Title: Is the excessive reliance on the board monitoring justified in the context of corporate governance framework?

Authors: Monika Singla; Shveta Singh; Sushil

Addresses: Department of Management Studies, Indian Institute of Technology Delhi, Vishwakarma Bhawan, Shaheed Jeet Singh Marg, Hauz Khas, New Delhi – 110016, India ' Department of Management Studies, Indian Institute of Technology Delhi, Vishwakarma Bhawan, Shaheed Jeet Singh Marg, Hauz Khas, New Delhi – 110016, India ' Department of Management Studies, Indian Institute of Technology Delhi, Vishwakarma Bhawan, Shaheed Jeet Singh Marg, Hauz Khas, New Delhi – 110016, India

Abstract: This paper attempts to extend the concept of 'bundle of governance mechanisms' and analyses the dynamics of various governance mechanisms in relation to each other. Further, this paper seeks to answer if it is justified to exercise a huge reliance on board monitoring alone while designing or analysing the governance structure of a firm. This paper uses the total interpretive structural modelling (TISM) approach to analyse the various hierarchical relationships based on the relative driving power and dependence of various monitoring mechanisms. The findings suggest that a huge reliance on board monitoring is justified to an extent as it has the driving power to strengthen other governance mechanisms. However, the relationship between board monitoring and firm performance is moderated by other governance mechanisms like product market competition and ownership concentration. Thus, board monitoring alone should not be considered as a benchmark to assess the quality of the governance structure of a firm.

Keywords: corporate governance; monitoring mechanisms; board of directors; bundle of governance mechanisms.

DOI: 10.1504/JGBA.2018.097777

Journal for Global Business Advancement, 2018 Vol.11 No.6, pp.776 - 801

Available online: 06 Feb 2019 *

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