M Thenmozhi

This study examines the impact of concentrated founder ownership on related party transactions (RPTs) for Indian firms. We find that concentrated founder ownership is positively related to RPTs and is more likely to encourage RPTs that are beneficial for the minority shareholders. We also observe that RPTs are associated with higher firm value. This relationship is more pronounced for business group firms and firms with more highly concentrated founder ownership. We show that the reputation incentive plays a very important role in founders’ decisions, and they use RPTs as an efficient transaction mechanism.

A study of post-acquisition performance of cross border acquisitions involving emerging market firms shows that when developed market firms acquire emerging market firms, rule of law in the target country has a significant favorable impact on post-acquisition performance; while country level corporate governance has no impact. Contrarily, when emerging market firms acquire developed market firms, country level corporate governance in the target country has a significant adverse impact on post-acquisition performance, while rule of law has no impact. We provide evidence that if rule of law in the emerging market target country is less evolved but not dismally low, the developed market acquirer can seize the opportunity to enforce better discipline at the firm level in the target firm and thereby enhance post-acquisition performance. However, in the case of emerging market firms' acquisitions, lower the difference in country level corporate governance, superior gains are assured. The study provides evidence that location level factors affect post acquisition performance differently for ADTE and AETD acquisitions and ADTE acquisitions give importance to rule of law, while AETD acquisitions emphasis on corporate governance factors to ensure value creation in acquisitions and the results are robust after controlling for country effects and year effects.

We examine the impact of increasing levels of concentrated founder ownership on board independence and extend the knowledge by exploring whether the impact of concentrated founder ownership on board independence varies with firm's life cycle stages, ownership identity, level of external monitoring and type of firms. Using the Indian sample of 13,636 firm-year observations for the period 2001–2015, we find that controlling shareholders influence the board structure and exhibit a non-monotonic relationship. The relationship moves from entrenchment to alignment and again to entrenchment as their shareholding increases. We find that Indian controlling shareholders influence board independence more than their foreign counterparts. We show that business group firms are associated with greater board independence than standalone firms. We also show that controlling shareholders influence board independence of the firm in the growth stage. Our findings support the notion that the effect of concentrated ownership changes with its level of ownership, identity, firm life cycle stages, level of external monitoring and type of firms.