Role of Corporate Governance mechanism and Firm performance: A study of Indian corporate sector

Abstract

The study intends to examine the main role of corporate governance mechanisms and its relationship with firm performance. The study is confined to the BSE 500-indexed companies for the period 2009-2019. For the firm performance analysis two approaches measured by market based (Tobin’s Q) and accounting-based (Return on Assets (ROA), Return on Equity (ROE)). In addition to this study corporate governance used as proxies by set of some mechanisms including board independence, board size, board meetings i.e. audit committee, remuneration and nomination committee, CEO duality and ownership structure.

The regression analysis was run to test the dataset of 327 listed companies in Indian corporate sector. The results of our study indicated that companies which comply with good and strong corporate governance mechanisms can directly achieve higher market and accounting based performance. Thus, the research findings reach to the conclusion that the research findings lead to the conclusion that the corporate governance mechanisms, which have been introduced in the Indian corporate sector for transparency, accountability and integrity have partially successful to deal with the different issues and manifestations of firm performance.