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Corporate governance and investment decisions of retail investors in equity: do group affiliation and firm age matter?

Dipanwita Chakraborty (Indian Institute of Technology Kharagpur, Kharagpur, India)
Neeraj Gupta (N. L. Dalmia Institute of Management Studies and Research, Mumbai, India)
Jitendra Mahakud (Indian Institute of Technology Kharagpur, Kharagpur, India)
Manoj Kumar Tiwari (Indian Institute of Technology Kharagpur, Kharagpur and National Institute of Industrial Engineering, Mumbai, India)

Managerial Auditing Journal

ISSN: 0268-6902

Article publication date: 9 September 2022

Issue publication date: 3 January 2023




The purpose of this study is to examine the impact of corporate governance (CG) on the shareholding level of retail investors in Indian listed firms.


Primarily, a broad CG-index was constructed based on the Indian Companies Act, 2013; Clause 49 listing agreement; and Securities Contracts (Regulation) Act, 1956. Thereafter, a panel data approach has been used to examine the association between CG attributes and retail shareholdings (RSs) during 2014–2015 and 2018–2019.


Authors find that the firm-level CG quality positively affects retail investors’ shareholding level. The results explain that among various attributes of CG, retail investors pay more attention to firms’ audit and board information while making investment decisions. The results also reveal that the influence of CG attributes on RSs is lesser for group-affiliated, mature and large-sized firms than for stand-alone, young and small-sized firms.

Practical implications

First, the study provides new insight to the firms for increasing retail-shareholding levels and complying with India’s ongoing minimum public shareholding norms by improving CG practices concerning specific CG mechanisms. Second, it illuminates the regulators and policymakers to monitor and strengthen firms’ governance quality in light of ongoing regulatory reforms.


This study is a new investigation that explores the impact of CG on investment decisions of retail investors from the perspective of an emerging economy.



Chakraborty, D., Gupta, N., Mahakud, J. and Tiwari, M.K. (2023), "Corporate governance and investment decisions of retail investors in equity: do group affiliation and firm age matter?", Managerial Auditing Journal, Vol. 38 No. 1, pp. 1-34.



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