Board Characteristics, Audit Committee and Ownership Structure Influence on Firm Performance of Manufacturing Firms in India
International Journal of Business and Economics Research
Volume 6, Issue 4, August 2017, Pages: 73-87
Received: Apr. 29, 2017; Accepted: Jun. 15, 2017; Published: Jul. 24, 2017
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Author
Palaniappan Gurusamy, Department of Management Studies, Vinayaka Missions Kirupananda Variyar Engineering College, Salem, Tamil Nadu, India
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Abstract
The study investigates the relationship and impact of corporate governance measures such as board characteristics, audit committee and Ownership Structure on the financial performance of the selected manufacturing firms listed in Bombay Stock Exchange (BSE). The study empirical in nature and applies panel data regression analysis to a sample of 357 manufacturing firms listed in BSE during the period 2006-2015. The study found that board size is positively and significantly linked to both the financial performance measures, i.e. Return on assets (ROA) and Return on Equity (ROE) but the negative and insignificant impact in case of Tobin’s Q. Audit committee independence is significant and negatively affected by ROE. The same promoters' shareholding is negatively and significantly related to all the financial measures and there is an insignificant negative relationship between institutional shareholding and both financial performance measures (Tobin’s Q and ROA). The study implies that to improve the performance and accordingly the value of firms, the percentage of promoters' ownership should be decreased as it has positive linkages with the financial performance. The board members have potential knowledge and expertise in the field should be increased as it has aligned with accounting based financial performance. Further, it will help the investors to pay special attention to the corporate governance, audit committee and type of ownership of firms while making the investments.
Keywords
Corporate Governance, Audit Committee, Ownership Structure, Financial Performance, Panel Data, Manufacturing Firms
To cite this article
Palaniappan Gurusamy, Board Characteristics, Audit Committee and Ownership Structure Influence on Firm Performance of Manufacturing Firms in India, International Journal of Business and Economics Research. Vol. 6, No. 4, 2017, pp. 73-87. doi: 10.11648/j.ijber.20170604.16
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Copyright © 2017 Authors retain the copyright of this article.
This article is an open access article distributed under the Creative Commons Attribution License (http://creativecommons.org/licenses/by/4.0/) which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
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