Title: Financial performance and governance synergy: unlocking R&D potential in Indian companies

Authors: Tarun Kumar Soni; Divya Mehta; Sanjeewani Sehgal

Addresses: FORE School of Management, Adhitam Kendra, B-18, Qutub Institutional Area, New Delhi – 110016, India ' Shaheed Bhagat Singh College, University of Delhi, New Delhi, India ' Cluster Innovation Centre, University of Delhi, New Delhi, India

Abstract: This research paper investigates the link between research and development (R&D) intensity, corporate governance, financial variables, and other significant firm-level characteristics using panel least squares and quantile regression methods. The results of our study confirm the positive relationship between the level of exports, the degree of board independence, directors' compensation, and financial performance of the company. The study also finds a negative relationship between a company's debt and the level of foreign promoter ownership. These findings have important implications, as firms with superior corporate governance devote a larger percentage of their funds to R&D. Consequently, policymakers ought to support stronger governance frameworks that include having enough independent board members and paying adequate remuneration to board members. Additionally, enterprises with greater foreign promoter shareholdings are required to invest in R&D to counteract the unfavourable association between foreign promoter concentration and R&D intensity.

Keywords: research and development intensity; corporate governance; firm performance; developing economy; quantile regression; panel least regression.

DOI: 10.1504/IJMED.2025.145148

International Journal of Management and Enterprise Development, 2025 Vol.24 No.2, pp.201 - 226

Received: 12 Jun 2024
Accepted: 01 Dec 2024
Published online: 21 Mar 2025 *

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