Does Corporate Governance Disclosure Practice Impact Firm Performance in India?

Abstract

The present study aims to examine the relationship between compliance requirement of corporate governance disclosure practices and firm performance in India. Unlike most of the existing studies, we compute corporate governance scores based on the compliance requirement of Clause 49 of listing agreement of SEBI for the period 2006-2016. The corporate governance data for Nifty 50 companies is hand-collected from their annual reports. We apply fixed effect regression model to examine the impact of corporate governance disclosure practices on firm performance measured in three alternatives ways like market, operating and financial performance. The empirical results indicate that corporate governance disclosure practices have positive and significant impact on market performance of the firms. It implies that companies that comply with regulatory requirements achieve higher market performance. The results also show that corporate governance disclosure practises have negative and significant impact on financial performance. The present study contributes to the limited literature on the relationship between regulatory compliance requirements and firm performance. The findings are useful to policy makers, managers, analysts and investors. LINKS