Title: Impact of board characteristics and ownership structure on firm performance: empirical evidence from India

Authors: Aswini Kumar Mishra; R.L. Manogna; Shikhar Jain

Addresses: Department of Economics, Birla Institute of Technology and Science, Pilani, K.K. Birla Goa Campus, Zuarinagar, India ' Department of Economics, Birla Institute of Technology and Science, Pilani, K.K. Birla Goa Campus, Zuarinagar, India ' Department of Economics, Birla Institute of Technology and Science, Pilani, K.K. Birla Goa Campus, Zuarinagar, India

Abstract: This study attempts to assess the empirical relationship between corporate governance and the financial performance of firms in the Indian context by using a set of board and ownership characteristics as representatives of corporate governance practices. We employ a panel dataset comprising of a large sample of 1,347 Indian non-financial companies for the period 2010 to 2018. For studying firm performance, we use both accounting-based performance measures like return on assets (ROA) as well as market-based performance measures like Tobin's Q (TQ). Starting from the basic static panel estimation approach using the fixed-effects estimator, we gradually move on to dynamic panel estimation using different GMM and system GMM estimators to examine the various board characteristics that influence firm performance in India. Based on our final model estimated using system GMM, we infer that on one hand, board size, board activity, and promoter ownership are found to positively influence firm performance while on the other hand, board meetings are found to be negatively related to firm performance. For policymakers and corporates, our study provides valuable insights into the specific aspects of corporate governance that can be targeted and implemented effectively to improve the financial performance of firms.

Keywords: board characteristics; firm performance; corporate governance; board of directors; ownership structure; India.

DOI: 10.1504/IJBIR.2022.123261

International Journal of Business Innovation and Research, 2022 Vol.28 No.2, pp.227 - 245

Received: 30 Jan 2020
Accepted: 28 Jun 2020
Published online: 07 Jun 2022 *

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