© 2023 IJRAR December 2023, Volume 10, Issue 4 [Link].

org (E-ISSN 2348-1269, P- ISSN 2349-5138)

Impact of Corporate Governance Practices on

Financial Performance of Listed Companies in
India
Raj Kumar Singh*
Naresh Kumar**
Ajay Kumar***

*Professor, Department of Commerce, Himachal Pradesh University, Summer Hill, - 171005, Himachal
Pradesh.
**
Assistant Professor – Commerce, Govt. College Diggal, Solan – 173218, Himachal Pradesh.
***
Assistant Professor – Commerce, Govt. College Tissa, Chamba – 176316, Himachal Pradesh.

Abstract

The present research work aims to examine the corporate governance practices and their impact on financial
performance of top 20 listed companies in India, 10 each from public sector and private sector for a period of
10 years from 2011-12 to 2020-21. The objectives of the study are to examine the corporate governance
practices of public sector and private sector in India: to investigate the impact of corporate governance
practices on return on equity (ROE); and to investigate the impact of corporate governance practices on return
on assets (ROA). Data is gathered from secondary sources namely annual reports and websites of companies.
Descriptive statistics, correlation analysis and regression analysis are used as research methods. To fulfil the
first objective, a Corporate Governance Index (CGI) is developed on the basis of content analysis to examine
the corporate governance practices. For second and third objective, panel data regression model with fixed –
effects and random – effects has been applied to investigate the impact of corporate governance practices on
financial performance. The findings of the study revealed that the corporate governance practices of private
sector companies are better than public sector companies. The findings of the impact of corporate governance
practices on financial performance reveals that general body meetings and auditor’s certificate have positive
and significant impact on ROE, while other variables have no significant impact on ROE. CEO and CFO
certification have positive and significant impact on ROA, while, firm size has negative and significant impact
on ROA. Other governance variables have no significant impact on ROA. The outcomes of the study provide
actionable insights for companies’ board, policymakers and academicians to enhance corporate governance
standards and thereby strengthen the overall financial health of organizations.

Key Words: Corporate Governance, Financial Performance, ROE, ROA, Public and Private Sectors.

JEL Classification Codes: C 33, C 58, G 30, G 34.

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1. Introduction: Corporate governance is a framework of organisational structure and procedures crafted
to steer companies in pursuit of their objectives by ensuring effective direction, meticulous monitoring and
judicious control. Every stakeholder in all kind of organizations, whether public or private, profit making or
non-profit making, expect good governance. Further, stakeholders in all organizations rightfully expect their
interest to be protected and also look for transparency and disclosure of relevant facts and figures. Good
governance also requires from their leaders to remain accountable for their actions and inactions (Singh et al.,
2009). In the present scenario of turbulent business environment, the demand for good corporate governance
has become of utmost concern. There are two aspects that ensure good governance i.e. legal compliance and
ethical compliance. The legal compliance constitutes rules, regulations, law and all other legal frameworks
enacted by the government. The ethical compliance constitutes of values, ethics, morality, virtues and wisdom
(Singh, 2011). Good governance is an important channel not only in achieving economic growth but also
distributing the beneficial effects of growth throughout the society. In the broader sense, well governed
companies contribute more to the economic, as those companies are stable, sustainable and capable to provide
regular profits to their shareholders and regular earning to their employees, and to strengthen investors’
confidence in the capital market (Singh et al., 2022). The Companies Act, 2013 is a harbinger of
revolutionary change in the domain of corporate governance – from shareholder’s model to stakeholder’s
model (Singh, 2013). Corporate governance (CG) refers to the rules, practices and processes by which a
company is executed and managed. Good CG ensures that companies operate efficiently and effectively and
maximize shareholder value (Alodat et al., 2022).
A crucial pathway by which corporate governance (CG) influences economic results involves aligning
incentives between shareholders and managers. This alignment can be established through methods like
performance-based compensation and the inclusion of independent directors on boards. Another approach is
ensuring trustworthy and transparent financial reporting, which serves to mitigate information asymmetries
between managers and investors (Bui and Crazcsak, 2023). While the benefits of sound corporate
governance (CG) are evident, obstacles persist in the successful implementation of effective governance
procedures. These challenges comprise factors like ownership concentration, conflicts of interest, and the
complexities associated with measuring and overseeing governance practices (Hunjra et al., 2021). In sum,
effective corporate governance (CG) plays a crucial role in ensuring that companies operate in the
shareholders' best interests and optimize their value. According to Farooq et al. (2022), aligning incentives
between managers and shareholders and ensuring reliable, transparent financial reporting can lead to
improved financial performance and risk reduction for companies. Nonetheless, the implementation of
effective governance practices poses challenges, necessitating on-going efforts to govern companies as
efficiently and effectively as possible (Bui and Crazcsak, 2023).
The last few years, there has been a growing interest on "corporate governance," (Hassan, 2012) prompting
(Parker (2007) to assert that it has become a topic of paramount importance, attracting significant attention
and sparking debates among legislators, regulators, professionals, business organizations, the media, and the
general public. Corporate Governance serves as the framework that supervises and governs all aspects of a
company's operations. Its growing importance on a global scale positions it as a vital instrument for achieving
corporate excellence, driving enhanced performance, maximizing stakeholder wealth, and elevating overall
corporate value. The impact of corporate governance encompasses the generation and equitable distribution of
wealth among diverse stakeholders (Fama and Jensen, 1983). Enhancing economic development within a
nation is significantly facilitated by the effective implementation of corporate governance, which, according
to Naseem et al., (2017), contributes to the improved financial performance of companies. The prosperity of
an organization in the realm of economic development extends beyond factors like efficiency, innovation, and
quality management; it is contingent upon the steadfast adherence to corporate governance principles, codes,
and regulations, as emphasized by Goel, (2018). Research by Tadesse, (2004) indicates that the adoption of
corporate governance standards has a favourable impact on the financial performance of firms, while
insufficient governance practices undermine effectiveness and long-term sustainability.
According to researchers, companies with effective corporate governance (CG) outperform other firms in two
main ways; first, they optimize the utilization of financial and human resources. Given the reduced agency
costs, these firms distribute higher dividends, leading to increased stock prices and overall firm value; and
Second, well-governed firms do not demand a higher return on equity (ROE) because the expense of
monitoring management is lower for shareholders compared to their counterparts (Shleifer and Vishny,
1997). Due to their strong market reputation, proficiently governed firms can secure external funds at more
favourable interest rates (Nazir and Afza, 2018). However, some scholars challenge the direct correlation
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between CG and firm profitability, contending that the benefits may be offset by the costs associated with
implementing an effective CG mechanism.
Prior studies have predominantly employed five methodologies to assess financial performance: the
accounting-based approach (Vintila and Pauneschu, 2016; Yilmaz and Buyuklu, 2016; Ashfaq et al.,
2017; Yilmaz, 2018; Bhandari and Aroea, 2016; Chaudhary and Gakhar, 2018; Diriba and
Basumatary, 2019; Boakye et al., 2020; Meah et al., 2021); market-based approach (Sarwanan, 2009;
Dwivedi and Jain, 2005; G. C. Bahadur, 2016; Shahwan, 2015; Khan et al., 2017; Singh et al., 2018;
Goel et al., 2021); value-based approach (Mir & Seboui 2006; Mittal et al., 2008; Kumar and Sharma,
2011; Bahadur and Deb, 2013; Sanchia and Zen, 2015 ); combined accounting-based and market-based
(Christensen, et al., 2010; Gugnani, 2013; Venkatraman and aselvam, 2014; Dhamija et al., 2014; Rossi,
2015; Francis, et al., 2015; Arora and Sharma, 2016; Kakanda et al., 2017; Buallay et al., 2017; Naseem
et al., 2017; Maharani and Soewarno,2018; Yameen et al., 2019; Kyere and Ausloos; Puni and
Anlesinya, 2020; Guluma, 2021); and a combined accounting-based, market-based, and value-based
approach (Manna et al., 2016; Shrivastav and Kalsie, 2017; Pintea et al., 2021). In this current
investigation, accounting-based approach is adopted to explore the influence of corporate governance on the
financial performance of Indian public and private sector companies. The study utilizes two accounting ratios
namely, return on equity (ROE) (Khatab et al., 2011; Rossi et al., 2015; Shrivastav and Kalsie, 2017; Puni
and Anlesinya, 2020) and return on assets (ROA) (Hamdouni, 2010; Vintila and Paunescu, 2016; Yilmaz,
2018; Gulzar et al., 2020) to find out the linkages between corporate governance practices and financial
performance of Indian public and private sector companies.

2. Review of Literature: In terms of this relationship, both financial performance variables and corporate
governance variables can be broadly categorized (Yilmaz, 2018). Numerous studies have explored the impact
of various facets of corporate governance on performance of the firms. However, in this section, our literature
review is confined to those specifically concentrating on the association between corporate governance and
financial performance measured by return on equity (ROE) and return on assets (ROA). Corporate
governance theory posits that there is a positive correlation between corporate governance and firm
performance. However, different results were found in empirical studies since corporate governance practices
varies across countries and related business cultures are different (Turan and Bayyurt, 2013). Pearce and
Zahra (1992) in their study found the positive and significant association between board size and financial
performance. Hamdouni (2010) however found a negative and significant impact of board size and CEO
duality on ROE; positive and significant impact of board size and ROA; board independence positively and
significantly associated with ROE but native and significant in case of ROA. Yermack (1996) found that
companies with small board size depict more favourable values to financial measures as board size significant
and negatively impacted ROA. Board composition however had no significant impact on ROA. Bhagat and
Bolton (2008) in their empirical study observed positive and significant and positive impact on ROA, while
CEO duality and board independence had negative and significant impact on financial performance (ROA).
Jackling and Johl (2009) in their study found that board size and outside directors were positively and
significantly impacted financial performance, however, CEO duality and outside directors’ workload had
significant adverse impact on financial performance. Christensen et al. (2010) observed that audit committee,
remuneration committee, firm size and shareholder concentration had positive and significant impact on ROA.
Board size, CEO duality, board independence and financial leverage on the other hand significantly and
inversely impacted ROA. Valenti et al. (2011) found in their investigation that change in number of directors
and change in number of outside directors had positive and significant impact on ROA, while it had no
significant impact on ROE. Kuo and Kga (2012) found no significant impact of corporate governance
mechanisms on financial performance. Joecks et al. (2013) in his paper found significant negative impact of
board gender diversity on financial performance (ROE). Vekatraman and Selvam (2014) in their study
found no significant impact of ownership pattern and board composition on financial performance. Adenkule
and Aghedo (2014) in their empirical found the evidence of a significant positive influence of board
composition, board size, CEO duality and ownership concentration on the financial performance as measured
by ROA. Rossi et al. (2015) analysed the impact of corporate governance practices measure by Corporate
Governance Quality Index (CGQI) on financial performance and found that CGQI had positive and
significant impact on financial performance as measured by ROE, but it had no significant impact on ROA.
Malik and Makhdoom (2016) confirmed that board independence had significant positive link with firm
performance; board size, board meetings, CEO compensation had significant negative link with firm
performance; and large shareholder number had no significant influence on firm performance. Roy (2016) in
his investigation came into conclusion that ownership structure and corporate governance mechanisms
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positively and significantly influence the company performance. Arora and Sharma (2016) in their study
investigated that corporate governance measurement variables were not significantly associated with financial
performance (ROA, ROE) of the companies. Herdijiono and Sari (2017) in their examination found that
board size had significant positive influence on financial performance, while, audit committee size,
institutional ownership and managerial ownership had no significant impact to increase firm financial
performance. On the other hand, simultaneous test confirmed these governance variables’ impact on firm
performance. Falah (2017) in his study found that board size had negative impact on firm performance (ROA,
ROE and Tobin’s Q), while board independence was positively and significantly associated with firm
performance. Additionally, CEO duality had inverse significant influence on financial performance. Arora
and Bodhanwala (2018) in their study reported that corporate governance index (CGI) had positive and
significant impact on financial performance excluding EPS. They concluded that board structure having
adequate presence of independent directors on the board of Indian companies had a positive influence on
financial performance by their effective monitoring. Diriba and Basumatary (2019) confirmed no significant
impact of size of board, independence of board and CEO duality on financial performance (ROE). Pintea et
al. (2020) in their study found a negative insignificant impact on financial performance (ROE). Kyere and
Ausloos (2021) in their empirical investigation had found that board size was positive and significantly
associated with firm performance (ROA and Tobin’s Q), while significant positive impact of board
independence on ROA and insignificant impact on Tobin’s Q. CEO duality had no significant linkage with
firm performance. Audit committee had negative and significant impact on ROA, whereas, no effect on
Tobin’s Q. In their research, Singh and Sharma (2022) observed notable enhancements in the disclosure of
corporate governance and adherence to compliance requirements among Indian banks following the
implementation of the Companies Act, 2013, and the revised Clause 49 of the SEBI listing agreement. In their
study, Singh and Chauhan (2022) reported that there was no significant difference in corporate governance
practices of public sector companies. In their research paper, Singh et al. (2022) investigated the linkages of
corporate governance attributes with financial performance over a period of eleven years from 2010-11 to
2020-21 and observed that board attendance had positive and significant impact on financial Performance
(ROA, ROE), while, expertise of board and CEO duality inversely significant influence on financial
performance. Additionally, board committees had significant positive link with ROE, while, board gender
diversity had positive and significant impact on ROE. Board committees and board expertise had inverse
significant influence on Tobin’s Q, while, board meetings positively and significantly influenced Tobin’s Q.
In their work Singh and Chauhan (2022) reported that the pooled impact of ownership pattern and financial
performance had significant effect on corporate governance, whereas, change in financial performance
reported no significant influence on change in corporate governance. Singh and Sharma (2022) in their study
reported that the significant improvements had been recorded in corporate governance disclosures and
compliance requirements in Indian banking sector excluding SBI which was inconsistent scorer.
After going through extensive literature on the association between corporate governance and financial
performance, specifically ROE and ROA, revealed mixed findings. While some reported positive of between
board sizes, independence on firm performance; others identified negative effects of CEO duality on firm
performance. Ownership patterns and governance indices also exhibited varied impacts. The relationship is
complex, context-dependent, with factors such as board composition and board committees contributing to the
complex understanding of corporate governance's influence on financial performance.

3. Research Methodology: The methodological framework of the present study is illustrated as under:
3.1 Objectives of the Study: The following objectives are formulated on the comprehensive review of
previous studies and the proposed conceptual model:

1. To examine the corporate governance practices of public sector and private sector companies in India.
2. To investigate the impact of corporate governance practices on financial performance of companies in
India.
3.2 Hypotheses of the Study: Corresponding to the objectives of the study, following hypotheses are
developed:
H01: The corporate governance practices have no significant impact on return on equity of public and private
sector companies in India.

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H02: The corporate governance practices have no significant impact on return on equity of public and private
sector companies in India.
3.3 Scope of the Study: The current research study focuses on examining the impact of corporate governance
practices on the financial performance of the top 20 public and private sector companies during the period
from 2011-12 to 2020-21 covering ten years, using a panel data regression approach with random effects and
fixed effects models. The research study is empirical in nature, relying on secondary data. The dependent
variables, serving as proxies for measuring financial performance, include return on equity (ROE) and return
on assets (ROA). Various corporate governance mechanisms such as board composition and activism, board
diversity, board independence, chairman-CEO duality, code of conduct, board committees, disclosure and
transparency, general body meetings, means of communication, CEO CFO certification, and auditor’s
certificate have been chosen as independent variables. Additionally, two control variables namely, firm size
and financial leverage are also considered for analysis. The secondary source of data consists of published
annual reports obtained from the respective companies' websites. A thorough review of these reports ensures
the accuracy and reliability of the data, aligning with the content analysis of selected corporate governance
parameters as indicated by previous studies (Singh et al., 2022). Financial data used for computing ROE and
ROA in the current research study are also extracted from the annual reports of the selected companies.

3.4 Sample Size: The universe of the study consists of all the companies listed either on National Stock
Exchange (NSE) or on Bombay Stock Exchange (BSE). A sample of top 20 companies (10 from public sector
and 10 from private sector) on the basis of their net worth as of 31st March, 2021 has been selected for
analysis purposes. The Table-1 presents the top public and private sector companies, with their corresponding
net worth.
Table-1: Sample Distribution of Selected Public and Private Sector Companies
Public Sector Companies Private Sector Companies
Name of Company Net Worth (Cr) Name of Company Net Worth (Cr)
Oil and Natural Gas Corporation Limited 2,04,558.57 Reliance Industries Limited 4,17,795.00
NTPC Limited 1,18,985.49 Tata Steel Limited 91,267.11
Indian Oil Corporation Limited 1,10,500.04 Bharti Airtel Limited 77,360.10
Power Grid Corporation of India Limited 69,578.84 Tata Consultancy Services Limited 74,794.00
Bharat Petroleum Corporation Limited 54,544.55 Infosys Limited 71,531.00
Gail (India) Limited 46,611.15 Larsen & Toubro Limited 60,413.54
Steel Authority of India Limited 43,494.88 ITC Limited 59,004.58
Hindustan Petroleum Corporation Limited 36,186.11 Maruti Suzuki India Limited 51,366.80
NHPC Limited 31,647.31 JSW Steel Limited 46,977.00
NMDC Limited 29,756.14 Wipro Limited 45,241.60
Source: Annual Reports of the Companies and [Link]
Note: Net Worth as on 31st March, 2023
3.5 Corporate Governance Measurement: Most of the previous studies have executed various methodology
to compute corporate governance scores, however, in the present study, the measurement of corporate
governance practices in both India's public and private sectors, has been done by utilizing a comprehensive
index developed by the researcher, which is comprising 100 parameters organized into 14 sub-indices. The
creation of the index involved a thorough integration of vital elements from the Indian Companies Act of
2013, Clause 49 of SEBI's Listing Agreement, and globally recognized corporate governance best practices.
Furthermore, the researcher has personally contributed to the Corporate Governance Index (CGI) by
introducing some parameters based on previous studies.
Table-2: Corporate Governance Index
Sr. No. Governance Parameters Total Points
1 Company’s philosophy on code of governance in the context of sustainable development 1
2 Board composition and activism sub-index 9
3 Board diversity sub-index 8
4 Board independence sub-index 9
5 Chairman and CEO duality 1
6 Code of conduct sub-index 2
7 Board committees sub-index 31
8 Disclosure and transparency sub-index 22
9 General body meetings sub-index 3
10 Means of communication sub-index 3
11 General shareholder information sub-index 5
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12 CEO and CFO certification 1
13 Certificate from auditor on compliance of corporate governance 1
14 Disclosure of stakeholders’ interests sub-index 4
Total 100
Source: Author’s Own Construction Based on Clause 49, Companies Act 2013.
3.6 Measurement of Financial Performance and Control Variables: In the previous studies, the
researchers assessed the impact of corporate governance on financial performance using different financial
performance indicators. In the current study, two accounting-based methods namely, return on equity (ROE)
and return on assets (ROA) are used as financial performance indicators. Return on equity is the ratio of the
company’s net profits to its shareholder’s total equity. Return on assets is the ratio of company’s net profits to
its total assets. Additionally, two control variables namely, firm size and financial leverage is also employed
in the study along with corporate governance mechanisms. Firm size is measured as the total assets of the
company. Financial leverage is determined as the ratio of earnings before interest and tax (EBIT) to earnings
after tax (EBT).
3.7 Econometric Models Specifications: Two functional models have been developed to investigate the
impact of corporate governance practices on financial performance of Indian public and private sector
companies. For testing the formulated hypothesis, the study utilised the following empirical models (refer
Table-2 and Table-3):

Panel Data Regression (Random – Effects and Fixed – Effects) for ROE

Model-I: Ln(ROE)it = α0 + β1Ln (PHIL)it + β2Ln (BCA)it + β3Ln (BD)it + β4Ln (BI)it + β5Ln (CCD)it + β6Ln
(COC)it + β7Ln (BC)it + β8Ln (D&T)it + β9Ln (GBM)it + β10Ln (CCC)it + β11Ln (AC)it + β12Ln (FLV)it +uit
………………………….(1)
where, ROE = Return on Equity; PHIL = Philosophy; BCA = Board Composition Activism; BD = Board Diversity; BI
= Board Independence; CCD = Chairman CEO Duality; COC = Code of Conduct; BC = Board Committees; D&T =
Disclosure and Transparency; GBM = General Body Meetings; CCC = CEO and CFO Certification; AC = Auditor’s
Certificate; FLV = Financial Leverage; α0 = intercept; β1, β2, β3……..β12 = Slope of regression line; and uit = error term, i
= Companies, t = time period, Ln = Natural Logs

Panel Data Regression Model (Random – Effects and Fixed – Effects) for ROA

Model-II: Ln(ROA)it = α0 + β1Ln (PHIL)it + β2Ln (BCA)it + β3Ln (BD)it + β4Ln (BI)it + β5Ln (CCD)it β6Ln
(COC)it + β7Ln (BC)it + β8Ln (D&T)it + β9Ln (GBM)it + β10Ln (MOC)it + β11Ln (CCC)it + β12Ln (AC)it +
β13Ln (FS)it + β14Ln (FLV)it +uit ……………….(2)
where, ROA = Return on Assets; PHIL = Philosophy; BCA = Board Composition Activism; BD = Board Diversity; BI
= Board Independence; CCD = Chairman CEO Duality; COC = Code of Conduct; BC = Board Committees; D&T =
Disclosure and Transparency; GBM = General Body Meetings; MOC = Means of Communication; CCC = CEO and
CFO Certification; AC = Auditor’s Certificate; FS = Firm Size; FLV = Financial Leverage; α 0 = intercept; β1, β2,
β3……..β14 = Slope of regression line; and uit = error term, i = Companies, t = time period, Ln = Natural Logs

Table-3: Description of rol Variables Used in Model-I and Model-II

Variables Description Past Studies Expected Sign
Independent Variables
Philosophy on Code of Natural logarithm of philosophy sub-index
New Variable β1 < 0 or β1 > 0
Corporate Governance (PHIL) obtained score
Adekunle and Aghedo (2014), Rossi et al.
Board Composition and Natural logarithm of board composition
(2015), Roy (2016), Prusty and Kumar (2016), β2 < 0 or β2 > 0
Activism (BCA) and activism sub-index obtained score
Manna et al. (2016), Bhandari and Arora (2016)
Natural logarithm of board diversity sub- Van-Diepen (2015), Vintila and Paunescu
Board Diversity (BD) β3 < 0 or β3 > 0
index obtained score (2016), Singh et al. (2023)
Bhagat and Black (2002), Christensen et al.
(2010), Zhang & Wang (2013), Ammari et al.
Natural logarithm of board independence (2014), Liu et al. (2015), Abdulah (2016);
Board Independence (BI) β4 < 0 or β4 > 0
sub-index obtained score Tanveer and Malik (2017), Naseem et al. (2017),
Yilmaz (2018), Diriba and Basumatary (2019),
Kyere and Ausloos (2021)
Bhagat and Bolton (2008), Jackling and Johl
(2009), Christensen et al. (2010), Bayrakdaroglu
Natural logarithm of chairman CEO
Chairman CEO Duality (CCD) et al. (2012), Manna et al. (2016), Vintila and β5 < 0 or β5 > 0
duality sub-index obtained score
Paunescu (2016), Arora and Sharma (2016),
Khan et al. (2017)
Code of Conduct (COC) Natural logarithm code of conduct sub- New Variable β6 < 0 or β6 > 0

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index obtained score
Christensen et al. (2010) Kajananthan (2012),
Natural logarithm of board committees Yakubu (2015), Prusty and Kumar (2016), G. C.
Board Committees (BC) β7 < 0 or β7 > 0
sub-index obtained score Bahadur (2016), Bhandari and Arora (2016),
Singh et al. (2018) Puni and Anlesinya (2020)
Disclosure and Transparency Natural logarithm of disclosure and Prusty and Kumar (2016), Bhandari and Arora
β8 < 0 or β8 > 0
(D&T) transparency sub-index obtained score (2016), Hassouna et al. (2017)
Natural logarithm of general body
General Body Meetings (GBM) New Variable β9 < 0 or β9 > 0
meetings sub-index obtained score
Means of Communication Natural logarithm of means of
New Variable β 10< 0 or β10> 0
(MOC) communication sub-index obtained score
Natural logarithm of CEO CFO β11, β 10< 0 or β11, β
CEO CFO Certification (CCC) New Variable
certification sub-index obtained score 10 > 0
Natural Logarithm of auditor’s certificate β12, β 11 < 0 or β12, β
Auditor’s Certificate (AC) New Variable
sub-index obtained score 11 > 0

Control Variables
Natural logarithm of total assets Naseem et al. (2017); Tanveer and Malik (2017);
Singh et al. (2018) Yameen et al. (2019);
Firm Size (FS) Bendigeri and Hyderabad (2020); Boakye et β13 < 0 or β13 > 0
al.(2020); Gulzar et al. (2020); Goel et al. (2021);
Pintea et al. (2021)
Bhagat and Bolton (2008), Jackling and Johl
(2009), Hamutyinei et al. (2015), Shahwan
Natural logarithm of the ratio of earnings
(2015), Arora and Sharma (2016), Salem et al. β12, β 14 < 0 or β12, β
Financial Leverage (FLV) before interest and tax (EBIT)/ Earnings
(2019), Bendigeri and Hyderabad (2020), Gulzar 14 > 0
before tax (EBT)
et al. (2020), Goel et al. (2021), Meah et al.
(2021)
Dependent Variables
Hamdouni (2010), Venkatraman and Selvam
(2014), Ammari et al. (2014), Rossi et al.
Natural logarithm of ROE = (Net
Return on Equity (ROE) (2015), Vintila and Paunescu (2016), Kyere and
Profit/Total Shareholder’s Equity) X 100
Ausloos (2019), Chaudhary and Gakhar (2018),
Pintea et al. (2021)
Natural logarithm of ROA = (Net Hamdouni (2010), Venkatraman and Selvam
Profits/Total Assets) X 100 (2014), Ammari et al. (2014),Rossi et al. (2015),
Return on Assets (ROA) Vintila and Paunescu (2016), Buallay (2017),
Chaudhary and Gakhar (2018), Yameen et al.
(2019)
Note: β < 0 shows a negative sign, β > 0 shows a positive sign

4. Analysis and Results: The comprehensive analysis and discussion of present study is presented as
under:

4.1 Descriptive Analysis: Table-4 illustrates the descriptive statistical analysis for dependent, independent
and control variables of public and private sector companies which show the attributes of the selected
variables. The negative value of the skewness shows that the variation is to the higher side of mean, while
positive value of skewness shows variation to the lower side of the mean. Positive value of kurtosis depicts
that the distribution is leptokurtic, while the negative value shows the distribution is platykurtic.

Table-4: Descriptive Statistics of Independent, Dependent and Control Variables

Variables N Mean Std. Dev. Min Max Skew Kurt CV
PHIL 200 0.45 0.50 0.00 1.00 0.20 -1.98 110.83
BCA 200 6.23 1.42 3.00 9.00 -0.32 -0.70 22.74
BD 200 4.70 1.32 2.00 8.00 0.08 -0.29 28.02
BI 200 4.95 1.70 0.00 9.00 -0.18 0.10 34.30
CCD 200 0.33 0.47 0.00 1.00 0.75 -1.45 144.48
COC 200 1.83 0.38 1.00 2.00 -1.72 0.98 20.87
BC 200 21.20 4.45 10.00 29.00 -0.27 -0.70 21.00
D&T 200 19.35 1.88 13.00 22.00 -1.05 1.52 9.72
GBM 200 2.74 0.44 2.00 3.00 -1.10 -0.79 16.05
MOC 200 2.70 0.55 1.00 3.00 -1.67 1.88 20.34
CCC 200 0.36 0.48 0.00 1.00 0.59 -1.67 133.67
AC 200 0.57 0.50 0.00 1.00 -0.26 -1.95 87.96
FS 200 135289.25 134506.66 22302.00 971699.00 3.21 13.99 99.42
FLV 200 1.12 0.92 -7.35 4.83 -4.73 42.31 81.78
ROE 200 15.06 10.74 -35.70 44.72 -.54 4.50 71.30
ROA 200 8.85 7.81 -12.01 32.07 1.04 1.19 88.31
Source: Author’s Calculations, STATA Output

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4.2 Correlation Matrix: Table-5 presents the correlation matrix, showing the all possible correlation between
different pairs of variables. It is observed from the analysis of correlation matrix that correlation between
different pairs of variables is less than 75 percent, showing that there is no existence of multicollinearity or
multicollinearity will not be a serious problem in applying regression models.

Table-5: Correlation Matrix

ROE ROA PHIL BCA BD BI CCD COC BC D&T GBM MOC CCC AC FS FLV

ROE 1

ROA .864** 1

PHIL .041 -.087 1

BCA -.031 .102 .052 1

BD .117 .252** -.349** .324** 1

BI .120 .146* -.066 .214** .281** 1

CCD .150* .346** -.477** .151* .592** .250** 1

COC .084 .127 -.112 .028 .124 .498** .263** 1

BC .075 .233** -.117 .408** .430** .659** .376** .468** 1

D&T .042 .126 .013 .236** .263** .606** .320** .675** .639** 1

GBM .186** .129 .170* .226** -.007 .244** .022 .327** .311** .348** 1

MOC .166* .170* .128 .296** .311** .203** .263** .180* .320** .161* .196** 1

CCC -.054 .076 -.092 .357** .103 .148* .214** .016 .188** .088 .017 .259** 1
** ** ** ** ** ** * ** ** * **
AC .125 .311 -.362 .500 .641 .204 .609 .153 .482 .218 .170 .311 .259** 1

FS -.276** -.327** .391** .173* -.197** .152* -.200** .104 .257** .203** .137 .097 .156* -.058 1

FLV .152* .013 .103 -.032 -.083 -.049 -.174* -.149* -.046 -.192** .149* .059 -.152* -.063 -.027 1

**. Correlation is significant at the 0.01 level (2-tailed).

*. Correlation is significant at the 0.05 level (2-tailed).

Source: Authors Calculations, Stata Output

4.3 Analysis of Corporate Governance Indices of Public and Private Sector Companies
The analysis of Table-6 presents the Corporate Governance Indices (CGIs) scores of public and private sector
companies. Among public sector companies, ONGC Ltd. has the highest average CGI score and SAIL has the
lowest average CGI score. Among private sector companies, Infosys Ltd. has highest average CGI score and
Maruti Suzuki India Ltd. has lowest average CGI score. The average CGI score of combined public and
private sector companies is 74.38. The average CGI score of public sector companies is less than the average
score of combined public and private sector companies while, average CGI score of private sector companies
is above the average CGI score of combined public and private sector companies showing that private sector
companies’ corporate governance practices are better than private sector companies.
Tabel-6: Corporate Governance Indices of Public and Private Sectors in India
Companies 11-12 12-13 13-14 14-15 15-16 16-17 17-18 18-19 19-20 20-21 Average
ONGC Ltd. 69 69 74 72 73 79 74 74 73 68 72.5
NTPC Ltd. 64 66 69 72 69 75 75 77 76 74 71.7
IOC Ltd. 68 62 64 65 63 73 74 77 74 71 69.1
PGCIL 58 69 71 74 69 71 74 76 74 75 71.1
BPCL 58 55 60 64 62 71 74 69 67 56 63.6
GAIL (India) Ltd. 68 63 60 62 65 70 73 77 70 64 67.2
SAIL 52 53 53 60 63 59 65 65 66 67 60.3
HPCL 53 53 51 58 59 62 69 69 66 68 60.8
NHPC Ltd. 64 68 71 73 79 78 74 79 73 64 72.3
NMDC Ltd. 65 66 65 66 74 72 73 71 65 58 67.5
Average of Public Sector
61.9 62.4 63.8 66.6 67.6 71 72.5 73.4 70.4 66.5 67.61
Companies
Reliance Industries Ltd. 74 75 78 86 86 86 87 89 88 87 83.6

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Tata Steel Ltd. 70 75 74 86 86 83 85 87 86 85 81.7
Bharti Airtel Ltd. 68 69 71 80 80 80 79 81 84 85 77.7
TCS Ltd. 74 76 76 83 84 84 84 86 83 82 81.2
Infosys Ltd. 80 80 83 79 85 88 92 89 89 88 85.3
Larsen & Toubro Ltd. 66 67 68 79 79 81 85 86 85 86 78.2
ITC Ltd. 71 70 72 81 82 86 86 88 86 86 80.8
Maruti Suzuki India Ltd. 62 65 62 78 77 79 80 81 80 81 74.5
JSW Steel Ltd. 75 79 81 83 86 86 86 88 90 87 84.1
Wipro Ltd. 79 80 79 84 85 84 86 88 90 89 84.4
Average of Private
71.9 73.6 74.4 81.9 83 83.7 85 86.3 86.1 85.6 81.15
Sector Companies
Average of Public and
66.9 68 69.1 74.25 75.3 77.35 78.75 79.85 78.25 76.05 74.38
Private Sectors
Source: Author’s Calculations, Annual Reports of Respective Companies from 2011-12 to 2020-21
Figure-1 presents the trends of CGI scores of public sector companies, private sector companies, and
combined public and private sector companies. Public sector companies’, private sector companies’, and
combined public and private sector companies’ CGI scores are projected for the next ten years on the basis of
trend analysis. Thus, by the year 2030-31, public sector companies’, private sector companies’, and combined
public and private sector companies’ projected CGI scores will increase to 82.242, 105.783 and 94.011
respectively.

Figure-1: Corportae Governance Index of Public and Private Sector

Comapnies
100
Corporate Governance Score

80

60

40
Combined Sector = 1.3539x + 66.933 Public Sector = 1.0091x + 62.06
20 R² = 0.7524 Private Sector = 1.6988x + 71.807 R² = 0.5482
R² = 0.8375
0
2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21
Years

Public Sector Companies Private Sector Companies

Combined Public and Private Sector Companies

5. Impact of Corporate Governance Practices on Financial Performance of Indian Public and Private
sector Companies: In this section, the analysis of the impact of corporate governance practices on financial
performance of Indian public and private sector companies has been done. The analysis is presented as under:

5.1 Analysis of the Impact of Corporate Governance practices on Return on Equity (ROE): The
empirical analysis of the impact of corporate governance practices on return on equity has been presented and
discussed in this part. Table-7 presents the results of the random effects model and the fixed effects model
regarding the impact of corporate governance practices on return on equity of Indian public and private sector
companies. To select the appropriate model, the null hypothesis that the random effects model is more
suitable than fixed effects model has been tested by employing the Hausman specification test.

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Table-7: Estimated Results of the Random Effects Model and Fixed Effects Model
Random Effects Model Fixed Effects Model
Variables Coefficient z P>z Coefficient t P>t
Philosophy (PHIL) 0.30173 0.99 0.321 0 (omitted)
Board Composition and Activism (BCA) -0.08521 -0.5 0.621 -0.01866 -0.11 0.916
Board Diversity (BD) 0.128334 0.83 0.408 -0.00429 -0.03 0.978
Board Independence (BI) -0.13388 -0.78 0.436 7.06E-05 0 1
Chairman CEO Duality (CCD) 0.403666 1.35 0.176 -0.25627 -0.68 0.495
Code of Conduct (COC) 0.10394 0.26 0.792 -0.31558 -0.82 0.412
Board Committees (BC) 0.024928 0.11 0.911 -0.32575 -1.43 0.156
Disclosure and Transparency (D&T) -0.03259 -0.07 0.944 0.091763 0.21 0.836
General Body Meetings (GBM) 0.327949 1.7 0.09** 0.284668 1.51 0.132
CEO CFO Certification (CCC) 0.04996 0.2 0.841 0.243807 0.63 0.53
Auditor’s Certificate (AC) 1.003914 3.45 0.001* 0.139839 0.4 0.688
Financial Leverage (FLV) 0.065399 1.4 0.162 0.012321 0.28 0.782
_cons 1.344176 1.25 0.212 4.254628 3.43 0.001
R2 0.4193 R2 0.0415
Wald chi2 39.49 F 0.91
Prob > chi2 0.0001 Prob > F 0.5284
Source: Author’s Calculations, STATA Output
Note: *Significant at 0.01 level; **Significant at 0.10 level

The estimated results of Hausman specification test is presented in the Table-8, as under:

Table-8: Hausman Specification Test Estimates

Coefficients
(b) Fixed (B) Random (b-B) Difference sqrt(diag(V_b-V_B)) S.E.
BCA -0.01866 -0.08521 0.066552 0.04101
BD -0.00429 0.128334 -0.13262 .
BI 7.06E-05 -0.13388 0.133951 .
CCD -0.25627 0.403666 -0.65993 0.227348
COC -0.31558 0.10394 -0.41952 .
BC -0.32575 0.024928 -0.35068 0.046897
D&T 0.091763 -0.03259 0.124357 .
GBM 0.284668 0.327949 -0.04328 .
CCC 0.243807 0.04996 0.193848 0.297532
AC 0.139839 1.003914 -0.86407 0.191135
FLV 0.012321 0.065399 -0.05308 .
Test: Ho: difference in coefficients not systematic
chi2(11) = (b-B)'[(V_b-V_B)^(-1)](b-B)
= 8.34
2
Prob>chi = 0.6822
Source: Author’s Calculations, STATA Output

Table-8 depicts the outcomes of Hausman specification test. The χ2 value = 8.34 with the corresponding p-
value = 0.6822 above the 5 percent level of significance showing that the null hypothesis is accepted.
Therefore, the analysis of the study confirms that the Random Effects Model is superior to the Fixed Effects
Model in terms of appropriateness.

Table-7 illustrates the estimates of the impact of corporate governance practices with control variables on
ROE. The χ2 value of the random effects model is 39.49 which is significant (p-value = 0.0001 <0.05), stating
that the corporate governance practices have significant impact on financial performance. The R2 (0.4193)
value is showing that 41.93 percent variation in dependent variable (ROE) is explained by all the independent

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variables, and remaining 58.07 percent variation is caused by some other variables which are not included in
this model.
The analysis of Model-I reveals that Philosophy (β1 = 0.30173, p-value = 0.321 >0.05), Board Diversity (β3 =
0.128334, p-value = 0.408 >0.05), Chairman CEO Duality (β5 = 0.403666, p-value = 0.176 > 0.05), Code of
Conduct (β6 = 0.10394, p-value = 0.792 > 0.05), Board Committees (β7 = 0.024928, p-value = 0.911 > 0.05),
and CEO CFO Certification (β10 = 0.04996, p-value = 0.841 > 0.05) of companies have positive impact on
ROE, but insignificant p-value do not support the hypotheses. Board Composition and Activism (β2 = -
0.08521, p-value = 0.621 > 0.05), Board Independence (β4 = -0.13388, p-value = 0.436 > 0.05), and
Disclosure and Transparency (β8 = -0.03259, p-value = 0.944 > 0.05) have negative influence on ROE, but the
insignificant p-value do not confirm the hypotheses. The General Body Meetings (β9 = 0.327949, p-value =
0.09 < 0.10) and Auditor’s Certificate (β11 = 1.003914, p-value = 0.001 < 0.05) have positive and significant
impact on ROE showing that with every 1 percent increase in the scores of general body meetings, and
auditor’s certificate, ROE tends to increase with 0.327 percent and 1.003 percent respectively. The control
variable Firm Leverage (β12 = 0.065399, p-value = 0.162 >0.05) has positive but insignificant impact on
ROE. In overall, the Random Effects model is significant (χ2 = 39.49, p-value = 0.0001 <0.01) which shows
that the Corporate Governance Practices have a significant impact on the financial performance measured by
Return on Equity of public and private sector companies.

5.2 Analysis of the Impact of Corporate Governance Practices on Return on Assets (ROA): The
empirical analysis of the impact of corporate governance practices on return on assets has been presented and
discussed in this part. Table-10 presents the results of the random effects model and the fixed effects model
regarding the impact of corporate governance practices on return on assets of Indian public and private sector
companies. To select the appropriate model, the null hypothesis that the random effects model is more
suitable than fixed effects model has been tested by employing the Hausman specification test.

Table-9: Estimated Results of the Random Effects Model and Fixed Effects Model
Random Effects Model Fixed Effects Model
Variables Coefficient z P>z Coefficient t P>t
Philosophy (PHIL) 0.512163 1.42 0.156 0 (omitted)
Board Composition and Activism (BCA) 0.057276 0.44 0.663 0.057006 0.42 0.676
Board Diversity (BD) -0.06436 -0.56 0.577 -0.09606 -0.84 0.401
Board Independence (BI) 0.059571 0.46 0.648 0.095622 0.73 0.464
Chairman CEO Duality (CCD) 0.269553 1.07 0.286 -0.04238 -0.15 0.882
Code of Conduct (COC) 0.120761 0.42 0.676 -0.07844 -0.27 0.79
Board Committees (BC) 0.030921 0.18 0.859 -0.1468 -0.82 0.415
Disclosure and Transparency (D&T) 0.438151 1.26 0.207 0.438723 1.26 0.209
General Body Meetings (GBM) 0.158612 1.11 0.268 0.13364 0.95 0.346
Means of Communication (MOC) -0.16884 -0.92 0.356 0.031376 0.16 0.875
CEO CFO Certification (CCC) 0.430511 1.87 0.062*** 0.557996 1.89 0.06
Auditor’s Certificate (AC) 0.547037 2.22 0.026** 0.200564 0.76 0.449
Firm Size (FS) -0.34967 -4.88 0.000* -0.28395 -2.82 0.005
Financial Leverage (FLV) 0.042731 1.26 0.209 0.022893 0.68 0.495
_cons 3.397923 3.26 0.001 4.240015 3.84 0
R2 0.5106 R2 0.2470
Wald chi2 49.11 F 1.57
Prob > chi2 0.000 Prob > F 0.0991
Source: Author’s Calculations, STATA Output
Note: *Significant at 0.01 level; **Significant at 0.05 level; ***Significant at 0.10 level

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The estimated results of Hausman specification test is presented in the Table-10, as under:

Table-10: Hausman Specification Test Estimates

Coefficients
(b) Fixed (B) Random (b-B) Difference sqrt(diag(V_b-V_B)) S.E.
BCA 0.057006 0.057276 -0.00027 0.035741
BD -0.09606 -0.06436 -0.0317 .
BI 0.095622 0.059571 0.036051 .
CCD -0.04238 0.269553 -0.31193 0.131333
COC -0.07844 0.120761 -0.19921 0.058651
BC -0.1468 0.030921 -0.17772 0.045538
D&T 0.438723 0.438151 0.000572 0.017375
GBM 0.13364 0.158612 -0.02497 .
MOC 0.031376 -0.16884 0.200215 0.07865
CCC 0.557996 0.430511 0.127484 0.183607
AC 0.200564 0.547037 -0.34647 0.097429
FS -0.28395 -0.34967 0.065715 0.070582
FLV 0.022893 0.042731 -0.01984 .
Test: Ho: difference in coefficients not systematic
chi2(13) = (b-B)'[(V_b-V_B)^(-1)](b-B)
= 15.08
Prob>chi2 = 0.3024
(V_b-V_B is not positive definite)
Source: Author’s Calculations, STATA Output

Table-10 depicts the outcomes of Hausman specification test. The χ2 value = 15.08 with the corresponding p-
value = 0.3024 above the 5 percent level of significance showing that the null hypothesis is accepted.
Therefore, the analysis of the study confirms that the Random Effects Model is superior to the Fixed Effects
Model in terms of appropriateness.

Table-9 presents the estimates of the impact of corporate governance practices with control variables on ROA.
The χ2 value of the random effects model is 49.11 which is significant (p-value = 0.0000 <0.05), stating that
the corporate governance practices have significant impact on financial performance. The R2 (0.5106) value is
showing that 51.06 percent variation in dependent variable (ROA) is explained by all the independent
variables and remaining 48.94 percent variation is caused by some other factors which are not included in this
model.
The analysis of Model-II reveals that Philosophy (β1 = 0.512163, p-value = 0.156 > 0.05), Board Composition
and Activism (β2 = 0.057276, p-value = 0.663 >0.05), Board Independence (β4 = 0.059571, p-value = 0.648
>0.05), Chairman CEO Duality (β5 = 0.269553, p-value = 0.286 > 0.05), Code of Conduct (β6 = 0.120761, p-
value = 0.676 > 0.05), Board Committees (β7= 0.030921, p-value = 0.859 > 0.05), Disclosure and
Transparency (β8 = 0.438151, p-value = 0.207 > 0.05), and General Body Meetings (β9 = 0.158612, p-value =
0.268 > 0.05) have positive impact on ROA, but the insignificant p-value do not support the hypotheses. The
Board Diversity (β3 = -0.06436, p-value = 0.577 > 0.05) and Means of Communication (β10 = -0.16884; p-
value = 0.356 >0.05) have negative impact on ROA, but the insignificant p-value do not confirm the
hypotheses. The CEO CFO Certification (β11 = 0.430511, p-value = 0.062 < 0.10) and Auditor’s Certificate
(β12 = 0.547037, p-value = 0.026 < 0.05) have positive and significant impact on ROA, showing that with
every 1 percent increase in CEO CFO certification and auditor’s certificate scores, the ROA tends to increase
by 0.430 percent and 0.547 percent respectively. Firm Size (β13 = -0.34967, p-value = 0.000 < 0.01) has
negative and significant impact on ROE implying that 1 percent increase in firm assets will reduce ROA by
0.349 percent. Financial Leverage (β14 = 0.042731, p-value = 0.209 > 0.05) has no significant impact on
ROE. In overall, the Random Effects model is significant (χ2 = 49.11; p-value = 0.000 <0.01) which shows
that the Corporate Governance Practices have a significant impact on the financial performance measured by
Return on Assets of public and private sector companies.

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6. Conclusions and Policy Implications: The research investigates into the corporate governance practices of
both Indian public sector and private companies. It explores how these practices influence the financial
performance of the leading twenty listed companies in India, ten each from public sector and private sector.
The study employs panel data regression models (Random – Effects and Fixed – Effects), to make the
analysis. The summary of the tested hypotheses have been presented in Table-11.
The analysis of corporate governance practices show that among public sector companies, ONGC Ltd. has the
highest average CGI score and SAIL has the lowest average CGI score. Among private sector companies,
Infosys Ltd. has highest average CGI score and Maruti Suzuki India Ltd. has lowest average CGI score. The
average CGI score of combined public and private sector companies is 74.38. The average CGI score of
public sector companies is less than the average score of combined public and private sector companies
while, average CGI score of private sector companies is above the average CGI score of combined public and
private sector companies showing that private sector companies’ corporate governance practices are better
than private sector companies.
The results of the study’s Model-I report that Philosophy, Board Diversity, Chairman CEO Duality, Code of
Conduct, Board Committees, and CEO CFO Certification have positive impact on ROE, but insignificant p-
value do not support the hypotheses. Board Composition and Activism, Board Independence, and Disclosure
and Transparency have negative influence on ROE, but insignificant p-value do not confirm the hypotheses.
The General Body Meetings and Auditor’s Certificate have positive and significant impact on ROE showing
that with every 1 percent increase in the scores of general body meetings, and auditor’s certificate, ROE tends
to increase with 0.327 percent and 1.003 percent respectively. The control variable Firm Leverage has
positive but insignificant impact on ROE. The results of Model-II reveal that Philosophy, Board Composition
and Activism), Board Independence, Chairman CEO Duality, Code of Conduct, Board Committees,
Disclosure and Transparency, and General Body Meetings have positive impact on ROA, but the insignificant
p-value do not support the hypotheses. The Board Diversity and Means of Communication have negative
impact on ROA, but the insignificant p-value do not confirm the hypotheses. The CEO CFO Certification and
Auditor’s Certificate have positive and significant impact on ROA, showing that with every 1 percent increase
in CEO CFO certification and auditor’s certificate scores, the ROA tends to increase by 0.430 percent and
0.547 percent respectively. Firm Size has negative and significant impact on ROE implying that 1 percent
increase in firm assets will reduce ROA by 0.349 percent. Financial Leverage has no significant impact on
ROE. The findings of the study confirm that corporate governance practices are still in the emerging stage in
India.

Table-11: Summary of Hypothesis Testing

Sr. No. Corporate Governance Variables Expected Sign ROE ROA
1 Philosophy (PHIL) ± +ve and insignificant +ve and insignificant
2 Board Composition and Activism (BCA) ± -ve and insignificant +ve and insignificant
3 Board Diversity (BD) ± +ve and insignificant -ve and insignificant
4 Board Independence (BI) ± -ve and insignificant +ve and insignificant
5 Chairman CEO Duality (CCD) ± +ve and insignificant +ve and insignificant
6 Code of Conduct (COC) ± +ve and insignificant +ve and insignificant
7 Board Committees (BC) ± +ve and insignificant +ve and insignificant
8 Disclosure and Transparency (D&T) ± -ve and insignificant +ve and insignificant
9 General Body Meetings (GBM) ± +ve and significant +ve and insignificant
10 Means of Communication (MOC) ± -ve and insignificant
11 CEO CFO Certification (CCC) ± +ve and insignificant +ve and significant
12 Auditor’s Certificate (AC) ± +ve and significant +ve and significant
13 Firm Size (FS) ± -ve and significant
14 Financial Leverage (FLV) ± +ve and insignificant +ve and insignificant

7. Limitations of the Study and Scope for future Research

The current research work is based on the secondary data taken from the annual reports and websites of 20
public and private sector companies over the period from 2011-12 to 2020 – 21. The study analyses the
impact of twelve corporate governance mechanisms calculated employing a content analysis approach in the
presence of two control variables on the financial performance of companies in respect of ROE and ROA. The
study is limited to only the twenty selected Indian Public and private sector companies; however, similar
study can be conducted in banking sector also. The findings of the study cannot be generalized; however,
these will be useful for policy formulation Indian corporate sector. Future research should consider all
possible corporate governance mechanisms and other financial performance criteria like market-based
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indicators and value-based indicators for more comprehensive analysis. The agency view of the corporation is
typically taken into account in studies on corporate governance, however, in the future, stakeholder theory and
resource management theory may be worthy of consideration. Finally, it is suggested that the corporate
governance of the Indian public and private sectors should be more effective and stronger for the sustainable
economic growth of India.

Authors' Contribution

Dr. Raj Kumar Singh explored the idea of pursuing a study on the impact of corporate governance practices
on the financial performance of Indian public and private sector companies. Naresh Kumar and Dr. Ajay
Kumar extracted the annual reports from the websites of public and private sector companies and collected,
edited, and coded the data for analysis. Naresh Kumar and Dr. Ajay Kumar drafted the literature review
relevant to the study. Dr. Raj Kumar Singh and Naresh Kumar analysed the data through MS-Excel, SPSS
software and STATA software; and Dr. Ajay Kumar prepared the tables. Naresh Kumar and Dr. Ajay Kumar
wrote the rough draft of the research paper. Dr. Raj Kumar Singh edited the final manuscript.

Conflict of Interest

The authors certify that they have no affiliations with or involvement in any organization or entity with any
financial interest or non-financial interest in the subject matter or materials discussed in this manuscript.

Funding Acknowledgement

The authors received no financial support for the research, authorship, and/or for publication of this article.

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