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Financial performance and governance synergy: unlocking R&D potential in Indian companies

Author

Listed:
  • Tarun Kumar Soni
  • Divya Mehta
  • Sanjeewani Sehgal

Abstract

This research paper investigates the link between research and development (R%D) intensity, corporate governance, financial variables, and other significant firm-level characteristics using panel least squares and quantile regression methods. The results of our study confirm the positive relationship between the level of exports, the degree of board independence, directors' compensation, and financial performance of the company. The study also finds a negative relationship between a company's debt and the level of foreign promoter ownership. These findings have important implications, as firms with superior corporate governance devote a larger percentage of their funds to R%D. Consequently, policymakers ought to support stronger governance frameworks that include having enough independent board members and paying adequate remuneration to board members. Additionally, enterprises with greater foreign promoter shareholdings are required to invest in R%D to counteract the unfavourable association between foreign promoter concentration and R%D intensity.

Suggested Citation

  • Tarun Kumar Soni & Divya Mehta & Sanjeewani Sehgal, 2025. "Financial performance and governance synergy: unlocking R&D potential in Indian companies," International Journal of Management and Enterprise Development, Inderscience Enterprises Ltd, vol. 24(2), pages 201-226.
    • Handle: RePEc:ids:ijmede:v:24:y:2025:i:2:p:201-226
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