Economic Consequences of 'Regulation on Corporate Governance': Evidence from India

21 Pages Posted: 2 Feb 2005 Last revised: 11 May 2008

See all articles by Asish K. Bhattacharyya

Asish K. Bhattacharyya

Nonlinear Insights ; Shiv Nadar University; Shiv Nadar University

Ajitava Raychaudhuri

Jadavpur University

Sadhalaxmi Vivek Rao

Indian Institute of Management Calcutta


Regulations dealing with investor protection are essential for economic development of any country. India, with more than 20 million shareholders, is one of the largest emerging markets in terms of market capitalization. In order to protect the large investor base, the Securities and Exchange Board of India (SEBI) has enforced a regulation requiring mandatory disclosure of information and change in the corporate governance mechanisms of Indian listed companies. The aim of this study is to empirically examine the economic impact of this Regulation on Indian stock market. The results provide evidence of significant reduction in beta of the experimental group, where beta is used as surrogate for cost of equity capital. The result is consistent with the notion that increased information and better corporate governance mechanism reduces the cost of equity capital of these companies.

Keywords: Corporate governance, financial disclosure regulation, event study, beta, cost of equity capital, SEBI

JEL Classification: M41, G34, G38

Suggested Citation

Bhattacharyya, Asish K. and Raychaudhuri, Ajitava and Vivek Rao, Sadhalaxmi, Economic Consequences of 'Regulation on Corporate Governance': Evidence from India. Available at SSRN: or

Asish K. Bhattacharyya (Contact Author)

Nonlinear Insights ( email )

Flat 708, Tower 6, Narmada
D 6 Vasant Kunj
New Delhi, 110070
91 8527300499 (Phone)


Shiv Nadar University ( email )

Shiv Nadar University ( email )

Ajitava Raychaudhuri

Jadavpur University ( email )

188, Raja S.C. Mallick Rd, Kolkata 700032
Calcutta, West Bengal 700032
913324146328 (Phone)

Sadhalaxmi Vivek Rao

Indian Institute of Management Calcutta ( email )

19 Bear Paw,
Apt # 18c
Irvine, CA Orange County 92604
United States
949 872 2196 (Phone)


Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
PlumX Metrics