Academy of Accounting and Financial Studies Journal Volume 21, Number 1, 2017 1 THE EFFECT OF OWNERSHIP STRUCTURE ON MARKET VALUATION OF FIRMS IN INDIA: EVIDENCE FROM BSE-100 INDEX COMPANIES Nahila Nazir, Ansal University, India Amarjeet Kaur Malhotra, Ansal University, India ABSTRACT This study aims to test whether ownership and control concentration influences corporate market value of firms in BSE 100 Index companies in India from 2000-2014 covering all major sectors. The conceptual model is developed through a review of literature and is then implemented in the context of BSE (Bombay Stock Exchange) in India. A total data of BSE 100 Index companies for 15 years were considered. The panel data regression model is applied in order to draw the causal relationship between the variables considered for the study. The variables used are found to have a very good fit as it shows that every aspect of ownership has its own impact on market valuation. The study thus establishes that the non-promoters holding (if taken as an individual variable) and non-promoters non institutional holding have a significant impact on market capitalization of the firm. Furthermore, it is found that the non-promoters institutional holding and non-promoters non institutional holding have a significant impact on PB value of the firm. The study uses market capitalisation and PB value to check market valuation of firms. Also, this study has taken broader aspect of ownership structure into account. All parameters used in this study have not been studied in previous studies in Indian context. This study tries to fill this gap. Keywords: ownership structure, market valuation, market capitalisation, Price to Book Value, BSE, India INTRODUCTION The relevance of the conflict of interest between owners and managers, especially with regard to the likely effects for firm performance is shown in agency theory. According to (Jensen & Meckling, 1976), this theory is dependent on assumptions like the absence of complete agreements and the opportunism of financial agents to justify the appearance of agency costs. These costs occur from efforts by the owner (the principal) to keep an eye on the actions of the manager (the agent) and create contractual bonuses for him, as well as by certain techniques of the manager to benefit himself over the of the shareholders, such as concentrating on the short term, insider trading, and resistance/amount of resistance to activities that are advantageous to the shareholders, including liquidations, divisions, and mergers (Jensen & Meckling, 1976; Stulz, 1988). One of the effective topics which have gained much importance in corporate governance is ownership structure. The relationship between ownership structure and firm performance has acquired significant attention. (Berle and Means 1932) are the pioneers to bring focus to the idea that with the improved diffuseness of the ownership structure, the firm performance deteriorates.