Internal Corporate Governance Practices of Manufacturing Firm in India: An Empirical Study

Abstract

The objective of the study is to examine whether there is a relationship between the firm characteristics and internal corporate governance practices of companies listed in BSE between 2006 and 2015. The study has undertaken 16 major manufacturing sectors covering a total of 357 firms. The Literature has constructed the measures of the ICG Index such as the composition of board composition, board activity, audit committee, and ownership structure. The study has collected the relevant information obtained from the respective firm’s annual reports and CMIE-Prowess through the content analysis technique. A panel data method of analysis is conducted while evaluation necessary diagnostics tests are made wherever necessary. The result found a positive association between firm size and profitability whereas leverage and growth in sales are inversely associated with internal corporate governance practices. The study’s results have important implications for policymakers, investors, regulatory authorities and academic perspectives, especially those in India and developing countries across the globe.

Keywords: Corporate Governance, Internal Governance Measures, Board Composition, Board Activity, Audit Committee, Ownership Structure

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