Corporate Governance Practices by Indian Corporates

Shukla, Hitesh

doi:10.1177/097324700800400315

Cited by 2 publications

(1 citation statement)

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“…A good system of corporate governance will facilitate the resolution of corporate conflicts between minority and controlling shareholders, between executives and shareholders and between shareholders and other stakeholders. Therefore, the key objective of efficient corporate governance is to protect the interests of shareholders and various other stakeholders, including customers, suppliers, employees and society at large, and to ensure full transparency and integrity in communication, while making available complete, accurate and clear disclosure to all the parties concerned (Shukla, 2008).…”

Section: Review Of the Literaturementioning

confidence: 99%

Do disclosure and transparency affect bank’s financial performance?

Oino

2019

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Purpose The purpose of this paper is to examine the impact of transparency and disclosure on the financial performance of financial institutions. The emphasis is on assessing transparency and disclosure; auditing and compliance; risk management as indicators of corporate governance; and understanding how these parameters affect bank profitability, liquidity and the quality of loan portfolios. Design/methodology/approach A sample of 20 financial institutions was selected, with ten respondents from each, yielding a total sample size of 200. Principal component analysis (PCA), with inbuilt ability to check for composite reliability, was used to obtain composite indices for the corporate governance indicators as well as the indicators of financial performance, based on a set of questions framed for each institution. Findings The analysis demonstrates that greater disclosure and transparency, improved auditing and compliance and better risk management positively affect the financial performance of financial institutions. In terms of significance, the results show that as the level of disclosure and transparency in managerial affairs increases, the performance of financial institutions – as measured in terms of the quality of loan portfolios, liquidity and profitability – increases by 0.3046, with the effect being statistically significant at the 1 per cent level. Furthermore, as the level of auditing and the degree of compliance with banking regulations increases, the financial performance of banks improves by 0.3309. Research limitations/implications This paper did not consider time series because corporate governance does not change periodically. Practical implications This paper demonstrates the importance of disclosure and transparency in managerial affairs because the performance of financial institutions, as measured in terms of loan portfolios, liquidity and profitability, increases by 0.4 when transparency and disclosure improve, with this effect being statistically significant at the 1 per cent level. Originality/value The use of primary data in assessing the impact of corporate governance on financial performance, instead of secondary data, is the primary novelty of this study. Moreover, PCA is used to assess the weight of the various parameters.

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Section: Review Of the Literaturementioning

confidence: 99%