Corporate Governance Practices under the Companies Act 2013: Evidence from Indian Listed Companies
Author(s): Dr. Mrityunjai Singh
Publication #: 2604015
Date of Publication: 02.12.2019
Country: India
Pages: 1-9
Published In: Volume 5 Issue 6 December-2019
DOI: https://doi.org/10.62970/IJIRCT.v5.i6.2604015
Abstract
Following the Companies Act 2013, governance reforms introduced in India were a huge regulatory step towards good governance that would make the companies more accountable, transparent and protect investors. We empirically confirm the effectiveness of these reforms by analysing governance compliance among companies listed on the National Stock Exchange of India. And we focus on governance aspects such as board composition, independence of directors, audit committee performance, gender diversity and corporate disclosure. We use a panel dataset of listed firms in the post-reform period and rely on econometric methods to investigate the effects of governance quality on firm performance indicators such as ROA and market valuations. More robust governance mechanisms, specifically independent audit control and diversified boards, are better for the firm in terms of financial performance, information asymmetry reduction and investor confidence. In addition, the outcome of the study also demonstrates that governance reforms under the Companies Act 2013 do more than just compliance and lead to a positive impact in corporate monitoring and financial stability. The study contributes to the emerging market corporate governance literature by offering evidence from a promoter-driven ownership environment and highlights the importance of institutional enforcement in conjunction with legal reforms. Policy implications for regulators in order to enhance governance monitoring and ensure sustainable corporate performance in India’s ever-evolving capital market system are offered.
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