The spate of scandals and the financial crisis in the recent past has resuscitated the interest of academicians and regulators in the subject of corporate governance. Since corporates employ several governance (agency-conflict controlling) mechanisms at one point of time and board independence is one of them, the central accent in this research is upon the investigation of determinants of corporate board independence in Indian institutional context. By counting on several model specifications, modulations, proxies and operationalizations, regression estimates discloses that inside ownership, leverage, dividend payout policy, institutional ownership and firm growth have a significant bearing on the level of board independence. The denouements of firm size and board affiliation level have also been recognized while analyzing the determinants of board independence. Overall, the outcomes of the empirical analysis have invigorated the applicability of agency theory standpoints in Indian context. Moreover, these findings have profound implications for corporate governance research and have also been able to abate the diversity in empirical evidences of performance consequences of board independence.
The present research work mainly focuses on the audit committee as a key to ensure a sound corporate governance framework in the companies. The insights from the present research work are a novel attempt to figure out the influence of selected audit committee characteristics on the performance of companies listed in India. Results suggest that audit committee size has a curvilinear effect on firm market valuation having an inflexion point of four directors comprising the members of the audit committee. Furthermore, the independent directors on the audit committee start contributing toward better firm accounting performance only after they constitute more than the majority. The audit committee activity has also demonstrated a significant relationship with firm performance in a nonlinear fashion. The above findings have been robust to the several alternative empirical tests and modifications. It also reveals that the findings solely based upon the linear testing of influence of audit committee characteristics are not conclusive in nature. Moreover, the findings generated from the characteristics of audit committee-firm performance association in this study are contingent upon the nature of performance measure being adopted. In relation to it, suitable implications and propositions have been quoted in the last section so as to offer directions to the interested parties.
The credibility and rectitude of monitoring effectiveness of non-executive (outside) directors has been highly discussed in the past academia. In this light, the present research involves the testing of endogeneity in the relationship between board independence and firm performance as proxied by firm market valuation. It has utilized the multimethodological approach on the data set of top corporates listed in Indian context. Notably, the application of pooled ordinary least squares (OLS) (static as well as dynamic), fixed effects regression, and system generalized method of moments (GMM) approach under dynamic modeling methodologies has demonstrated varying effects, which in turn, too provide manifestation of the predilection for dynamic system GMM, dynamic pooled OLS, and fixed effects over static pooled OLS. Findings of the research have ultimately concluded insignificant relationship between board independence and firm value. This effect remained robust even after controlling for the effect of board size. The implications of the insignificant board independence–firm value relationship have also been discussed and, thereby, offer useful directions to the regulators and policymakers.
Past research discerns that companies following sound governance practices are valued better in the market. Since board of directors play a very crucial role in corporate governance, the present study has identified some selected voluntary board practices and examined them with the help of a sample of top listed companies in India. The analysis covered in this paper provide insights into the association between voluntary board practices followed by the companies with a special emphasis on CEO non-duality i.e. separating the roles of CEO and board Chairman. The other selected voluntary board practices include the existence of outsidercontrolled board, majority-independent board, super active board and the establishment of completely independent audit committee. The study also highlights the role of firm size in the relationships between selected voluntary board practices. In particular, this investigation divulges that there exists an association between some of the selected voluntary board practices and these relationships do vary according to the firm size status in magnitude as well as direction.
The subject of corporate governance has always been of keen interest to the researchers in the area of management and finance. This paper basically concentrates on the corporate board of directors which is an internal corporate governance mechanism. Since the effectiveness of boards counts on several characteristics such as board size, board composition, leadership structure etc, therefore considering this viewpoint, the present study is based on the analysis of board size of BSE listed companies in India. This analysis broadly embraces the relationship between board size and performance as represented by various indicators such as Operating Profit Margin, Return on Assets, Return on Equity, Earnings per Share and Tobin’s Q. Spearman’s rho correlation, One Way ANOVA and Kruskal-Wallis tests were applied to draw the inferences. Results of the study remained robust and thus concluded that both board size and firm performance were independent of each other as board size was not found to be associated with firm performance.
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