Board characteristics and firm performance: evidence from banking industry in India

The Board of Directors in a firm performs the primary role of internal control mechanism. This Study seeks to understand the relationship between internal governance and performance of banks in India. The research paper investigates the effect of board characteristics (proportion of independent dire...

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Main Authors:	Manmeet Kaur, Madhu Vu
Format:	Article
Language:	English
Published:	Penerbit Universiti Kebangsaan Malaysia 2017
Online Access:	http://journalarticle.ukm.my/11965/ http://journalarticle.ukm.my/11965/ http://journalarticle.ukm.my/11965/1/14480-62476-1-PB.pdf

id	ukm-11965
recordtype	eprints
spelling	ukm-119652018-07-31T09:20:46Z http://journalarticle.ukm.my/11965/ Board characteristics and firm performance: evidence from banking industry in India Manmeet Kaur, Madhu Vu, The Board of Directors in a firm performs the primary role of internal control mechanism. This Study seeks to understand the relationship between internal governance and performance of banks in India. The research paper investigates the effect of board characteristics (proportion of independent directors, gender diversity, board size, meetings per year and attendance in board meetings) on the firm performance. This paper evaluates the impact of corporate governance mechanisms on bank’s financial performance using panel data for 28 listed banks at National Stock Exchange of India for the period of 2008-2014. Returns on Asset, Return on Equity, Tobin’s Q and Net Interest Income were used as the financial performance indicators. To estimate the relationship among governance and bank performance initially the Study uses Pooled Ordinary Least Square (OLS) Estimation and Generalized Least square (GLS) Estimation. Then a well-developed Generalized Method of Moments (GMM) Estimator is used to investigate the dynamic nature of performance and governance relationship. The Study empirically confirms that two step system GMM approach controls the problem of unobserved heterogeneity and endogeneity as compared to the OLS and GLS approach. The result suggests that banks with small board, boards with female members, and boards that meet more frequently tend to be more efficient and subsequently have a positive impact on performance of banks. The study offers insights to policy makers interested in enhancing the quality of governance of banks in India. In addition, the findings suggest that board characteristics play a vital role in the improvement of corporate governance mechanism for financial institutions. There is a great need to have efficient boards in banks to improve the overall health of the financial institutions and the economic development of the country. Penerbit Universiti Kebangsaan Malaysia 2017 Article PeerReviewed application/pdf en http://journalarticle.ukm.my/11965/1/14480-62476-1-PB.pdf Manmeet Kaur, and Madhu Vu, (2017) Board characteristics and firm performance: evidence from banking industry in India. Asian Journal of Accounting and Governance, 8 . pp. 39-53. ISSN 2180-3838 http://ejournal.ukm.my/ajac/issue/view/1033
repository_type	Digital Repository
institution_category	Local University
institution	Universiti Kebangasaan Malaysia
building	UKM Institutional Repository
collection	Online Access
language	English
description	The Board of Directors in a firm performs the primary role of internal control mechanism. This Study seeks to understand the relationship between internal governance and performance of banks in India. The research paper investigates the effect of board characteristics (proportion of independent directors, gender diversity, board size, meetings per year and attendance in board meetings) on the firm performance. This paper evaluates the impact of corporate governance mechanisms on bank’s financial performance using panel data for 28 listed banks at National Stock Exchange of India for the period of 2008-2014. Returns on Asset, Return on Equity, Tobin’s Q and Net Interest Income were used as the financial performance indicators. To estimate the relationship among governance and bank performance initially the Study uses Pooled Ordinary Least Square (OLS) Estimation and Generalized Least square (GLS) Estimation. Then a well-developed Generalized Method of Moments (GMM) Estimator is used to investigate the dynamic nature of performance and governance relationship. The Study empirically confirms that two step system GMM approach controls the problem of unobserved heterogeneity and endogeneity as compared to the OLS and GLS approach. The result suggests that banks with small board, boards with female members, and boards that meet more frequently tend to be more efficient and subsequently have a positive impact on performance of banks. The study offers insights to policy makers interested in enhancing the quality of governance of banks in India. In addition, the findings suggest that board characteristics play a vital role in the improvement of corporate governance mechanism for financial institutions. There is a great need to have efficient boards in banks to improve the overall health of the financial institutions and the economic development of the country.
format	Article
author	Manmeet Kaur, Madhu Vu,
spellingShingle	Manmeet Kaur, Madhu Vu, Board characteristics and firm performance: evidence from banking industry in India
author_facet	Manmeet Kaur, Madhu Vu,
author_sort	Manmeet Kaur,
title	Board characteristics and firm performance: evidence from banking industry in India
title_short	Board characteristics and firm performance: evidence from banking industry in India
title_full	Board characteristics and firm performance: evidence from banking industry in India
title_fullStr	Board characteristics and firm performance: evidence from banking industry in India
title_full_unstemmed	Board characteristics and firm performance: evidence from banking industry in India
title_sort	board characteristics and firm performance: evidence from banking industry in india
publisher	Penerbit Universiti Kebangsaan Malaysia
publishDate	2017
url	http://journalarticle.ukm.my/11965/ http://journalarticle.ukm.my/11965/ http://journalarticle.ukm.my/11965/1/14480-62476-1-PB.pdf
first_indexed	2023-09-18T20:01:33Z
last_indexed	2023-09-18T20:01:33Z
_version_	1777406882059649024

Board characteristics and firm performance: evidence from banking industry in India

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