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Role of corporate governance on firm performance: a study on large Indian corporations after implementation of Companies’ Act 2013

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Abstract

Corporate governance involves balancing the interests of the many stakeholders in a corporation—from shareholders and management to customers and the larger society. Corporate governance also offers the framework for attaining a company’s vision and mission, providing guidance and oversight on a broad spectrum—action plans and internal controls to performance measurement and corporate disclosure. Companies’ Act 2013 has been introduced in India with the primary objective of improving corporate governance practices in Indian corporations. In this paper, we investigate the moderating role of corporate governance practices in large Indian corporations on firm performance, post introduction of Companies’ Act 2013. Specifically, we study the influence of board’s involvement in company’s affairs, board’s diversity, CEO duality, board compensation, and promoters’ involvement in the board. We find sufficient evidence that board involvement and board diversity positively influence firm performance, while CEO duality, board compensation, and promoters’ presence do not have an influence on firm performance.

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Authors and Affiliations

  1. Centre for Management Studies, Administrative Staff College of India, Raj Bhavan Road, Hyderabad, 500082, India

    Arindam Das

  2. Cognizant Business Consulting, SIPCOT IT Park, Siruseri, Chennai, India

    Sourav Dey

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  1. Arindam Das
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  2. Sourav Dey
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Correspondence to Arindam Das.

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Das, A., Dey, S. Role of corporate governance on firm performance: a study on large Indian corporations after implementation of Companies’ Act 2013. Asian J Bus Ethics 5, 149–164 (2016). https://doi.org/10.1007/s13520-016-0061-7

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  • DOI: https://doi.org/10.1007/s13520-016-0061-7

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