Corporate Governance Practices and Firm Performance in Emerging Markets: Empirical Insights from India and Gulf Countries

Abstract

The purpose of this article is to analyse the impact of corporate governance practices on the performance of listed firms from countries like India and the Gulf countries. This research study relies on secondary data collected from annual reports of 100 companies covering 8 years, from 2010 to 2017, using manual content analysis. Fifty non-financial listed companies from each emerging market were selected; the selection is based on the market capitalization. Findings from countries’ dummy indicate that Indian companies perform better in corporate governance practices than Gulf countries. Moreover, corporate governance practices negatively impact Indian and Gulf countries’ firms’ performance measured by return on assets (ROA), except for governance effectiveness (GE) that has a positive impact. In contrast, corporate governance measured by board structure (BS) is negatively affected by the performance of Indian and Gulf countries’ listed companies measured by Tobin’s Q (TQ), whereas transparency and disclosure (TD), leverage (LEV) and GE have a positive impact. The results have implications for managers and policyholders to understand the corporate governance practices and their relationships with performance. Based on the best knowledge of the authors, this is one of the first studies that addresses the comparison between India and Gulf Cooperation Council (GCC) countries.