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Board structure and firm performance in Indian IT firms

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  • R. Rathish Bhatt
  • Sujoy Bhattacharya

Abstract

Purpose - – The purpose of this paper is to examine the relationship between financial performance and internal governance structure of Information Technology (IT) sector in India. Various aspects of the board such as board independence, board size, board meeting, board attendance, aspects of leadership with role duality and family ownership are addressed in this study. Design/methodology/approach - – The sample consists of 114 listed IT sector firms in India from 2006 to 2011. To account for endogeneity of the relationship between firm performance, corporate governance and capital structure of the firm, simultaneous system of equations was employed. Findings - – The study, after controlling for firm-specific factors, shows that larger board size had a positive impact on firm performance. Independent directors on the board did not show any association with firm performance. The study failed to find any relationship between the number of board meetings and firm performance. However, attendance of the board members was found to be positively associated with firm performance. Family firms showed better performance compared to non-family firms. Originality/value - – The study demonstrates that governance measures related to the board in Indian firms have some similarities to the firms in western countries. However, the study shows that some of the widely used board characteristic measures differ with other studies documented in the western contexts which limits the generalisability of the western studies in the emerging countries.

Suggested Citation

  • R. Rathish Bhatt & Sujoy Bhattacharya, 2015. "Board structure and firm performance in Indian IT firms," Journal of Advances in Management Research, Emerald Group Publishing Limited, vol. 12(3), pages 232-248, November.
    • Handle: RePEc:eme:jamrpp:v:12:y:2015:i:3:p:232-248
    DOI: 10.1108/JAMR-07-2014-0042
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    Citations

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    Cited by:

    1. Enni Savitri & Andreas Andreas & Almasdi Syahza & Tatang Ary Gumanti & Nik Herda Nik Abdullah, 2020. "Corporate governance mechanism and financial performance: role of earnings management," Entrepreneurship and Sustainability Issues, VsI Entrepreneurship and Sustainability Center, vol. 7(4), pages 3395-3409, June.
    2. 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.
    3. Ishfaq Gulzar & S. M. Imamul Haque & Tasneem Khan, 2020. "Corporate Governance and Firm Performance in Indian Textile Companies: Evidence from NSE 500," Indian Journal of Corporate Governance, , vol. 13(2), pages 210-226, December.
    4. Erlane K Ghani & Ham Xairyani Mohamed & Kamaruzzaman Muhammad, 2019. "Board Characteristics and Foreign Direct Investment in Public Listed Property Companies: A Malaysian Evidence," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 10(3), pages 116-131, May.
    5. Michel Sayumwe, 2019. "Corporate Governance: An Overview. From Creation of Value for Shareholders by the Board to the Duality Role of Its Chairperson," Journal of Business Administration Research, Journal of Business Administration Research, Sciedu Press, vol. 8(1), pages 40-51, April.
    6. Osei, Francis, 2022. "The effect of corporate governance elements on employee performance: evident form ghanaian banking industry," Technium Business and Management, Technium Science, vol. 2(3), pages 6-22.
    7. Deden Tarmidi & Etty Murwaningsari & Haryono Umar & Sekar Mayangsari, 2020. "The Influence of Tax Compliance and Earnings Quality on Financial Performance (Evidence from Indonesia and Thailand)," International Journal of Emerging Trends in Social Sciences, Scientific Publishing Institute, vol. 8(2), pages 70-74.
    8. Nailesh Limbasiya & Hitesh Shukla, 2019. "Effect of Board Diversity, Promoter’s Presence and Multiple Directorships on Firm Performance," Indian Journal of Corporate Governance, , vol. 12(2), pages 169-186, December.
    9. Faozi A. Almaqtari & Hamood Mohd. Al-Hattami & Khalid M. E. Al-Nuzaili & Mohammed A. Al-Bukhrani, 2020. "Corporate governance in India: A systematic review and synthesis for future research," Cogent Business & Management, Taylor & Francis Journals, vol. 7(1), pages 1803579-180, January.
    10. Hend Alregab, 2023. "The role of corporate governance in attracting foreign investment: An empirical investigation of Saudi‐listed firms in light of vision 2030," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 28(1), pages 284-294, January.
    11. María Consuelo Pucheta-Martínez & Isabel Gallego-Álvarez, 2020. "Do board characteristics drive firm performance? An international perspective," Review of Managerial Science, Springer, vol. 14(6), pages 1251-1297, December.
    12. Tutun Mukherjee & Som Sankar Sen, 2022. "Impact of CEO attributes on corporate reputation, financial performance, and corporate sustainable growth: evidence from India," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 8(1), pages 1-50, December.

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