Causal Nexus Between Ownership Structure And Stock Price Volatility – Evidence From Listed Service Sector Firms In India

Abstract

This paper investigates the causal nexus between the pattern of ownership structure in Indian service sector companies and its stock price volatility. Ownership structure consists of promoter holdings, public shareholdings, institutional and non institutional holdings. Media and entertainment sector 16 listed firms sample was taken for the study and it is found that largest shareholder in this sector is promoters, who hold more than 58% stake in the firm. Public shareholding is the second largest. Institutional and non institutional investors have less than 25% shareholdings. Volatility is measured using standard Deviation and GARCH (1,1) is used to check the volatility persistence. It is found that price volatility is not significantly influenced by the firm ownership structure. This agrees with the notion that the price volatility is largely influenced by external macro economic variables and speculative forces of the market and internal factors like leverage and ownership structure has no significant influence on stock price volatility.

Key Words: Ownership structure, volatility, GARCH, Promoter holdings

JEL category: G23, G21