Corporate Governance and Firm Characteristics

Dr. Harsh Purohit; Dr. Monika Chopra,; Priyanka Chadha

Abstract

The study tries to understand the dynamic relationship between different firm characteristics and corporate governance variables in Indian context by taking the sample of BSE-Sensex companies for a period of 12 years. The paper tries to estimate the impact of selected corporate governance attributes such as board size, outside directors, ownership concentration etc., on capital structure of sample firms. It applies correlation analysis and panel data framework by taking into account both short term and long term debt equity ratio as dependent variable and different variables representing ownership structure, corporate governance and other control variables to study the relationship. Overall results indicate a positive relationship between short term and long term debt equity ratio which was considered as a proxy for capital structure of a firm and the corporate governance variables providing evidence that capital structure of the firm is influenced by governance variables. The positive relationship suggests that companies with higher debt are better governed which indicates that debt may be acting as a self-enforcing governance mechanism.

Keywords

Corporate governance, ROCE, RONW, EPS, PBDTM, CPM

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Cites this article as

D. H. P. , D. M. Chopra,, P. C. , "Corporate Governance and Firm Characteristics", International Journal of Innovative Research in Engineering & Management (IJIREM), Vol-3, Issue-3, Page No-184-199, 2016. Available from: