Impact of Corporate Governance on Foreign Institutional Investment

Capital is required for the growth and also for the development of every sector of the economy at large. There are two sources of arranging capital that is internal sources and external source. In the year 1991 India has faced Balance of Payment crisis which force India to open the economy for liberalisation, Privatisation and Globalization. This allows a foreign capital to invest in selected sector. There are various factors which can affect the foreign capital investments like Strong Regulatory System, emerging market, transparent economy etc and this gives scope to Foreign Institutional Investors (FII) to invest capital. Corporate Governance is also considers as one of the factor which can have impact on inflow of capital in equity and debt. Hence there arises a need to find out to what extent FII are related with Corporate Governance of a company. The present study tries to find out the relation of Corporate Governance with FII and also tries to find out the other extraneous variables impact on FII. For the study purpose the secondary data will be collected from respective company's annual reports of the year 2015–16. CNX Nifty 50 companies are selected for the study. To find out the impact various statistical tool were applied like Correlation Coefficient, Regression model, f-test and z-test.