This study tries to examine the empirical relationship between corporate governance and financial performance of Indian firms by developing a corporate governance index (CGI) based on a variety of corporate governance characteristics. Such characteristics include board structure, ownership structure, director participation and busyness, market for external control, and product market competition. We employ a panel dataset for Indian non-financial firms listed on the National Stock Exchange for the period 2010–2018. Using a System GMM dynamic panel approach, we analyse the relationship of CGI with different firm performance measures including market-based performance measures like Tobin’s Q (TQ), and accounting-based performance measures like Return on Assets (ROA) and Return on Net Worth (RONW). Based on the empirical results, we find a significant positive relationship of corporate governance index (CGI) with ROA and RONW and significant negative relationship with TQ. Lastly, the CGI used by our study is based on a broad spectrum of dimensions of corporate governance and serves as a direction for business houses and shareholders to work towards governance practices leading to better financial performance of the firms.

本研究试图通过基于各种公司治理特征制定公司治理指数（CGI），来研究印度公司的公司治理与财务绩效之间的经验关系。这些特征包括董事会结构，股权结构，董事参与和忙碌，外部控制市场以及产品市场竞争。我们采用2010-2018年期间在国家证券交易所上市的印度非金融公司的面板数据集。使用系统GMM动态面板方法，我们分析了CGI与不同公司绩效指标的关系，其中包括基于市场的绩效指标（如Tobin的Q（TQ））和基于会计的绩效指标（如资产收益率（ROA）和净资产收益率） （RONW）。根据实证结果，我们发现公司治理指数（CGI）与ROA和RONW呈显着正相关，与TQ呈显着负相关。最后，我们的研究使用的CGI基于广泛的公司治理维度，并为企业和股东朝着实现公司更好的财务绩效的治理实践的方向提供了指导。