ANVESHAK-International Journal of Management

Open Access Open Access  Restricted Access Subscription Access
Open Access Open Access Open Access  Restricted Access Restricted Access Subscription Access

Corporate Governance and Corporate Performance:A Study of Indian Manufacturing Sector


Affiliations
1 FDDI School of Business & Entrepreneurship, India
     

   Subscribe/Renew Journal


The current study aims to measure the relationship between corporate governance and financial performance of the company. The study is based on the secondary data collected from the annual reports of the 32 manufacturing companies in the field of consumable goods, FMCG, pharmaceutical and automobile sector. The stepwise regression analysis was performed to measure the impact of seven parameters of corporate governance given in SEBI clause 49 of the listing agreement. The independent variables used in the study are: board composition, shareholding pattern, board level committees, number of subsidiaries, disclosures, other compliances, and role and power of audit committees. It was found from the study that board composition, board ownership or shareholding pattern, disclosures and other compliances are the parameters of the corporate governance which have a positive and significant impact on the profitability of the manufacturing companies of India. It was also found from the study that degree of corporate governance is high among Indian manufacturing companies.

Keywords

Corporate Governance, Profitability, Performance, Manufacturing Sector, India, Disclosures, SEBI.
Subscription Login to verify subscription
User
Notifications
Font Size


  • 􀀃 Aggarwal, Priyanka (2013), “Impact of Corporate Governance on Corporate Financial Performance”, IOSR Journal of Business and Management (IOSR-JBM), Vol. 13, Issue 3 (Sep.-Oct. 2013), pp. 01–05.

  • 􀀃 Adenikinju, O. and Ayorinde, F. (2001), “Ownership Structure, Corporate Governance and Corporate Performance: The Case of Nigerian Quoted Companies”, Unpublished Final Report Presented at the AERC Biannual Research Workshop, Nairobi, Kenya, May.

  • 􀀃 Muni, Amba (2014), “Corporate Governance and Firms’ Financial Performance”, Journal of Academic and Business Ethics, derived from http://www.aabri.com/copyright, pp. 1–11.

  • 􀀃 Cadbury, A. (1992), “Report of the Committee on the Financial Aspects of Corporate Governance”, London: Gee Publishing.

  • 􀀃 Chen, I.J., Lai, J.H. and Chen, C.C. (2012), “Industrial Concentration, Innovation and Corporate Layoff Announcements”, International Research Journal of Finance and Economics, No. 87.

  • 􀀃 Coles, J.W., McWilliams, V.B. and Sen, N. (2001), “An Examination of the Relationship of Governance Mechanisms to Performance”, Journal of Management, Vol. 27(1), pp. 23–50.

  • 􀀃 Core, J.E., Holthausen, R.W. and Larcker, D.F. (1999), “Corporate Governance, Chief Executive Officer Compensation, and Firm Performance”, Journal of Financial Economics, Vol. 51(3), pp. 371–406.

  • 􀀃 Coskun and Sayilir (2012), “Relationship between Corporate Governance and Financial Performance of Turkish Companies”, International Journal of Business and Social Science, Vol. 3, No. 14, [Special Issue–July 2012], pp. 59–64.

  • 􀀃 Dalton, D.R. et al. (1999), “Number of Directors and Financial Performance: A Meta Analysis”, The Academy of Management Journal, Vol. 42(6), pp. 674–686.

  • 􀀃Duc V.O. and Thuy Phan (2013), “Corporate Governance and Firm Performance: Empirical Evidence from Vietnam”, Accessed from www.iosrjournals.org.

  • 􀀃Ehikioya, B.I. (2009), “Corporate Governance Structure and Firm Performance in Developing Economies: Evidence from Nigeria”, Corporate Governance, Vol. 9(3), pp. 231–243.

  • 􀀃Garg, Ajay (2007), “Influence of Board Size and Independence on Firm Performance: A Study of Indian Companies”, Vikalpa, Vol. 32, No. 3, pp. 39–60.

  • 􀀃Hussain, N. and Othman, R. (2012), “Code of Corporate Governance and Firm Performance”, British Journal of Economics, Finance and Management Sciences, Vol. 6(2).

  • 􀀃Imam, M. and Malik, M. (2007), “Firm Performance and Corporate Governance through Ownership Structure”, Evidence from Bangladesh Stock Market, International Review of Business Research Papers, Vol. 3(4), pp. 88–110.

  • 􀀃Jensen, M.C. and Meckling, W.H. (1976), “Theory of the Firm Managerial Behavior, Agency Costs and Ownership Structure”, Journal of Financial Economics, Vol. 3(4), pp. 305–360.

  • 􀀃Jensen, M.C. and Murphy, K.J. (1990), “Performance Pay and Top-Management Incentives”, Journal of Political Economy, Vol. 98(2), pp. 225–264.

  • 􀀃Kapooria, R.C. Sharma and Kaul (2013), “Impact of Corporate Governance on Firm Performance: An Empirical Analysis of IT and Manufacturing Sectors”, International Global Research Analysis, Vol. 2, No. 6, pp. 123–124.

  • 􀀃Kaur (2014), “Corporate Governance and Financial Performance: A Case Study of Indian Banking Industry”, Asian Journal of Multidisciplinary Studies, Vol. 2, No. 2, pp. 91–96.

  • 􀀃Klein, A. (1998), “Firm Performance and Board Committee Structure”, Journal of Law and Economics, Vol. 41(1), pp. 275–303.

  • 􀀃Kojola, O. (2008), “Corporate Governance and Firm Performance: The Case of Nigerian Listed Firms”, European Journal of Economics, Finance and Administrative Sciences, No. 14, pp. 1450–2275.

  • 􀀃Lipton, M. and Lorsch, J.W. (1992), “A Modest Proposal for Improved Corporate Governance”, Business Lawyer, Vol. 48(1), pp. 59–77.

  • 􀀃Majumdar, S.K. and Chhibber, P. (1999), “Capital Structure and Performance: Evidence from a Transition Economy on an Aspect of Corporate Governance”, Public Choice, Vol. 98(3-4), pp. 287–305.

  • 􀀃Mehran, H. (1995), “Executive Compensation Structure, Ownership and Firm Performance”, Journal of Financial Economics, Vol. 38(2), pp. 163–184.

  • 􀀃Peters, George and Bagshaw, Karibo (2014), “Corporate Governance Mechanisms and Financial Performance of Listed Firms in Nigeria: A Content Analysis”, Global Journal of Contemporary Research in Accounting, Auditing and Business Ethics, Vol. 1, Issue 2, pp. 103–128.

  • 􀀃Salami, K.A. (2011), “Analysis of the Relationship between Share Ownership Structure, Corporate Governance Structure, and Corporate Investment Efficiency, using GSE Market Data (2005–9)”, Journal of Accounting and Finance, Vol. 11(4), pp. 111–118.

  • 􀀃Sørensen, R.J. (2007), “Does Dispersed Public Ownership Impair Efficiency? The Case of Refuse Collection in Norway”, Public Administration, Vol. 85(4), pp. 1045–1058.

  • 􀀃Vafeas, N. and Theodorou, E. (1998), “The Relationship Between Board Structure and Firm Performance in the UK”, The British Accounting Review, Vol. 30(4), pp. 383–407.

  • 􀀃Weill, L. (2003), “Leverage and Corporate Performance: A Frontier Efficiency Analysis on European Countries”.

  • 􀀃Yammeesri, J. and Herath, S.K. (2010), “Board Characteristics and Corporate Value: Evidence from Thailand”, Corporate Governance, Vol. 10(3), pp. 279–292.

  • 􀀃Yermack, D. (1996), “Higher Market Valuation of Companies with a Small Board of Directors”, Journal of Financial Economics, Vol. 40(2), pp. 185–211.


Abstract Views: 641

PDF Views: 0




  • Corporate Governance and Corporate Performance:A Study of Indian Manufacturing Sector

Abstract Views: 641  |  PDF Views: 0

Authors

Virendra Khanna
FDDI School of Business & Entrepreneurship, India

Abstract


The current study aims to measure the relationship between corporate governance and financial performance of the company. The study is based on the secondary data collected from the annual reports of the 32 manufacturing companies in the field of consumable goods, FMCG, pharmaceutical and automobile sector. The stepwise regression analysis was performed to measure the impact of seven parameters of corporate governance given in SEBI clause 49 of the listing agreement. The independent variables used in the study are: board composition, shareholding pattern, board level committees, number of subsidiaries, disclosures, other compliances, and role and power of audit committees. It was found from the study that board composition, board ownership or shareholding pattern, disclosures and other compliances are the parameters of the corporate governance which have a positive and significant impact on the profitability of the manufacturing companies of India. It was also found from the study that degree of corporate governance is high among Indian manufacturing companies.

Keywords


Corporate Governance, Profitability, Performance, Manufacturing Sector, India, Disclosures, SEBI.

References





DOI: https://doi.org/10.15410/aijm%2F2017%2Fv6i1%2F120833