of blockholder promoters on debt financing of Indian firms

Authors: Anuja Sethiya; M. Thenmozhi

Addresses: Department of Management Studies, Indian Institute of Technology Madras, Chennai-600036, India ' Department of Management Studies, Indian Institute of Technology Madras, Chennai-600036, India

Abstract: We examine the effect of blockholder promoters on financing decisions of Indian firms. A fixed effect panel analysis of 13,131 observations during the period 2001-2017, confirm that, greater the promoter ownership, less the preference for leverage. However, the impact of promoter ownership on financing decisions varies with the type of blockholders. We find that the moderating effect of state-owned and private-foreign blockholders with promoter ownership is negatively associated with leverage, while family-owned blockholders with promoter ownership is positively associated with leverage. The study finds that the significance of agency cost II varies with the identity of blockholder promoters.

Keywords: promoter ownership; leverage; blockholder; state-owned; private-Indian; family-owned; private-foreign; agency cost.

DOI: 10.1504/IJCG.2020.107393

International Journal of Corporate Governance, 2020 Vol.11 No.1, pp.1 - 22

Received: 28 Nov 2018
Accepted: 17 Aug 2019
Published online: 26 May 2020 *

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