The IUP Journal of Corporate Governance
Does Corporate Governance Impact Firm Performance? A Comparative Analysis of State-Owned Enterprises Versus Private Enterprises in India

Article Details
Pub. Date : Oct, 2021
Product Name : The IUP Journal of Corporate Governance
Product Type : Article
Product Code : IJCG31021
Author Name Neetu Yadav, Vijaya Lakshmi and Sonali Narbhariya
Availability : YES
Subject/Domain : Management
Download Format : PDF Format
No. of Pages : 13



This paper examines the impact of Corporate Governance (CG) variables on firm performance, and studies if the relation is different for State-Owned Enterprises (SOEs) and private enterprises. The study examined 53 listed Indian firms, wherein 33 are private and the remaining are SOEs for the period 2011 to 2019, using multivariate regression analysis. The CG variables used in the study are independent director, non-executive directors, meetings, audit committee, and board size. Further, the study provides evidence that among all the CG variables, independent director and audit committee are found to be significant and this relation remains consistent in both types of firms: SOEs and private. The study concludes that the overall performance of SOEs is less than that of the private firms.


Corporate Governance (CG) has gained attention from researchers and practitioners, following the increasing number of corporate scandals. Roy (2016) defined CG as a set of processes that provide an assurance to the outside investors a fair return on their investment. However, many authors defined CG as a mechanism to reduce the agency problem, thus leading to more transparency and efficiency in the system and finally improving the firm performance. Though the focus of CG is generally associated with the private sector, it is equally important in State-Owned Enterprises (SOEs). Numerous studies have been conducted for testing the CG practices of private and public sector firms as they are different entities with different rules and regulations, and different management philosophy. Further, the disclosure practices of these categories are also different, which leads to the difference in their CG practices. Therefore, in the light of the discussion so far, this study aims to ascertain the impact of Corporate Governance structure on firm performance. It also aims to conduct a comparative analysis of SOEs and private firms operating in India.