Does board structure impact a firm's financial performance? Evidence from the Indian software sector
D Bansal, S Singh - American Journal of Business, 2022 - emerald.com
D Bansal, S Singh
American Journal of Business, 2022•emerald.comPurpose The purpose of this study is to examine the impact of board structure on financial
performance of Indian software companies. It is an empirical study carried out on 92
software companies from 2011 to 2018. Design/methodology/approach The board size,
board independence, board meetings, CEO duality, audit, remuneration and nomination
committee are used as board structure variables. Two accounting-based measures, return
on assets (ROA), return on equity and one market-based measure Tobin's Q are used as a …
performance of Indian software companies. It is an empirical study carried out on 92
software companies from 2011 to 2018. Design/methodology/approach The board size,
board independence, board meetings, CEO duality, audit, remuneration and nomination
committee are used as board structure variables. Two accounting-based measures, return
on assets (ROA), return on equity and one market-based measure Tobin's Q are used as a …
Purpose
The purpose of this study is to examine the impact of board structure on financial performance of Indian software companies. It is an empirical study carried out on 92 software companies from 2011 to 2018.
Design/methodology/approach
The board size, board independence, board meetings, CEO duality, audit, remuneration and nomination committee are used as board structure variables. Two accounting-based measures, return on assets (ROA), return on equity and one market-based measure Tobin's Q are used as a representative of financial performance of software companies. Panel regression is used to test the hypothesis.
Findings
Results demonstrates that board size, board meetings, remuneration and nomination committee have positive impact on more than one performance measures, while audit committee do not have any relation with any of the performance measures. It is also found that CEO duality has negative but significant relation with firm's performance and board independence has negative influence on ROA.
Practical implications
The findings of the study attract the attention of company's policymakers, shareholders to know the importance of board structure in increasing the firm's performance. The outcome of the study has relevance in other developing economies also. The results of the study can be utilised by policymakers and regulatory bodies in the formulation of good corporate government (CG) practices for the enhancement of profitability and market value of companies.
Originality/value
The findings suggest that special attention should be given to quality of CG, specifically board structure while measuring corporate financial performance.
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