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A Corporate governance index for large listed companies in India

Author

Listed:
  • Jayati Sarkar

    () (Indira Gandhi Institute of Development Research)

  • Subrata Sarkar

    () (Indira Gandhi Institute of Development Research)

  • Kaustav Sen

    () (Indian Institute of Management)

Abstract

We construct a Corporate Governance Index for 500 large listed Indian firms for the period from 2003 to 2008 in this paper. The index construction uses information on four important corporate governance mechanisms: the board of directors, the ownership structure, the audit committee, and the external auditor. The construction of the index for six years allows an examination of the evolution of corporate governance in India in a period when there have been a large number of corporate governance reforms. The analysis documents a rising trend in the level of the Corporate Governance Index of Indian companies. There is a strong association between the Corporate Governance Index and the market performance of companies, where companies with better corporate governance structures earn substantially higher rates of return in the market. This analysis shows that Indian markets tend to reward companies that carry out governance reforms. It provides an impetus to regulators as well as to push for further reforms.

Suggested Citation

  • Jayati Sarkar & Subrata Sarkar & Kaustav Sen, 2012. "A Corporate governance index for large listed companies in India," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2012-009, Indira Gandhi Institute of Development Research, Mumbai, India.
  • Handle: RePEc:ind:igiwpp:2012-009
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    File URL: http://www.igidr.ac.in/pdf/publication/WP-2012-009.pdf
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Shreya Biswas, 2016. "Small World of Inter-Firm Network and Firm's Acquisition Behaviour," Working Papers id:8757, eSocialSciences.
    2. Wijesiri, Mahinda, 2016. "Weathering the storm: ownership structure and performance of microfinance institutions in the wake of the global financial crisis," Economic Modelling, Elsevier, pages 238-247.
    3. Biswas, Shreya, 2015. "Small World of Inter-firm Network an Firm's Acquisition Behaviour - An Evidence from India," MPRA Paper 67508, University Library of Munich, Germany.

    More about this item

    Keywords

    Corporate Governance Index; board of directors; ownership structure; audit committee; external auditors;

    JEL classification:

    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • M42 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Auditing

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