Board Characteristics Impact on the Firm Performance in the Indian Context




Board Characteristics, Board Size, Firm Performance, Tobin’s Q, Shares Pledged, Ownership Concentration, India


The research aims to determine the impact of the board characteristics on the firm performance for 348 firms of the National Stock Exchange (NSE) 500 Index listed on the National Stock Exchange of India for the period 2012-2018 using (OLS) Ordinary Least Square (FEM) Fixed Effect Model and more robust (GMM) Generalized Method of Moments regression techniques. GMM regression technique also controls for the endogeneity as well as heteroscedasticity and heterogeneity in panel data. Further, the moderating effects of market capitalization are also observed considering the impact of board characteristics on the firm performance using the interaction effects technique. Lastly, the ideal board size was determined based on the classification of market capitalization including small, mid and large market cap. Board characteristics including board size and percentage of shares held by the promoters have a positive significant impact on the firm performance while the percentage of shares pledged by the promoters has a negative significant impact on the firm performance. The results show that market capitalization moderates the relationship between board characteristics and firm performance. Findings also suggest an ideal board size of 8 for mid-cap firms and a range of 7-18 for large-cap firms which show a similar result to the Kotak Committee Report (2017) recommendations with the ideal board size being a minimum of 6 directors on the board. The results cannot be generalized as only the manufacturing and services (excluding financial) industries are taken into account, but the results can be applied to the abovesaid industry sectors.



Naim, Hamza; Aziz, Tariq (2022). "Board Characteristics impact on the Firm Performance in the Indian Context" Journal of World Economy: Transformations & Transitions (JOWETT) 2(05):19. DOI:


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Author Biographies

Hamza NAIM, Faculty of Management Studies and Research, Aligarh Muslim University, Aligarh, India.

Hamza Naim, is a research scholar in the area of finance under the supervision of Dr. Tariq Aziz. He has a NET (National Eligibility Test) qualification and his research interest include corporate finance and corporate governance.

Tariq AZIZ, Faculty of Management Studies and Research, Aligarh Muslim University, Aligarh, India.

Tariq Aziz, has a Ph.D. in Finance, an MBA, and a Bachelor degree in Commerce from Aligarh Muslim University. He was a recipient of Junior (JRF) and Senior Research Fellowship (SRF) of UGC. He got the Best Paper Award at the 7th Doctoral Colloquium-2013 at IIM-Ahmedabad and the "Special Mention Paper Award" at PAN-IIM World Management Conference (WMC) 2019. His research interests lie in asset pricing and behavioural finance and has various publications.


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