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Audit Committee, Corporate Governance and Firm Performance: Empirical Evidence from India


  • Nidhi Bansal
  • Anil K. Sharma


Considering the endorsement of Indian Companies Act (2013), the study examines the role of audit committee characteristics (independence and frequency of meetings) in addition with other components of corporate governance (duality, promoter shareholding, board composition, and board size) in improving firm performance. Fixed effect panel data regression was applied on 235 non-financial public limited companies listed in NSE 500. The time period considered was ten years (2004 to 2013). Return on Assets, Return on Equity, Tobin¡¯s q and Market Capitalization were used as proxy of firm performance. Results reveal significant positive association of board size and CEO-Chairman dual role with firm performance. However, findings did not reveal any additional effect of audit committee independence and its meeting frequency on the financial performance of Indian firms. Regulators and policy makers may reexamine the significance of greater independence of board and audit committee in context of firm performance.

Suggested Citation

  • Nidhi Bansal & Anil K. Sharma, 2016. "Audit Committee, Corporate Governance and Firm Performance: Empirical Evidence from India," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 8(3), pages 103-116, March.
  • Handle: RePEc:ibn:ijefaa:v:8:y:2016:i:3:p:103-116

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    References listed on IDEAS

    1. Michael C. Jensen, 2010. "The Modern Industrial Revolution, Exit, and the Failure of Internal Control Systems," Journal of Applied Corporate Finance, Morgan Stanley, vol. 22(1), pages 43-58, January.
    2. Felicia Olokoyo, 2013. "Capital Structure and Corporate Performance of Nigerian Quoted Firms: A Panel Data Approach," African Development Review, African Development Bank, vol. 25(3), pages 358-369.
    3. Felicia Omowunmi Olokoyo, 2013. "Capital Structure and Corporate Performance of Nigerian Quoted Firms: A Panel Data Approach," African Development Review, African Development Bank, vol. 25(3), pages 358-369, September.
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    6. Norman Mohd Saleh & Takiah Mohd Iskandar & Mohd Mohid Rahmat, 2007. "Audit committee characteristics and earnings management: evidence from Malaysia," Asian Review of Accounting, Emerald Group Publishing, vol. 15(2), pages 147-163, April.
    7. Leung, Sidney & Richardson, Grant & Jaggi, Bikki, 2014. "Corporate board and board committee independence, firm performance, and family ownership concentration: An analysis based on Hong Kong firms," Journal of Contemporary Accounting and Economics, Elsevier, vol. 10(1), pages 16-31.
    8. M. Hashem Pesaran, 2015. "Testing Weak Cross-Sectional Dependence in Large Panels," Econometric Reviews, Taylor & Francis Journals, vol. 34(6-10), pages 1089-1117, December.
    9. Markus M. Schmid & Heinz Zimmermann, 2008. "Leadership Structure and Corporate Governance in Switzerland," Journal of Applied Corporate Finance, Morgan Stanley, vol. 20(1), pages 109-120, December.
    10. Sanford J. Grossman & Oliver D. Hart, 1980. "Takeover Bids, the Free-Rider Problem, and the Theory of the Corporation," Bell Journal of Economics, The RAND Corporation, vol. 11(1), pages 42-64, Spring.
    11. Mark A. Bliss, 2011. "Does CEO duality constrain board independence? Some evidence from audit pricing," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 51(2), pages 361-380, June.
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    Cited by:

    1. Al-ahdal, Waleed M. & Alsamhi, Mohammed H. & Tabash, Mosab I. & Farhan, Najib H.S., 2020. "The impact of corporate governance on financial performance of Indian and GCC listed firms: An empirical investigation," Research in International Business and Finance, Elsevier, vol. 51(C).

    More about this item


    audit committee; board characteristics; companies act (2013); corporate governance; India;

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General


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