Title: Testing the demand for monitoring and advisory roles of independent directors: a case of Indian corporate boards
Authors: Shivan Sarpal
Addresses: Khalsa College of Law, Affiliated to Guru Nanak Dev University, Amritsar, Punjab (143002), India
Abstract: Research on Indian corporate governance has been largely relied on the monitoring role of corporate boards and thus, is devoid of another important role, i.e., advisory role performed by them. The present analysis makes an endeavour to fill the research gap of testing simultaneously the relevance of monitoring and advisory roles of corporate boards by specifically focusing on investigating the linkages between several firm specific factors (firm complexity, monitoring and advising costs, private benefits, CEO influence) and board independence. Overall the analysis maintains that board independence is significantly determined by the level of firm complexity and private benefits in the directions consistent with the past literature. However, the findings of monitoring and advising costs, and CEO influence hypotheses are opposite to the expectations derived from the concerned literature. These variations can be attributed to unique environment and different institutional contexts under which the firms are operated.
Keywords: board independence; firm complexity; costs of monitoring and advising; private benefits; CEO influence; firm size; corporate governance; Indian context; small firms; large firms.
International Journal of Corporate Governance, 2020 Vol.11 No.1, pp.76 - 107
Accepted: 21 Jan 2020
Published online: 26 May 2020 *