Board Characteristics, Audit Committee and Ownership Structure Influence on Firm Performance of Manufacturing Firms in India

Palaniappan Gurusamy

doi:doi:10.11648/j.ijber.20170604.16

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Board Characteristics, Audit Committee and Ownership Structure Influence on Firm Performance of Manufacturing Firms in India

Palaniappan Gurusamy

Published in International Journal of Business and Economics Research (Volume 6, Issue 4)

Received: 29 April 2017 Accepted: 15 June 2017 Published: 24 July 2017

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Abstract

The study investigates the relationship and impact of corporate governance measures such as board characteristics, audit committee and Ownership Structure on the financial performance of the selected manufacturing firms listed in Bombay Stock Exchange (BSE). The study empirical in nature and applies panel data regression analysis to a sample of 357 manufacturing firms listed in BSE during the period 2006-2015. The study found that board size is positively and significantly linked to both the financial performance measures, i.e. Return on assets (ROA) and Return on Equity (ROE) but the negative and insignificant impact in case of Tobin’s Q. Audit committee independence is significant and negatively affected by ROE. The same promoters' shareholding is negatively and significantly related to all the financial measures and there is an insignificant negative relationship between institutional shareholding and both financial performance measures (Tobin’s Q and ROA). The study implies that to improve the performance and accordingly the value of firms, the percentage of promoters' ownership should be decreased as it has positive linkages with the financial performance. The board members have potential knowledge and expertise in the field should be increased as it has aligned with accounting based financial performance. Further, it will help the investors to pay special attention to the corporate governance, audit committee and type of ownership of firms while making the investments.

Published in	International Journal of Business and Economics Research (Volume 6, Issue 4)
DOI	10.11648/j.ijber.20170604.16
Page(s)	73-87
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2024. Published by Science Publishing Group

Keywords

Corporate Governance, Audit Committee, Ownership Structure, Financial Performance, Panel Data, Manufacturing Firms

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Palaniappan Gurusamy. (2017). Board Characteristics, Audit Committee and Ownership Structure Influence on Firm Performance of Manufacturing Firms in India. International Journal of Business and Economics Research, 6(4), 73-87. https://doi.org/10.11648/j.ijber.20170604.16

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Palaniappan Gurusamy. Board Characteristics, Audit Committee and Ownership Structure Influence on Firm Performance of Manufacturing Firms in India. Int. J. Bus. Econ. Res. 2017, 6(4), 73-87. doi: 10.11648/j.ijber.20170604.16

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AMA Style

Palaniappan Gurusamy. Board Characteristics, Audit Committee and Ownership Structure Influence on Firm Performance of Manufacturing Firms in India. Int J Bus Econ Res. 2017;6(4):73-87. doi: 10.11648/j.ijber.20170604.16

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@article{10.11648/j.ijber.20170604.16,
  author = {Palaniappan Gurusamy},
  title = {Board Characteristics, Audit Committee and Ownership Structure Influence on Firm Performance of Manufacturing Firms in India},
  journal = {International Journal of Business and Economics Research},
  volume = {6},
  number = {4},
  pages = {73-87},
  doi = {10.11648/j.ijber.20170604.16},
  url = {https://doi.org/10.11648/j.ijber.20170604.16},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijber.20170604.16},
  abstract = {The study investigates the relationship and impact of corporate governance measures such as board characteristics, audit committee and Ownership Structure on the financial performance of the selected manufacturing firms listed in Bombay Stock Exchange (BSE). The study empirical in nature and applies panel data regression analysis to a sample of 357 manufacturing firms listed in BSE during the period 2006-2015. The study found that board size is positively and significantly linked to both the financial performance measures, i.e. Return on assets (ROA) and Return on Equity (ROE) but the negative and insignificant impact in case of Tobin’s Q. Audit committee independence is significant and negatively affected by ROE. The same promoters' shareholding is negatively and significantly related to all the financial measures and there is an insignificant negative relationship between institutional shareholding and both financial performance measures (Tobin’s Q and ROA). The study implies that to improve the performance and accordingly the value of firms, the percentage of promoters' ownership should be decreased as it has positive linkages with the financial performance. The board members have potential knowledge and expertise in the field should be increased as it has aligned with accounting based financial performance. Further, it will help the investors to pay special attention to the corporate governance, audit committee and type of ownership of firms while making the investments.},
 year = {2017}
}

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TY  - JOUR
T1  - Board Characteristics, Audit Committee and Ownership Structure Influence on Firm Performance of Manufacturing Firms in India
AU  - Palaniappan Gurusamy
Y1  - 2017/07/24
PY  - 2017
N1  - https://doi.org/10.11648/j.ijber.20170604.16
DO  - 10.11648/j.ijber.20170604.16
T2  - International Journal of Business and Economics Research
JF  - International Journal of Business and Economics Research
JO  - International Journal of Business and Economics Research
SP  - 73
EP  - 87
PB  - Science Publishing Group
SN  - 2328-756X
UR  - https://doi.org/10.11648/j.ijber.20170604.16
AB  - The study investigates the relationship and impact of corporate governance measures such as board characteristics, audit committee and Ownership Structure on the financial performance of the selected manufacturing firms listed in Bombay Stock Exchange (BSE). The study empirical in nature and applies panel data regression analysis to a sample of 357 manufacturing firms listed in BSE during the period 2006-2015. The study found that board size is positively and significantly linked to both the financial performance measures, i.e. Return on assets (ROA) and Return on Equity (ROE) but the negative and insignificant impact in case of Tobin’s Q. Audit committee independence is significant and negatively affected by ROE. The same promoters' shareholding is negatively and significantly related to all the financial measures and there is an insignificant negative relationship between institutional shareholding and both financial performance measures (Tobin’s Q and ROA). The study implies that to improve the performance and accordingly the value of firms, the percentage of promoters' ownership should be decreased as it has positive linkages with the financial performance. The board members have potential knowledge and expertise in the field should be increased as it has aligned with accounting based financial performance. Further, it will help the investors to pay special attention to the corporate governance, audit committee and type of ownership of firms while making the investments.
VL  - 6
IS  - 4
ER  -

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Author Information

Palaniappan Gurusamy

Department of Management Studies, Vinayaka Missions Kirupananda Variyar Engineering College, Salem, Tamil Nadu, India

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Palaniappan Gurusamy. (2017). Board Characteristics, Audit Committee and Ownership Structure Influence on Firm Performance of Manufacturing Firms in India. International Journal of Business and Economics Research, 6(4), 73-87. https://doi.org/10.11648/j.ijber.20170604.16

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ACS Style

Palaniappan Gurusamy. Board Characteristics, Audit Committee and Ownership Structure Influence on Firm Performance of Manufacturing Firms in India. Int. J. Bus. Econ. Res. 2017, 6(4), 73-87. doi: 10.11648/j.ijber.20170604.16

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AMA Style

Palaniappan Gurusamy. Board Characteristics, Audit Committee and Ownership Structure Influence on Firm Performance of Manufacturing Firms in India. Int J Bus Econ Res. 2017;6(4):73-87. doi: 10.11648/j.ijber.20170604.16

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@article{10.11648/j.ijber.20170604.16,
  author = {Palaniappan Gurusamy},
  title = {Board Characteristics, Audit Committee and Ownership Structure Influence on Firm Performance of Manufacturing Firms in India},
  journal = {International Journal of Business and Economics Research},
  volume = {6},
  number = {4},
  pages = {73-87},
  doi = {10.11648/j.ijber.20170604.16},
  url = {https://doi.org/10.11648/j.ijber.20170604.16},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijber.20170604.16},
  abstract = {The study investigates the relationship and impact of corporate governance measures such as board characteristics, audit committee and Ownership Structure on the financial performance of the selected manufacturing firms listed in Bombay Stock Exchange (BSE). The study empirical in nature and applies panel data regression analysis to a sample of 357 manufacturing firms listed in BSE during the period 2006-2015. The study found that board size is positively and significantly linked to both the financial performance measures, i.e. Return on assets (ROA) and Return on Equity (ROE) but the negative and insignificant impact in case of Tobin’s Q. Audit committee independence is significant and negatively affected by ROE. The same promoters' shareholding is negatively and significantly related to all the financial measures and there is an insignificant negative relationship between institutional shareholding and both financial performance measures (Tobin’s Q and ROA). The study implies that to improve the performance and accordingly the value of firms, the percentage of promoters' ownership should be decreased as it has positive linkages with the financial performance. The board members have potential knowledge and expertise in the field should be increased as it has aligned with accounting based financial performance. Further, it will help the investors to pay special attention to the corporate governance, audit committee and type of ownership of firms while making the investments.},
 year = {2017}
}

Copy | Download

TY  - JOUR
T1  - Board Characteristics, Audit Committee and Ownership Structure Influence on Firm Performance of Manufacturing Firms in India
AU  - Palaniappan Gurusamy
Y1  - 2017/07/24
PY  - 2017
N1  - https://doi.org/10.11648/j.ijber.20170604.16
DO  - 10.11648/j.ijber.20170604.16
T2  - International Journal of Business and Economics Research
JF  - International Journal of Business and Economics Research
JO  - International Journal of Business and Economics Research
SP  - 73
EP  - 87
PB  - Science Publishing Group
SN  - 2328-756X
UR  - https://doi.org/10.11648/j.ijber.20170604.16
AB  - The study investigates the relationship and impact of corporate governance measures such as board characteristics, audit committee and Ownership Structure on the financial performance of the selected manufacturing firms listed in Bombay Stock Exchange (BSE). The study empirical in nature and applies panel data regression analysis to a sample of 357 manufacturing firms listed in BSE during the period 2006-2015. The study found that board size is positively and significantly linked to both the financial performance measures, i.e. Return on assets (ROA) and Return on Equity (ROE) but the negative and insignificant impact in case of Tobin’s Q. Audit committee independence is significant and negatively affected by ROE. The same promoters' shareholding is negatively and significantly related to all the financial measures and there is an insignificant negative relationship between institutional shareholding and both financial performance measures (Tobin’s Q and ROA). The study implies that to improve the performance and accordingly the value of firms, the percentage of promoters' ownership should be decreased as it has positive linkages with the financial performance. The board members have potential knowledge and expertise in the field should be increased as it has aligned with accounting based financial performance. Further, it will help the investors to pay special attention to the corporate governance, audit committee and type of ownership of firms while making the investments.
VL  - 6
IS  - 4
ER  -

Copy | Download