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VOL. 5, ISSUE 2 (2023)
Influence of board structure on corporate financial performance in India
Authors
Jaba Rani Patta
Abstract
Board structures are
essential part of corporate governance. The contribution of board of directors
on the board of companies is significant for ensuring proper direction with
regard to leadership, vision, strategy, policies, monitoring, supervision,
accountability to shareholders and other stakeholders and to achieving greter
level of performance. So, board structure is an important factor in
determination of firm financial performance. The purpose of this
study is to investigate the relationship of financial performance measures with
corporate Board structure. Multiple regression is used covering the 2010–2019 period. The
analysis show that all listed companies have on an average eleven board members. The
two third of the directors are non- executive and half of the directors are
independent, which is in line with the India code of corporate governance. The
two third of the sample companies with the code of corporate governance
guideline for separating the CEO and chairman roles. The study also found that
Board size has a significant negative impact and Proportion of non-executive
directors in the corporate board positively significant effects on corporate
financial perform. Firm size and liquidity have a significant positive relation
and Leverage is negatively and significantly associated with corporate
financial performance. It can be concluded that the financial performance of
the Indian listed companies is significantly affected by board structure and
Indian corporate sector support the argument of both the agency theory and
resource dependency theory. The study also suggested that Indian corporate
sector particularly favours small boards with a high composition of Non
executive directors.
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Pages:97-104
How to cite this article:
Jaba Rani Patta "Influence of board structure on corporate financial performance in India". International Journal of Management and Commerce, Vol 5, Issue 2, 2023, Pages 97-104
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