| Pub. Date | : Jan, 2022 |
|---|---|
| Product Name | : The IUP Journal of Corporate Governance |
| Product Type | : Article |
| Product Code | : IJCG20122 |
| Author Name | Shikha Mittal Shrivastav |
| Availability | : YES |
| Subject/Domain | : Management |
| Download Format | : PDF Format |
| No. of Pages | : 15 |
The present study aims at finding a relationship between audit committee characteristics and firm performance of companies listed on the Indian Stock Exchange. Fixed Effect Panel Data Regression was employed on the data of 178 companies for a period of eight years. The results found that the audit committee characteristics (size, independence, and number of meetings) are in significant positive relationship with Tobin's Q, a market-based performance measure. However, only the impact of audit committee size is found to have a positive and significant impact on Return on Equity (ROE). The number of board level committee meetings has a positive and significant impact on Tobin's Q and negative and significant impact on ROE. The results of the present study can be used by policymakers and regulators who are involved directly or indirectly in pondering corporate governance reforms. The results are also beneficial for the managers, investors, and minority shareholders as they are concerned with the performance of the firms.
The collapse of many well-known companies like Enron, Worldcom, etc. in the past attracted international attention in exploring and developing corporate governance reforms in a manner that implementation of such corporate governance reforms would not only prevent the recurrence of such scams and scandals but also lead to better organizational performance. Although in the last two decades, several corporate governance reforms were introduced across different countries towards effective corporate governance systems in organizations, the results from such regulatory changes have been found to be mixed. Corporate Governance reforms and their effectiveness are based on the premise whether these reforms were based on the sound theories of Corporate Governance and/or the perceptions and viewpoints of the stakeholders to these reforms.
The sound corporate governance structure in an organization oversees the risks of administration failure and builds the management's obligations towards the board's oversight. Indian companies are considered for investment globally. This has raised the need for transparent, objective, and good governance to a higher platform. An all-around corporate governance structure is viewed as a necessary measure for controlling the occurrence of corporate misconduct.