Firm Characteristics and Foreign Institutional Ownership: Evidence from India

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Ruchi Kansil Archana Singh


The Government of India has taken various initiatives in recent years to
improve its investment regime to attract foreign investments. The objective of this paper
is to study the effect of firm characteristics on controlling stake and non-controlling stake
of Foreign Institutional Ownership (FIO) in an emerging market - India. Binary and
multinomial logistic regression models are applied to the dataset that cover financial years
2008 to 2014. A total of 496 publicly listed Indian non-financial firms listed on the two
major stock exchanges of India (Bombay Stock Exchange (BSE) and National Stock
Exchange (NSE) as at March 31, 2014 were examined. Findings show that profitability,
growth, size and risk of the firm significantly increase the probability of controlling stake
of foreign institutional investors. Results also highlight that the stakes of foreign
institutional investors would increase in relatively profitable, growing and larger firms.
Additionally, there is a need for policy intervention to attract more and more foreign
investment. With the series of reforms initiated by the Government of India, much more
needs to be done to boost and maintain investor confidence.


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How to Cite
KANSIL, Ruchi; SINGH, Archana. Firm Characteristics and Foreign Institutional Ownership: Evidence from India. Institutions and Economies, [S.l.], p. 35-53, july 2017. ISSN 2232-1349. Available at: <>. Date accessed: 19 july 2019.