Application of Value Based Financial Measures to Improve Corporate Governance in India: Evidence through Random Effects Model

Abstract

Corporate governance has gained momentum because of changing business environment and various factors such as the GATT (General Agreement on Tariffs and Trade) and WTO (World Trade Organization) which have contributed to raise the awareness towards good governance practices. This purpose of the study is to examine the relationship between financial performance measures and corporate governance variables which we examine by Correlation Matrix for the period from 2001 to 2013 for value-based financial performance measures like economic value added (EVA) and market value added (MVA). Empirical studies in corporate governance focus on the link between corporate governance and firm's performance. Therefore, this study is based on the relationship between corporate governance and value based financial performance measures like EVA and MVA of information technology sector in India. Overall, this study concludes that corporate governance has significance influence on the financial performance of the information technology firms in India.