Do board characteristics influence financial performance? Evidence from indian manufacturing sector

Corporate governance is one of the major economic developments of the twenty-first century. Although it was existed before, but it became talk of the town after the miserable failures of some giant corporates around the globe and also in India. Corporates, irrespective of nature or size, started taking this concept seriously and gave the much needed attention as it became imperative for their survival and growth. Corporate governance refers to system by which companies are directed and controlled. It is basically concerned with the decision-making aspect of the organisation with an objective of protecting the interest of all the stakeholders especially shareholders. A well-functioning corporate governance mechanism attracts not only the local investors but also foreign investors as well. The purpose of the present study is to study the effects of corporate governance characteristics on the financial performance of selected companies in Indian Manufacturing Sector. The financial performance is measured with the help of both market-based measures and accounting-based measures which are Tobin's Q and Return on Assets. The paper also used control variables like firm size, firm growth. The analysis indicated that all corporate governance measures except board size have a positive impact on the financial performance measures used in the study.