TITLE:
Corporate Governance and Firm Performance in Emerging Markets: Evidence from India
AUTHORS:
Sheeba Kapil, Rakesh Mishra
KEYWORDS:
Corporate Governance, Ownership Structure, Board Structure, Firm Performance, India, Emerging Markets, Family Capitalism
JOURNAL NAME:
Theoretical Economics Letters,
Vol.9 No.6,
August
29,
2019
ABSTRACT: This study attempts to explore the link between
corporate governance system developed by firms like promoter ownership,
institutional relationship (as
percentage ownership in the firm), foreign
institutional investors (FII) ownership, board size (log assets), family control
which is a significant indicator for board independence.
Further we have also taken CEO duality, number of board meetings and busyness
of directors and linked it with firm performance. Market based firm performance
measures and accounting based performance show different impact. Findings
indicate that impact of corporate governance variables on market based
performance measures (Tobin’s Q) is greater than the impact on accounting based
performance measures (ROA and ROE). Ownership structure i.e. family capitalism impacts market based performance measures
more whereas board structure impacts accounting based performance measure more.
Among board variables, board size is found to impact performance positively and
CEO duality is found to impact performance negatively. Board independence i.e. “monitoring board” is found to
impact accounting based performance positively, whereas number of board
meetings is found to impact market based performance
measure positively. Directors’ internal busyness is not found to impact any of
the performance measures. Directors’ external busyness is impacting accounting
based measures negatively when the busyness is measured in terms of position of
directors in other companies.