Corporate Governance and Financial Performance of BSE Listed Firms:Evidence from Indian Pharmaceutical Sector

The purpose of the study is to analyse the effect of corporate governance variables on the financial performance of the pharmaceutical companies in India listed on the Bombay Stock Exchange (BSE) over the period 2005-2013. Panel econometric technique namely fixed effects ordinary least square is applied to determine the impact of governance variables on financial performance. Empirical results indicate that Board size and remuneration of executive directors have significant positive relation to the ROA and RONW. Indian Institutional Shareholding is statistically significant and negatively related to both ROA and RONW. Promoters' shareholding is positively related with both financial measures but relationship is significant only to RONW. The diversified findings of the study will provide support to regulatory authorities for taking appropriate measures on corporate governance and suggest the policy makers to make law that ensures the strict compliance of uniform governance information disclosures by the corporate so that extensive research can be done on each and every aspects of governance.