Effect of Corporate Governance Practices on Profitability and Firm Value of Selected Indian It Companies

Abstract

The primary aim of corporate governance is to increase the company's performance and harmonization of various interest groups. But the performance of a company is not only to achieve superior financial results but all financial and non-financial aspects of its work. Performance of listed companies is significantly influenced by the shape of corporate governance, namely the ability to identify and harmonize interests of different social partners. This paper aims to study the impact of corporate governance practices on firm's profitability and firm value in Indian context for selected listed seven IT companies over the period of ten years. For evaluating the impact of Corporate Governance Practices, variables studied are- Family controlled firms, Board Size, Board Composition, Board Meetings, Chairman - CEO duality, Woman as an executive director, Firm Age, Asset Tangibility, and Financial Leverage. Multiple regression analysis was conducted to identify the factors that affect profitability and firm value. It is found that the profitability of the firms does have effect on Corporate Governance practices. It is also found that corporate governance has effect on Firm Value indicating the awareness among various stakeholders regarding corporate governance practices.