The influence of corporate governance characteristics on profitability of Indian firms: An empirical investigation of firms listed on Bombay Stock Exchange

  • Received November 14, 2020;
    Accepted January 25, 2021;
    Published February 5, 2021
  • Author(s)
  • DOI
    http://dx.doi.org/10.21511/imfi.18(1).2021.10
  • Article Info
    Volume 18 2021, Issue #1, pp. 114-125
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This work is licensed under a Creative Commons Attribution 4.0 International License

This article aims to empirically examine corporate governance features and their association with Indian listed companies’ profitability. Thirty-three listed firms are selected from the top 100 companies in India. Corporate governance is defined by two parts: board of directors (size, structure, diligence) and audit committee (size, structure, diligence). In contrast, the profitability of Indian listed firms is calculated by two indicators: return on assets (ROA) and earnings per share (EPS). The outcomes concerning ROA reveal that board diligence, size of audit committee, audit committee composition, diligence of audit committee, and size of a company has a significant relationship with ROA. In contrast, board size and board composition have an insignificant association with ROA. Concerning earnings per share (EPS) model, the results show that size of audit committee, audit committee composition, diligence of audit committee, and firm size have a significant relationship with EPS. In contrast, board size, board composition, and board diligence have an insignificant association with EPS. The results may be of benefit to those scholarly researchers, practitioners, and governors who are interested in exploring the quality of corporate governance practices in an emerging market such as India and its effect on firms’ profitability.

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    • Figure 1. Study framework for all indicators
    • Table 1. Measurement of variables
    • Table 2. Descriptive analysis
    • Table 3. Correlation matrix and multicollinearity test
    • Table 4. Regression analysis
    • Table 1A. Some of prior studies in India
    • Funding acquisition
      Eissa A. Al-Homaidi, Amgad S.D. Khaled
    • Methodology
      Eissa A. Al-Homaidi, Amgad S.D. Khaled, Nabil Ahmed M. Senan
    • Writing – original draft
      Eissa A. Al-Homaidi
    • Writing – review & editing
      Eissa A. Al-Homaidi, Nabil Ahmed M. Senan
    • Conceptualization
      Ebrahim Mohammed Al-Matari
    • Data curation
      Ebrahim Mohammed Al-Matari, Amgad S.D. Khaled
    • Formal Analysis
      Ebrahim Mohammed Al-Matari, Amgad S.D. Khaled
    • Software
      Ebrahim Mohammed Al-Matari, Mosab I. Tabash
    • Supervision
      Ebrahim Mohammed Al-Matari, Mosab I. Tabash
    • Resources
      Mosab I. Tabash, Nabil Ahmed M. Senan
    • Validation
      Mosab I. Tabash
    • Project administration
      Nabil Ahmed M. Senan