Print ISSN: 2204-1990

Online ISSN: 1323-6903

Keywords : NSE 500


THE INFLUENCE OF CORPORATE GOVERNANCE ON FIRM PROFITABILITY: A STUDY OF THE FIRMS LISTED ON INDIA’S NSE 500

Ruby Mary Notts, Dr. Amitava Roy

Journal of Contemporary Issues in Business and Government, 2022, Volume 28, Issue 3, Pages 633-651
DOI: 10.47750/cibg.2022.28.03.049

A robust corporate governance is imperative in creating sound corporate culture of
consciousness, lucidity and openness which in turn enables a company's management achieve
its objectives in a way that maximizes profits. The given studyaims to empirically evaluate
the association of firm profitabilitywith various corporate governance mechanisms, for firms
traded on the NSE 500. The time period for our studyranges from 2013 to 2020 - using
Ordinary Least Squares as the method of estimation. We used two estimates of firm
profitability – Return on Assets (ROA) and Net Profit Margin (NPM). The analysis
established significant favourable association between ROA and independent directors’as a
proportion of the boards, total number of board meetings held, number of board committees
and audit committee presence.With respect to NPM, results showed that it was significantly
and favourably impacted by the proportion of non-executive directors on the boards, total
number of board meetings, total number of board committees prevalent in the company and
firm size. However, board size,audit committee presence and independent directors as a
proportion ofaudit committees indicated a negative impact on NPM.