Corporate Governance and Firm Performance in Indian Pharmaceutical Sector

Abstract

Corporate governance has received a lot of attention in India because of the scandals that have taken place in the corporate world in the last two decades. Investors are also concerned over the relationship between corporate governance and performance indicators. In this context, our study empirically examines the impact of corporate governance on firm performance for Indian firms for the period 2001-2010. We utilize a range of measures of corporate governance including board size, outside directors, number of meetings held and firm performance variables covering both market-based and financial indicators. For empirical analysis, different specifications like fixed effects and simultaneous equation method have been employed for the robustness of the results. Findings of the analysis suggest that corporate governance has a significant impact on firm performance.

Keywords: Corporate governance; firm performance; panel data

JEL Classification: G34; L25; L65; C23; C33