The Impact of Legal and Regulatory Environment: A Study of Corporate Governance and Disclosure Practices of Firms Listed on Bombay Stock Exchange

--Pankaj M Madhani

Governance depends on both country-level as well as firm-level mechanisms. The country-level governance mechanisms include a country’s laws, its culture and norms, and the institutions that enforce the laws. Firm level or internal governance mechanisms are those that operate within the firm. Apart from firm-level governance mechanism, it is also important to study whether the institutional, legal and regulatory environments for shareholder protection rights and the corporate governance structure are complementary or substitute of each other. This research looks into the institutional, legal and regulatory environments of the US, UK, Luxembourg and India from the perspective of corporate governance and disclosure practices by studying a sample of 54 firms across various sectors listed on the Bombay Stock Exchange, India. The research seeks to empirically investigate whether they are significantly different for firms cross-listed in those countries. The research suggests that legal and regulatory environments for corporate governance and internal corporate governance are not substitutes. On the contrary, they are complementary because strong corporate governance at the country level reinforces the effectiveness of internal governance at the firm level, increasing the effect of internal corporate governance.

© 2016 IUP. All Rights Reserved.

The Relationship Between CEO Duality and Firm Performance: An Analysis Using Panel Data Approach

--Shikha Mittal Shrivastav and Anjala Kalsie

This paper seeks to examine the relationship between the CEO duality (one person serving the role of both chairman of the board and CEO) and firm performance. Existing literature on CEO duality is based on two theories of corporate governance. While agency theory suggests that CEO duality negatively affects performance, stewardship theory favors CEO duality and argues that it positively impacts the firm performance. The present paper adds to the existing literature by employing panel data of 145 non-financial companies listed on National Stock Exchange of India for a period of five years, i.e., 2008-2012. Firm performance has been measured using Tobin’s Q as a market-based measure, and Return on Equity (ROE) as accountingbased measure. Panel data is analyzed using fixed effect within and Least Square Dummy Variable (LSDV) model, random effect model and Feasible Generalized Least Square (FGLS) model. The paper concludes that when Tobin’s Q is used as performance measure, the presence of CEO duality has a negative impact on firm performance. In case of ROE, the relationship is negative with fixed effect model and significantly negative with FGLS model.

© 2016 IUP. All Rights Reserved.

Corporate Governance: A Cybernetic View

--Venugopal Kummamuru

The word corporate governance is liberally used by many in the industry and has become a subject of intense discussion all over the world. Different definitions have been provided by various individuals/groups, which have given rise to questions like what is corporate governance? Its need, expectations and who is responsible for it? While discussing corporate governance, the focus remains mainly on the board of directors and financial aspects giving an impression that corporate governance is related only to these aspects though it is not so. In any organization, there are different entities. It is essential to understand the relationships and influences among different entities of an organization to understand the function of corporate governance. This paper attempts to provide a comprehensive definition of corporate governance after taking a cybernetic view of the function and applying the concepts of the Viable Systems Model developed by Stafford Beer. A cybernetic view of corporate governance while bringing in clarity also leads to a more complete and viable definition of corporate governance, fulfilling the purpose of this paper.

© 2016 IUP. All Rights Reserved.