Institutional Shareholding Pattern in Bangladesh and Its Impact on Corporate Governance Mechanism and Profitability
Institutional shareholders mean these financial institutions that receive money from other and investment them in their own name. They include Private Commercial Banks, Non-Bank Financial Institutions, Investment Corporation of Bangladesh (ICB), Insurance Companies, Leasing Companies, Provident and Pension Funds, Mutual Funds, Other Manufacturing Companies. The aim of the research is to find out the impact of % of institutional share ownership on the number of no executive independent directors on the board, executive remuneration, firm’s profitability and average institutional shareholding in different sectors of Bangladesh. Here the dependent variables are the number of independent directors on the board, executive remuneration, firm’s profitability and independent variable is % of institutional shareholding. The sample of this paper includes 312 firms listed in DSE across all of the sectors for the year 2019. Data are collected from these companies’ website and Dhaka Stock Exchange (DSE) website. Least square regression analysis is also used to analyze the impact of institutional share ownership on company’s corporate governance and firm’s profitability measure. This research finds out positive and a significant relationship between % of institutional share ownership with the number of independent directors on the board composition, executive directors remuneration and profitability of firms. It has been identified that private commercial banks are the largest institutional shareholders. At the end, along with the conclusions few points are proposed as suggestion for encouraging the involvement and increasing participation of institutional shareholders depending on the findings of our analysis.