Universal Journal of Accounting and Finance Vol. 8(4), pp. 140 - 147
DOI: 10.13189/ujaf.2020.080406
Reprint (PDF) (268Kb)

Nexus between Corporate Governance and Financial Performance: Corroboration from Indian Banks

Sanjeeb Kumar Dey ^*, Debabrata Sharma
Department of Commerce, Ravenshaw University, Odisha-753003, India

ABSTRACT

Corporate governance (CG) is now a world phenomenon and the nucleus of economic regulations. History evidenced that failure in corporate governance might lead to economic turmoil. Governance of banks is particularly important for a country like India which is still in the path of economic development. In this paper, we have tried to establish the nexus between corporate governance practices and financial performance of selected Indian public sector banks. The study is empirical in nature and is based on secondary data collected from CMIE Prowess database. We have considered ten public sector banks based on their balance sheet size covering seven years ending on 2019. We have used Correlation and Regression Model to achieve our objectives. Two performance variables, eight corporate governance variables and two control variables have been used for this purpose. Based on the diagnostic tests, we applied fixed effects generalised least square (GLS) regression. Our results showed that financial performance (ROA and ROE) is negatively associated with board size, board meetings, board committees and board independence. On the contrary, we found a positive relationship between the number of woman directors, executive directors, non-executive directors and banks' performance measures. Finally, we suggest that public sector banks should not have a board size beyond a certain limit. Our study will provide a new dimension to the existing literatures regarding the impact of governance and banking sector in particular.

KEYWORDS
Corporate Governance, Bank, India, Performance, ROA, ROE

Cite This Paper in IEEE or APA Citation Styles
(a). IEEE Format:
[1] Sanjeeb Kumar Dey , Debabrata Sharma , "Nexus between Corporate Governance and Financial Performance: Corroboration from Indian Banks," Universal Journal of Accounting and Finance, Vol. 8, No. 4, pp. 140 - 147, 2020. DOI: 10.13189/ujaf.2020.080406.

(b). APA Format:
Sanjeeb Kumar Dey , Debabrata Sharma (2020). Nexus between Corporate Governance and Financial Performance: Corroboration from Indian Banks. Universal Journal of Accounting and Finance, 8(4), 140 - 147. DOI: 10.13189/ujaf.2020.080406.