Ownership structure and sustainable growth: evidence from publicly listed firms

Purpose The objective of this paper is to study the relationship between promoters’ ownership (PO) and firm growth metrics, namely the sustainable growth rate (SGR) and the revenue growth rate (RGR). Design/methodology/approach To investigate the relationship, panel data of 1,085 observations from 155 listed firms in India spanning the period 2018 to 2024 are used. The study uses fixed effects regression models that account for firm-specific and time-specific unobserved heterogeneity. Findings The study introduces a statistically significant non-linear relationship between PO and both SGR and RGR. The quadratic term (PO2) derived from promoters’ ownership captures the actual non-linear dynamics, confirming a U-shaped (convex) relationship with the growth measures. Originality/value The study extends agency theory by confirming a non-linear agency cost relationship and offers fresh evidence from the emerging market context of India, focusing on SGR and RGR, rather than traditional valuation indicators.