Do ownership and board characteristics enhance firm performance? A corporate governance perspective

Purpose The purpose of this paper is to explore the relationship of board characteristics and firm performance for Indian companies. Design/methodology/approach Corporate governance structures of 391 Indian companies out of CNX 500 companies listed on National Stock Exchange have been studied for their impact on performance of companies. Structural equation modeling methodology has been employed on data for five financial years from 2010 to 2014 for selected companies. Market-based measure (Tobin’s Q) and accounting-based measure (return on asset) have been employed for measuring firm performance. Findings Empirical findings indicate that there is significant positive association between board size and firm performance. Board independence is found significantly related to firm performance. Number of board meetings is found to be sending positive signal to the market creating firm value. Separation of CEO and chairman of the board is found to be value creating and overburdened directors affect firm performance adversely. Findings also suggest that the governance-performance relationship is also dependent upon the type of performance measures used in the study. Research limitations/implications Limitations of this study are in terms of data methodology and possible omission of some variables. It is understood that the qualitative dynamics happening inside board meetings impact corporate performance. The strategic decisions-making process adopted by the boards to fight competition or to increase market share is not available in public domain easily. The decision-making processes and monitoring for implementation of these decisions could impact corporate governance-performance relationship. These parameters and their impact on corporate performance are not covered under the scope of the present study. However, the same could have thrown more light on governance-performance relationship. Originality/value The paper adds to the emerging body of literature on corporate governance-performance relationship in the Indian context using a reasonably wider and newer data set.

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Board characteristics and firm value for Indian companies

Journal of Indian Business Research ◽

10.1108/jibr-07-2016-0074 ◽

2018 ◽

Vol 10 (1) ◽

pp. 2-32 ◽

Cited By ~ 4

Author(s):

Rakesh Kumar Mishra ◽

Sheeba Kapil

Keyword(s):

Decision Making ◽

Corporate Governance ◽

Firm Performance ◽

Firm Value ◽

Corporate Performance ◽

Strategic Decision ◽

Tobin’S Q ◽

Tobin's Q ◽

Content Type ◽

Board Characteristics

Purpose This paper aims to explore the relationship between board characteristics and firm performance for Indian companies. Design/methodology/approach Corporate governance structures of 391 Indian companies out of CNX 500 companies listed on National Stock Exchange have been studied for their impact on performance of companies. Panel data regression methodology has been used on data for five financial years from 2010 to 2014 for the selected companies. Performance measures considered are market-based measure (Tobin’s Q) and accounting-based measure (return on asset [ROA]). Findings The empirical findings indicate that the market-based measure (Tobin’s Q) is more impacted by corporate governance than the accounting-based measure (ROA). There is a significant positive association between board size and firm performance. Board independence is found significantly related to firm performance. Number of board meetings is found to be sending positive signal to the market creating firm value. Separation of chief executive officer and chairman of the board is found to be value-creating, and overburdened directors affect firm performance adversely. Research limitations/implications Limitations of the study are in terms of methodology and possible omission of some variables. It is understood that the qualitative dynamics happening inside board meetings impact corporate performance. The strategic decision-making process adopted by the boards to fight competition or to increase market share is not easily available in public domain. The decision-making processes and monitoring for implementation of those decisions could impact corporate governance performance relationship. These parameters and their impact on corporate performance are not covered under the scope of the present study. Originality/value The paper adds to the emerging body of literature on corporate governance performance relationship in the Indian context by using a reasonably wider and newer data set.

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Corporate Governance and Firm Performance in Indian Textile Companies: Evidence from NSE 500

Indian Journal of Corporate Governance ◽

10.1177/0974686220966809 ◽

2020 ◽

Vol 13 (2) ◽

pp. 210-226

Author(s):

Ishfaq Gulzar ◽

S. M. Imamul Haque ◽

Tasneem Khan

Keyword(s):

Corporate Governance ◽

Firm Performance ◽

Performance Measures ◽

Board Independence ◽

Board Size ◽

Ceo Duality ◽

Board Characteristics ◽

And Performance ◽

Business Practitioners ◽

Measure Of Performance

This article endeavours to study the relationship between corporate governance and performance for a sample of 11 textile firms listed on Nifty 500 Index in India. The article examines whether the board characteristics have any impact on performance measures. The data covers the time period from 2014 to 2018. The study uses board size, board meetings, board independence as corporate governance surrogates from different dimensions along with other widely uses of independent variables to assess their impact in a panel data-based regression. The findings provide mixed results between the board characteristics and the firm performance. Board size and firm performance is statistically significant with return on assets and Tobin’s Q. Whereas, board independence, board meetings and CEO duality are not statistically significant with both accounting-based measure of performance and market-based measure of performance. The article provides empirical evidence that board independence, board meetings and CEO duality is not necessary for listed textile companies in India and would be of interest to regulatory bodies, business practitioners and academic researchers. The main value of this article is the analysis of the effect of corporate governance on performance measures on listed Indian textile industries.

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The impact of board characteristics and ownership identity on agency costs and firm performance: UK evidence

Corporate Governance ◽

10.1108/cg-09-2016-0184 ◽

2018 ◽

Vol 18 (6) ◽

pp. 1147-1176 ◽

Cited By ~ 5

Author(s):

Bahaaeldin Samir Allam

Keyword(s):

Corporate Governance ◽

Firm Performance ◽

Agency Costs ◽

Economic Conditions ◽

Agency Conflicts ◽

Governance Mechanisms ◽

Content Type ◽

Board Characteristics ◽

Corporate Governance Mechanisms ◽

The Impact

PurposeThis paper aims to provide a twofold empirical comparison: first, a comparison between the impact of corporate governance mechanisms on agency costs proxies and firm performance measures, and second, this comparison was used before and after the 2008 financial crisis, capturing two different economic states.Design/methodology/approachPanel regression methods were applied to two data sets of non-financial firms incorporated in the FTSE ALL-Share index over the period 2005-2011.FindingsThe results provide evidence that not all mechanisms lead to lower agency conflicts and/or higher firm performance. Ownership identity has a significant impact and the role of the governance mechanisms changes with the changes in the economic conditions surrounding the firm.Research limitations/implicationsThe results lend support to the notion that forcing a certain code of practice on firms to follow could compel them to move away from conflict reduction governance structures.Originality/valueTo the best of the authors’ knowledge, this is the first paper to provide a comparison of empirical evidence for the impact of board characteristics and ownership identity on agency costs and firm performance by using a comprehensive set of corporate governance mechanisms. This comparison challenges the prior studies that use performance as an indirect proxy for lower agency costs. Additionally, it compares the impact of the governance mechanisms during two different economic conditions.

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Do Board Characteristics Matter for Growth Firms? Evidence from China

Journal of Risk and Financial Management ◽

10.3390/jrfm14080380 ◽

2021 ◽

Vol 14 (8) ◽

pp. 380

Author(s):

Qiuwei Li ◽

Wei Zhou ◽

Hui Zhou ◽

Jiaxuan Chen

Keyword(s):

Corporate Governance ◽

Firm Performance ◽

Performance Indicator ◽

Information Technology Industry ◽

Analysis Method ◽

Board Characteristics ◽

Technology Industry ◽

Growth Enterprise Market ◽

Growth Firms ◽

Established Firms

Previous research on the effect of board characteristics mostly examines established firms. This raises the question of whether the findings from the board characteristics literature are applicable to rapidly growing enterprises, as their corporate governance landscape can be very different from that in large, mature companies. Our paper extends the corporate governance literature by investigating the performance implications of board characteristics in startups using a unique set of firms: 121 startups operating in the information technology industry listed on the Growth Enterprise Market (GEM) in China. Using a firm performance indicator constructed through the factor analysis method, we find significant correlations between firm performance and board size, age structure, board meeting frequency, and board ownership of shares. Our findings contribute to the corporate governance literature by shedding new light on the performance implications of board characteristics for startups operating in fast-paced industries.

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A survey of corporate governance studies in China

Corporate Ownership and Control ◽

10.22495/cocv10i4art5 ◽

2013 ◽

Vol 10 (4) ◽

pp. 61-70

Author(s):

Larry Li ◽

Tony Naughton

Keyword(s):

Corporate Governance ◽

Firm Performance ◽

Organizational Structure ◽

Driving Forces ◽

Research Direction ◽

Future Research ◽

Future Research Direction ◽

Board Characteristics ◽

Governance Practices ◽

And Performance

This paper reviews the theoretical and empirical corporate governance literature in China, concentrating on relationships between ownership, board characteristics and firm performance. In addition, we explore the recent floatation of non-tradable shares and relationship contracting (Guanxi), which are two unique corporate governance issues in China. Overall, the understanding of the key driving forces of firm organizational structure, corporate governance practices, and performance remains largely inconclusive and we make recommendations for future research direction.

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