Impact of Corporate Governance on Financial Performance of Indian Electronic Consumer Goods Firms

Abstract

Corporate governance refers to the set of systems, principles and processes by which a company’s governed. It provides the guidelines to the companies how the company can be directed and controlled. In this context, an attempt has been made in this paper to explore the possible impact of corporate governance on financial performance in Indian Electronic consumer goods firms. A sample of seven Electronic consumer goods companies from India is studied based on the Corporate Governance practices that are being followed by them which have been selected by their market capitalization. The focus was on some corporate governance mechanisms such as board size (BS), audit committee meeting (ACM), and audit committee independence (ACI). The dependent variables are return of assets (ROA), return on capital employed (ROCE). While the control variable is firm-size. The analysis results revealed a

significant relationship between corporate governance variables (board size, audit committee meeting, firm size) and performance of the company as measured by return on assets and return on capital employ. However, the findings revealed that only audit committee independent had significant relationship with performance when using accounting measure (return on assets and return on capital employ). This study contributes to the literature by providing an analysis of the impact of corporate governance on financial performance in Indian Electronic consumer goods firms.