Areas of Expertise

Corporate Finance, Financial Market Development, Privatization, Political Economy of Finance, Corporate Governance.

Academic Degrees

• PhD in Economics, University of Pittsburgh
• BSc in Economics Presidency College, Calcutta

Professional Experience

• Professor of Finance, 2023-
• Associate Professor of Finance, 2010-2022
• Assistant Professor of Finance, Kelley School of Business, 2003-2009

Selected Publications

• Dehejia, R. H., and Gupta, N. (2022). Financial Development and Micro-entrepreneurship. Journal of Finance Quantitative Analysis, 57(5), 1834-1861.
• Gormley, T,, Jha, A., and Gupta, N. (2018). Quiet Life No More? Corporate Bankruptcy and Bank Competition. Journal of Financial and Quantitative Analysis, 53(2), 581-611.
• Borisov, A., Goldman, E., and Gupta, N. (2016). The Corporate Value of (Corrupt) Lobbying. Review of Financial Studies, 29(4), 1039-107. Winner, Best Paper in the Finance Series, 2015 Standard Life Investments Finance Working Paper prize, European Corporate Governance Institute. Covered in the Harvard Law School Forum on Corporate Governance and Financial Regulation.
• Gupta, N. (2013). Selling the Family Silver to Pay the Grocer’s Bill? The Case of Privatization in India. In Jagdish Bhagwati and Arvind Panagariya (Eds.), Reforms and Economic Transformation in India (141-167). Oxford University Press: New York, NY.

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  Abstract

  Using data on Indian government-owned firms, we investigate the effect of privatization on the performance of these firms. Our results suggest that privatization is positively associated with the profitability and efficiency of of government-owned firms. Despite the small number of transactions, selling majority equity stakes to private owners has an economically significant impact on firm performance. Moreover, privatization is not associated with layoffs or a decline in employee compensation. These results are robust to controlling for the observable and unobservable characteristics of firms selected for privatization, and industry and country level reforms.

• Gupta, N., and Dinc, I. S. (2011).The Decision to Privatize: Finance, Politics, and Patronage. Journal of Finance, 66(1), 241-269.

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  We investigate the influence of political and financial factors on the decision to privatize government-owned firms using firm-level data from India. We find that the government significantly delays privatization in regions where the governing party faces more competition from opposition parties. This result is robust to firm-specific factors and regional characteristics. The results also suggest that political patronage is important as no government-owned firm located in the home state of the minister in charge is ever privatized. Using political variables as an instrument for the endogenous privatization decision, we find that privatization has a positive impact on firm performance.

• Gupta, N., and Yuan, K. (2009). On the Growth Effect of Stock Market Liberalizations. Review of Financial Studies, 22(11), 4715-4752.

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  Abstract

  Using panel data on industries in emerging markets, we investigate the effect of a stock market liberalization on industry growth. Consistent with the view that liberalization reduces financing constraints, we find that industries that are more externally dependent and face better growth opportunities grow faster following liberalization. However, this increase in industry growth appears to come from an expansion in the size of existing firms rather than through new firm entry, which is puzzling since new firms are typically more financially constrained. To reconcile these conflicting results we examine whether barriers to entry arising out of institutional and regulatory frictions affect the impact of liberalization on new firms. We find that liberalization leads to new firm growth at the industry level in countries that allocate capital more efficiently, and in industries that privatize government-owned firms. From a policy perspective these results suggest that a stock market liberalization will have a larger and more uniformly distributed growth impact if it is accompanied by complementary reforms that enhance competition.

• Gupta, N., Ham, J. C., and Svejnar, J. (2008). Priorities and Sequencing in Privatization: Theory and Evidence from the Czech Republic. The European Economic Review, 52(2), 183-208.

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  While privatization of state-owned enterprises has been one of the most important aspects of the economic transition from a centrally planned to a market system, no transition economy has privatized all its firms simultaneously. This raises the question of whether governments privatize firms strategically. In this paper we examine theoretically and empirically the determinants of the sequencing of privatization. To obtain testable predictions about the factors that may affect sequencing, we investigate the following competing government objectives: i) maximizing efficiency through resource allocation; ii) maximizing public goodwill from the free transfers of shares to the public; iii) minimizing political costs; iv) maximizing efficiency through information gains and v) maximizing privatization revenues. Next, we use firm-level data from the Czech Republic to test the competing theoretical predictions about the sequencing of privatization. Consistent with the hypotheses of a government priority on revenues and public goodwill, we find strong evidence that more profitable firms were privatized first. The sequencing of privatization is also consistent with maximizing efficiency through information gains.

• Gupta, N. (2008). Privatization in South Asia. In Gerard Roland (Ed.), Privatization: Successes and Failures, (170-198). New York, NY: Columbia University Press.
• Chari, A. and Gupta, N. (2008). Incumbents and Protectionism: The Political Economy of Foreign Entry Liberalization. Journal of Financial Economics, 88(3), 633-656.

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  This paper investigates the influence of incumbent firms on the decision to allow foreign direct investment into an industry. Based on data from India’s economic reforms, the results suggest that firms in concentrated industries are more successful at preventing foreign entry, that state-owned firms are more successful at stopping foreign entry than similarly placed private firms, and that profitable state-owned firms are more successful at stopping foreign entry than unprofitable state-owned firms. These findings continue to hold after controlling for industry characteristics such as the presence of natural monopolies and the size of the workforce. The pattern of foreign entry liberalization supports the private interest view of policy implementation.

• Gupta, N., Chakraborty, A., and Harbaugh, R. (2006). Best Foot Forward or Best for Last in a Sequential Auction? RAND Journal of Economics, 37(1), 176-194.

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  Should a seller with private information sell the best or worst goods first? Considering the sequential auction of two stochastically equivalent goods, we find that the seller has an incentive to impress buyers by selling the better good first because the seller's sequencing strategy endogenously generates correlation in the values of the goods across periods. When this impression effect is strong enough, selling the better good first is the unique pure-strategy equilibrium. By credibly revealing to all buyers the seller's ranking of the goods, an equilibrium strategy of sequencing the goods reduces buyer information rents and increases expected revenues in accordance with the linkage principle.

• Gupta, N. (2005). Partial Privatization and Firm Performance. The Journal of Finance, 60(2), 987-1015.

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  Most privatization programs begin with a period of partial privatization in which only non-controlling shares of firms are sold on the stock market. Since management control is not transferred to private owners it is widely contended that partial privatization has little impact. This perspective ignores the role that the stock market can play in monitoring and rewarding managerial performance even when the government remains the controlling owner. Using data on Indian state-owned enterprises we find that partial privatization has a positive impact on profitability, productivity, and investment.

Edited on February 7, 2025