Do Corporate Governance impact Firm Value? An Indian Perspective

59 Pages Posted: 11 Dec 2019

See all articles by Sajit Jacob

Sajit Jacob

Bharathiar University, Department of Commerce

Date Written: November 22, 2019

Abstract

This paper discusses the possibility of a financial value chain with CG as the trigger that generates and transmits value till it reaches market. The study explores the nature and function of CG in value creation. The main goal is to expose the role of CG in the financial value chain that culminates in market value addition. Main attention was paid to identifying financial leading indicators for Current Operations Value, Future Growth Value, Tobin’s q and Shareholder Value Added that remains as anchors for complete value materialization process .This topic was chosen because when corporate failures happen, the blame is on the CG, hence all actions aiming at strengthening of CG practices are deemed as assurance on firm performance and firm value. The major findings of the paper is the identification of a value chain that originates at CGPI. CGPI activates COV and FGV which in turn leads to EV, which in turn produces SVA. SVA in turn amplifies q. The q generates MVA and WAI. The above findings suggest that CG instigates value creation.

Keywords: Corporate Governance Performance Index, Current Operations Value, Future Growth Value, Tobin’s q, Shareholder Value Added

JEL Classification: G30, G32, G34

Suggested Citation

Jacob, Sajit, Do Corporate Governance impact Firm Value? An Indian Perspective (November 22, 2019). Available at SSRN: https://ssrn.com/abstract=3491551 or http://dx.doi.org/10.2139/ssrn.3491551

Sajit Jacob (Contact Author)

Bharathiar University, Department of Commerce ( email )

India

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