Corporate performance: does board independence matter? – Indian evidence

Abstract

Purpose

The purpose of this paper is to examine the effect of the presence of independent board directors on financial performance in India.

Design/methodology/approach

This study used panel regression models on large listed Indian firms to investigate the impact on financial performance owing to the presence of independent directors.

Findings

The findings suggest that independent board directors in Indian contexts do not significantly affect financial performance.

Practical implications

This study has implications for the formulation of regulation related to appointment of independent directors and the extent of their representation on the board for them to be effective.

Social implications

The proportion of independent directors on the board of the firm is influenced by the trade-off between the cost of having independent directors on the board versus the benefits to the firm and society.

Originality/value

The impact of the presence of an independent director on financial performance in highly concentrated ownership remains ambiguous.

Citation

Haldar, A., Shah, R., Nageswara Rao, S.V.D., Stokes, P., Demirbas, D. and Dardour, A. (2018), "Corporate performance: does board independence matter? – Indian evidence", International Journal of Organizational Analysis, Vol. 26 No. 1, pp. 185-200. https://doi.org/10.1108/IJOA-12-2017-1296