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Determinants of corporate financial performance relating to board characteristics of corporate governance in Indian manufacturing industry

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  • G. Palaniappan

Abstract

Purpose - The purpose of this paper is to examine if certain board characteristics have an impact on the financial performance of manufacturing firms in India. Design/methodology/approach - The study draws on data from 275 firms listed in NSE during from 2011 to 2015, using a multiple regression model. The present study examines the effect of board characteristics such as board size, CEO duality, independence and board activity devoted to the effectiveness of firms performance regarding market and accounting based financial performance measures. Findings - The finding supports an inverse association between the extent of board characteristics and the firms’ performance indicators. The study also finds a statistically significant negative relationship between board size and TobinsQ, ROA and ROE. The evidence also shows that the board independence and meeting frequency moderate the relationship between return on equity and return on assets by enhancing these measures among corporate governance mechanisms. Research limitations/implications - The present study does not include all possible board characteristics, i.e., large shareholders dominance on the board and promoter’s and institutional shareholding, to support firm’s performance. Further research might include the ownership structure of the board to improve firm’s performance. Originality/value - The study focuses on the corporate governance issues such as size, duality, independence and activity of the boards and their influence on firm performance. The subject analyzes the possible impact of board characteristics and firm-related features that have received much attention from academic research, which has largely focused on studying the publications of corporate governance in India and Asian context.

Suggested Citation

  • G. Palaniappan, 2017. "Determinants of corporate financial performance relating to board characteristics of corporate governance in Indian manufacturing industry," European Journal of Management and Business Economics, Emerald Group Publishing Limited, vol. 26(1), pages 67-85, July.
    • Handle: RePEc:eme:ejmbep:ejmbe-07-2017-005
    DOI: 10.1108/EJMBE-07-2017-005
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    Citations

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    Cited by:

    1. Mahesh Chand Garg & Khushboo Tanwer, 2023. "Board Variables Reforms in India: Success or Failure? A Comparative Analysis Between Pre and Post Enactment Period of Companies Act, 2013," Asia-Pacific Financial Markets, Springer;Japanese Association of Financial Economics and Engineering, vol. 30(3), pages 531-558, September.
    2. Kofi Mintah Oware & Harshitha Moulya & Thathaiah Mallikarjunappa, 2024. "Corporate social responsibility assurance, board characteristics and social performance disclosure. Evidence of listed firms in India," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 29(2), pages 1707-1721, April.
    3. Dr. Nandkishor N. Dhondge, 2023. "Application of corporate governance measures in Indian small and medium enterprises: A way forward," Indian Journal of Commerce and Management Studies, Educational Research Multimedia & Publications,India, vol. 14(2), pages 14-21, May.
    4. Hanna Mysaka & Ivan Derun, 2021. "Corporate Financial Performance and Tobin’s Q in Dividend and Growth Investing," Contemporary Economics, University of Economics and Human Sciences in Warsaw., vol. 15(3), September.
    5. Adeleke Abdulyekini Adebanjo & Okere Wisdom, 2024. "Sustainable Drivers of Financial Success in Nigeria’s Non-Financial Sector: A Managerial Perspective," International Review of Management and Marketing, Econjournals, vol. 14(6), pages 433-442, October.
    6. Palaniappan Gurusamy, 2024. "Corporate Ownership Structure and Its Effect on Capital Structure: Evidence from BSE Listed Manufacturing Companies in India," IIM Kozhikode Society & Management Review, , vol. 13(2), pages 135-153, July.
    7. Agnus Baby & Md Aslam Mia & Anwar Allah Pitchay, 2024. "A systematic review of financial performance in the manufacturing industry," Future Business Journal, Springer, vol. 10(1), pages 1-20, December.

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