AN EMPIRICAL STUDY OF RELATIONSHIP OF GOOD GOVERNANCE AND ECONOMIC PERFORMANCE

Namita Rajput, Shevata Seghal Marwah, Simple Arora

Abstract


Corporate governance provides the structure for defining, implementing and monitoring a company’s goals and objectives and ensuring accountability to its shareholders and investors. The objective of the present study is to examine a relationship of corporate practices and its impact on financial performance. This is a unique study in the sense that it takes medium sized family business in purview and it also takes corporate governance practices including mandatory and non mandatory practices (SEBI clause 49) along with voluntary measures as suggested by Ministry of Corporate Affairs in their guidelines 2009 i.e. basically enveloping actions which are under compliance and which are beyond compliance for example activities like HR Development, Quality Improvement for benefit of customers, Environment Protection, Health and Safety for its employees and for the welfare of the Society at large which adds to the value of shareholder wealth. To establish the relationship between corporate governance and financial performance Regression and step wise regression is used.The empirical findings exhibit a strong relationship between some of the corporate governance parameters of sample firms and their financial performance even with the constraints of data availability and smaller size of the sample for the two reference years under study 2006-2007 and 2012-2013 for 50 companies.

Key words: Corporate Governance, Financial performance, medium size family managed firms, mandatory disclosures, compliance.


References


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ISSN : 2251-1555