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The influence of board characteristics on corporate illegality

Gundeep Kaur Virk (Faculty of Business Management and Commerce, Panjab University, Chandigarh, India)

Journal of Financial Regulation and Compliance

ISSN: 1358-1988

Article publication date: 8 May 2017




In light of frequent corporate scams and frauds, this paper aims to investigate the relationship of corporate illegality with the board of directors’ characteristics in Indian manufacturing companies.


The board of director characteristics of sample companies charged with violation of the Securities Exchange Board of India (SEBI) regulations from 2008 to 2013 are matched to an equivalent-sized control data set. A cross-sectional logistic regression model is applied to test the hypothesized association.


The findings suggest that the SEBI violations are less likely to occur when a large fraction of the board of directors consists of independent directors and when the individual directors have multiple appointments on the boards of other companies. However, it is observed that the size of the board and its meetings have no observable association with violation of the SEBI regulations.

Research limitations/implications

This work is likely to aid future research in exploring the impact of governance mechanisms on the occurrence of illegality. In future, studies may be conducted to investigate the probability of illegal corporate events using a larger sample size and corporate governance variables which have not been examined in the present study.

Practical implications

The analysis provides corporate policy makers and investors an insight to evaluate the vulnerability of a company being engaged in illegality based on its board features.


The present study is distinct from previous reports as it makes a novel attempt to gauge the relationship between the board of directors’ characteristics and the occurrence of illegality in the Indian corporate section.



Kaur Virk, G. (2017), "The influence of board characteristics on corporate illegality", Journal of Financial Regulation and Compliance, Vol. 25 No. 2, pp. 133-148.



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