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| 1 |
ID:
159410
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| Summary/Abstract |
The present article makes an attempt to empirically examine the linkage between
board composition and financial performance of the listed Indian and Chinse
firms spanning over the period from 2010 to 2014. Board composition comprises
of the four variables, namely, board size, auditors’ quality, CEO duality
and proportion of independent directors on the board. The study finds that for
Indian firms, the separation between the chief executive officer (CEO) and the
chairperson does have positive impact on the firms’ return on equity (ROE),
while for the Chinese firms, the proportion of independent directors on the
board does significantly influence ROE of the firms. Firms with higher proportion
of independent directors on their boards experience greater ROE. However,
auditors’ quality and board size are not found to have any impact on the ROE of
the firms of either country.
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| 2 |
ID:
173877
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| Summary/Abstract |
This study explores the influence of corporate governance practices in corporate boards on firm performance and draws insights on the relative importance for companies for fostering the development of governance mechanisms in business. The study examines 50 firms belonging to the benchmark index of the National Stock Exchange of India (NIFTY 50) and tracks them for over a five-year period. The study uses fixed and random effect econometric models to explore the relationship between corporate governance variables, and firm performance using both accounting returns (EVA, ROA and ROE) and market returns (MVA). The study finds that corporate governance variables significantly improve firm performance or value creation. Especially, multiple directorships, involvement of foreign institutional investors and increase in promoter holdings may significantly affect returns of the firm. The study suggests that it may be useful to foster better corporate governance practices and monitor linkages with firm performance as the effect is influenced by other control variables also.
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