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Bank nominee directors and corporate performance: micro evidence for India

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Author Info
Nachane, D M
Ghosh, Saibal
Ray, Partha

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Abstract

Banks and financial institutions play a major role in governance of non-financial companies in India through the mechanism of nominee directors. This paper probes two allied issues: firstly, the isolation of the firm specific factors which determine the presence of bank nominee directors on boards and secondly, whether companies, with bank nominee directors exhibit better performance/governance than companies with no banker representation on their boards. A Probit model estimated over a cross-section of Indian manufacturing firms for 2003, indicates that bankers on boards seem to exert a healthy impact on the companies. In fact, large public limited companies are likely to exhibit banker representation, primarily in their role as expertise providers. The evidence from Tobit model reconfirms these results.

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File URL: http://mpra.ub.uni-muenchen.de/2707/
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Publisher Info
Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 2707.

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Date of creation: 19 Mar 2005
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Publication status: Published in Economic and Politcal Weekly 12.40(2005): pp. 1216-1223
Handle: RePEc:pra:mprapa:2707

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Related research
Keywords: Banker; corporate governance; debt equity ratio;

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Find related papers by JEL classification:
G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Capital and Ownership Structure
C35 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Discrete Regression and Qualitative Choice Models

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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Saibal Ghosh, 2007. "Bank monitoring, managerial ownership and Tobin's Q: an empirical analysis for India," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 28(2), pages 129-143. [Downloadable!]
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