The Impact of Board Structure on Corporate Performance in India

Abstract

The present paper examines the status of corporate governance in India with special reference to board of directors. It investigates the impact of board of directors on corporate performance of top Indian companies. The board characteristics taken as independent variables are - board size, board composition, CEO duality, board activity, attendance during the meetings, board busyness i.e. directorships in other companies and gender diversity. Sample of top companies listed on BSE is taken to study impact of board characteristics on corporate performance for the year 2015-16 using multiple regression technique. Corporate performance of the companies is measured by Return on Assets and Price to Book Ratio. Size of the company, age and leverage are taken as control variables. The study finds that bigger boards have negative impact on corporate performance while board independence affects performance positively. Frequency of meetings as well as attendance therein is a positive factor influencing corporate performance. As believed in theory, busyness of directors in other companies is found to have negative impact and gender diversity, as anticipated, contributes positively towards corporate performance.

Keywords: Corporate Governance, Board Size, Board Composition, CEO Duality, Gender Diversity, Boards of Directors

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