Asian Journal of Research in Business Economics and Management
Year : 2015, Volume : 5, Issue : 4
First page : ( 88) Last page : ( 95)
Online ISSN : 2249-7307.
Article DOI : 10.5958/2249-7307.2015.00090.0

Corporate Governance and Its Relationship with the ROCE and PBIT: An Empirical Investigation in Indian Scenario

Singh Amanjot

Doctoral Research Fellow, Punjabi University, Patiala, India

Online published on 4 April, 2015.

Abstract

With the growing corporatisation, the concept of Corporate Governance has emerged out and continuously expanding by both horizontally and vertically. Through the study, an attempt has been made to study the link between the corporate governance and the financial performance of a company i.e. PBIT and ROCE. A total of 27 companies has been taken as a sample from the NSE-Nifty 50, excluding banks and other finance companies. The research exhibited that the corporate governance does not have a significant impact on the PBIT. Whereas the F-value of the model gives enough evidence and supports the alternate hypothesis, i.e. the corporate governance has a positive impact on the ROCE. The reason could be the board of directors have more significant control on the capital employed of the corporation instead of the revenue generated (PBIT). The regression coefficients do not exhibit a significant relationship with the ROCE and PBIT, except the negative regression coefficient of Board meetings with PBIT, which is significant at the 10% level. Overall, the corporate governance has a positive impact on the ROCE.

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Keywords

Board, Corporate, Governance, Regression, Return on Capital employed.

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