Doctoral Student at Indian Institute of Management Bangalore, India
The Principal-Principal agency problem is often associated with the presence of one dominant owner and other distributed shareholders who may not be able to challenge them. However, with the growing influence of securities markets as a capital pool, institutional investors have become significant owners of firm equity in many markets worldwide. Institutional owners are seen to have the incentive and ability to monitor the firm's functioning, but their influence has mainly been studied on the firm's management. We bring in institutional investors as a governance mechanism for other block owners in most world economies. We use the sample of large Indian firms as the regulations mandate clear identification of promoter/ dominant owners, providing a better proxy for owner influence beyond individual shareholding / blockholding. We look at listed state-owned enterprises (SOEs) with the Government as the primary owner and analyze their impact on voluntary environmental disclosures with the moderating effect of institutional holdings. We further see the relationship between the Government and the domestic and foreign institutional investors as an essential factor to explain the interaction between the owners.