Rethinking the primacy of board efficacy for governance: evidence from India

Suveera Gill (Based at University Business School, Panjab University, Chandigarh, India)

Corporate Governance

ISSN: 1472-0701

Publication date: 15 February 2013



If proficient boards result in better governance, as the literature on the subject generally suggests, engaging independent directors and having in place an effective audit committee would certainly facilitate productive corporate functioning and enhanced accountability. Motivated by such a viewpoint, the purpose of this paper is to unravel the reporting quality and performance of the Indian central public sector enterprises (CPSEs) and its private counterparts.


The well premeditated propositions of the study resulted in a final sample comprising 47 CPSEs and 30 peer companies. The auditors' report on financial statements was scanned to determine the quality of company's accounting and financial reporting systems. The BSE‐500 Index companies were ranked on select financial parameters to gauge relative performance of the sample companies.


An analysis of the CPSEs shows that non‐compliance with the corporate governance provisions with regards to the required number of independent directors on the board did not have any concomitant effect on their performance. Further, an examination of auditors' report revealed that the CPSEs provide a better insight into books of accounts, unlike the private sector.


The study is timely and relevant, given the expanded role of the state and renewed interest in boards. A case for collaborative engagement between the government and the corporate sector is proposed to address legal as well as regulatory lacunae for building trust and fostering good corporate governance. To ensure better compliance and enforcement of financial regulations it envisions an integrated accounting/auditing and taxation administration platform.



Gill, S. (2013), "Rethinking the primacy of board efficacy for governance: evidence from India", Corporate Governance, Vol. 13 No. 1, pp. 99-129.

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