Corporate Governance Dynamics: Exploring Influence on Financial Performance and Market Valuation

G. Thouseef Ahamed¹ , S. Aneel Amrutha Raju²

Section:Research Paper, Product Type: Journal-Paper
Vol.10 , Issue.2 , pp.8-17, Feb-2024

Online published on Feb 28, 2024

Copyright © G. Thouseef Ahamed, S. Aneel Amrutha Raju . This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
 

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Abstract :
The study explores the intricate relationship between corporate governance variables and financial performance indices in various sectors using data from 48 companies operating in 24 sectors. ANOVA, Regression analysis and correlation analysis are employed as quantitative research methods for revealing the interrelationships amongst board composition, CEO remuneration, executive directors’ proportion and financial measures such as EV/Net Operating Revenue, P/B Ratio among others. The results show that while Board Size positively influences trading capabilities executive directors are associated with higher asset turnover ratio. Conversely, negative correlations were reported between executive stock ownership and Price-to-Book ratio which may affect market valuation. Also, current ratio has positive relationship with CEO remuneration while gender diversity influences P/B Ratio favorably among other factors considered in this study. It is worth noting that independent directors’ proportion, ownership concentration and committee structure do not significantly explain variations on financial performance indicators. This study adds to existing knowledge on understanding the complex interaction between corporate governance systems and financial performance emphasizing their importance to in determining company valuation measures.

Key-Words / Index Term :
Corporate governance, financial performance, Board size, Executive directors, CEO remuneration, Gender diversity, Committee structure

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