Title: Board characteristics and corporate financial distress: the Indian evidence

Authors: Ibrahim Hussain; Tutun Mukherjee

Addresses: St. Xavier's University, Kolkata, West Bengal, 700160, India; The Bhawanipur Education Society College, Kolkata, 5, Elgin Road, Sreepally, Bhowanipore, West Bengal – 700020, India ' Xavier Business School, St. Xavier's University, Kolkata, Action Area III, B, Newtown, West Bengal – 700160, India

Abstract: This study aims to examine how board characteristics - board size, female directors, board independence, CEO duality, foreign directors, and frequency of board meetings - affect the likelihood of firms falling into financial distress in India. A matched-pairs research design is being utilised with 374 observations, half of which are classified as distressed and the other half as non-distressed. Data spanning ten years, from 2013 to 2022, has been collected for the sample firms. Using conditional (fixed-effect) logistic regression technique, the results indicate that board size hold positive relationship with the firm's likelihood of falling into financial distress, while board independence is found to be negatively associated. However, the results confirm that female directors, foreign directors, CEO duality and board meetings do not have a significant impact on the likelihood of financial distress in the Indian context. These findings bear important practical implications in the Indian context, particularly concerning the formulation of a robust code of corporate governance aimed at mitigating corporate failures.

Keywords: corporate governance; board characteristics; financial distress likelihood; matched-pair approach; conditional (fixed-effect) logistic regression; India.

DOI: 10.1504/IJCG.2025.145659

International Journal of Corporate Governance, 2025 Vol.15 No.2, pp.127 - 160

Received: 10 Jul 2024
Accepted: 25 Dec 2024
Published online: 11 Apr 2025 *

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