Date of Award

8-2008

Degree Type

Dissertation

Degree Name

Ph.D.

Degree Program

Financial Economics

Department

Economics and Finance

Major Professor

Mukherjee, Tarun

Second Advisor

Krishnaswami, Sudha

Third Advisor

Varela, Oscar

Fourth Advisor

Wei, Philip

Fifth Advisor

Whitney, Gerald

Abstract

By using the data on Indian firms on the BSE 500 Index during the period 2005-2006, we find that family ownership affects group affiliated firms more positively than standalone firms. Group affiliated firms underperform initially as compared to standalone firms but after certain threshold of family ownership their performance becomes better than standalone firms. Within diversified Indian Business Group, family ownership affects highly diversified affiliates positively. Effect of family excess vote holdings and involvement of family management is found to be insignificant. We also find that block holders affect firm value negatively. Our results are in contrast with the existing literature of diversification and family ownership on developed market especially, US and UK. Some of our results are consistent with those of Khanna and Palepu (2000). This paper supports most of the findings of Khanna and Palepu based on more complete and reliable data set. In addition, it shows that the superior performance of highly diversified groups is related to greater family ownership. In the second essay, we examined the issues related to market reaction on IT outsourcing announcement and firm characteristics which induce firms to outsource. We find that IT outsourcing has a strong positive effect on stock prices of announcing firms, especially for longer event windows. We also find that the higher the pre-announcement inefficiency of a firm (as evidenced by lower asset turnover ratios, higher operating cost to sales, and higher cost of good sales to sales), the greater the positive price reaction to the outsourcing announcements. We also find that firms with higher information asymmetry problems (firms in the service industry) elicit a higher positive market reaction at the time of outsource announcement. Finally, firms that are likely to outsource are cost inefficient, and/or are cash needy.

Rights

The University of New Orleans and its agents retain the non-exclusive license to archive and make accessible this dissertation or thesis in whole or in part in all forms of media, now or hereafter known. The author retains all other ownership rights to the copyright of the thesis or dissertation.

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