The Relation between Firm-Level Corporate Governance and Market Value: A Study of India

34 Pages Posted: 9 Apr 2010 Last revised: 7 Jul 2011

Bala N. Balasubramanian

Indian Institute of Management Ahmedabad; IIM Bangalore - Centre for Corporate Governance and Citizensip; Adjunct Professor

Bernard S. Black

Northwestern University - Pritzker School of Law; Northwestern University - Kellogg School of Management; European Corporate Governance Institute (ECGI)

Vikramaditya S. Khanna

University of Michigan Law School

Date Written: July 8, 2010

Abstract

Relatively little is known about the corporate governance practice of firms in emerging markets. We provide a detailed overview of the practices of publicly traded firms in India, and identify areas where governance practices are relatively strong or weak, relative to developed countries. We also examine whether there is a cross-sectional relationship between measures of governance and measures of firm performance and find evidence of a positive relationship for an overall governance index and for an index covering shareholder rights. The association is stronger for more profitable firms and firms with stronger growth opportunities.

Keywords: India, securities law, corporate governance, Clause 49

JEL Classification: G38, K22

Suggested Citation

Balasubramanian, Bala N. and Black, Bernard S. and Khanna, Vikramaditya S., The Relation between Firm-Level Corporate Governance and Market Value: A Study of India (July 8, 2010). nearly final version, published in Emerging Markets Review, Vol. 11, pp. 319-340, 2010; ECGI - Law Working Paper No. 177/2011; Northwestern Law & Econ Research Paper No. 10-10; U of Michigan Law & Econ, Empirical Legal Studies Center Paper No. 10-011; U of Texas Law School, Law and Economics Research Paper No. 180. Available at SSRN: https://ssrn.com/abstract=1586460 or http://dx.doi.org/10.2139/ssrn.1586460

Bala N. Balasubramanian

Adjunct Professor ( email )

Vastrapur
Ahmedabad, GA Gujarat
India
+919167036140 (Phone)

Indian Institute of Management Ahmedabad ( email )

Vastrapur
Ahmedabad, Gujarat
India
+919167036140 (Phone)

IIM Bangalore - Centre for Corporate Governance and Citizensip ( email )

Bannerghatta Road
Bangalore, Karnataka 560076
India

Bernard S. Black (Contact Author)

Northwestern University - Pritzker School of Law ( email )

375 E. Chicago Ave
Chicago, IL 60611
United States
312-503-2784 (Phone)

Northwestern University - Kellogg School of Management

2001 Sheridan Road
Evanston, IL 60208
United States
847-491-5049 (Phone)

European Corporate Governance Institute (ECGI)

Brussels
Belgium

Vikramaditya S. Khanna

University of Michigan Law School ( email )

625 South State Street
Ann Arbor, MI 48109-1215
United States
734-615-6959 (Phone)

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