Purpose – The study aims to examine corporate governance issues in India and establish the relationship between corporate governance and financial performance. Design/methodology/approach – The sample comprises 141 companies belonging to the “A” group stocks listed in the Mumbai Stock Exchange of India. Considering the institutional uniqueness in India, a composite measure of corporate governance is developed comprising three indicators – legal, board and proactive indicators. Data on the three indicators and financial performance were procured from secondary sources. In the step-wise multiple regression analysis, the influence of these three indicators and the composite measure of corporate governance was examined on firm performance after controlling the confounding effects of firm size. Findings – The board and the proactive indicators influence the firm performance significantly whereas legal compliance indicator does not do so. The composite corporate governance measure is a good predictor of firm performance. Originality/value – This study has two contributions: one, it proposes a composite measure of corporate governance considering the unique institutional characteristics of the Indian economy. Two, the study establishes the predictability of the new measure of corporate governance on firm performance as a tool to boost investors' confidence and financial health of firms.

No abstract

This paper reports the results of a study designed to examine if any firm-specific characteristics explain the cross-sectional variation in stock returns using Fama and Macbeth's methodology. It was found that size (measured by market capitalization), market leverage, price-to-book value, and earnings-to-price ratio were highly correlated with stock returns. While size and price-to-book-value were negatively correlated with stock returns, earningsto- price ratio and market leverage were found to be positively correlated with stock returns. The study also found a flat relationship between returns and beta. However, variables other than size did not have any incremental explanatory power, once the size effect had been adjusted for. On splitting the sample period into pre-95 and post-95 sub-periods, it was found that the above effects were predominant in the post-95 sub-period compared to the pre-1995 one. In the entire sample period, small firms generated an annualized excess return of 70 per cent over the large firms.

No abstract

This article presents the findings of a study of dividend paying behaviour of more than 200 Indian companies over 15 years. It attempts to examine whether the companies offering bonus issue have been able to generate greater returns for their shareholders than those that have not offered any bonus issue but have maintained a steadily increasing dividend rate. It is found that most of the companies either maintained the dividend rate after the bonus issue at the pre-bonus level or decreased it (but not proportionately) thereby increasing the dividend payments to the shareholder. In fact, a few companies increased the dividend rate after a bonus issue. It is found that, during 1982-91, the bonus issuing companies yielded greater returns to their shareholders than those that did not make any bonus issue but maintained a steadily increasing dividend rate. This phenome - non got reversed during 1992-96. The declining tendency of the MNCs to issue bonus shares is found to be one of the reasons for such behaviour.