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Title: Capital contribution, insider ownership and firm performance: evidence from Indian IPO firms

Authors: Bhawana Jain; Sangeetha Gunasekar; P. Balasubramanian

Addresses: Amrita School of Business, Amrita Vishwa Vidyapeetham, Coimbatore, India ' Amrita School of Business, Amrita Vishwa Vidyapeetham, Coimbatore, India ' Amrita School of Business, Amrita Vishwa Vidyapeetham, Coimbatore, India

Abstract: Several studies have explored the nonlinear relationship between insider ownership and post-IPO firm performance, whereas the inter-relationship among pre-IPO cash contribution, insider ownership and firm performance has not been investigated. Our study attempts to do so for an emerging economy, India using panel data of 199 IPO firms for the sample period of 2007 to 2018. Results indicate that there is a nonlinear relationship between insider ownership and post-IPO firm performance with lower ownership levels indicating positive impact and higher ownership levels indicating negative impact. Further, the study finds that pre-IPO cash contribution of owners has a long-term increasing negative impact, though these results significantly differ across varying levels of insider ownership. The study controls for endogeneity in the variables.

Keywords: initial public offering; IPO; insider ownership; capital contribution; firm performance; promoter ownership.

DOI: 10.1504/IJCG.2020.107404

International Journal of Corporate Governance, 2020 Vol.11 No.1, pp.23 - 46

Received: 08 May 2019
Accepted: 21 Jan 2020

Published online: 19 May 2020 *

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