Corporate Governance Internal Board Mechanisms and Firm Performance: A Panel Level Analysis in Emerging Market

Abstract

This paper seeks to examine the relationship between internal corporate governance mechanisms and firm performance of NSE listed Companies. Firm performance has been measured using Tobin’s Q and MBVR as market-based measures and ROA and ROE as accounting-based measures. Econometric Analysis is performed using Fixed Effect with-in and Least Square Dummy Variable model, Random effect model and Feasible Generalized Least Square model on a panel of 178 non-financial NSE listed firms for a period of eight years from 2011-2018. The results concluded that Board parameters are the important internal corporate governance mechanisms impacting firm performance in Indian context. Board size, Board Composition, Board independence and CEO Duality have a significant negative impact on firm performance measures; on the other hand, Chairman Identity has a significant positive impact on firm performance. However, Board Activity has no impact on firm performance. The results provided a comprehensive analysis of various board parameters based on the various theories of corporate governance viz. agency, stewardship, stakeholder and resource dependency theory backed by the extensive empirical literature on corporate governance and firm performance studies which would be great help for researchers and academicians.