Impact of Corporate Governance on the Stock Prices of the Nifty 50 Broad Index Listed Companies

Journal Article

• Publication Work Type: Empirical research
• Magazine \ Newspaper: Journal
• Issue Number: 41
• Volume Number: July 2010
• Pages: 7-18

Publication Abstract

Lots of researches are being taken in the developed countries taking into
consideration the share price and the corporate governance factors. The purpose of this
research here is to study whether the share price of the NIFTY index listed companies is
affected by corporate governance factors or not. For this research, the annual reports and
the actual share price of fifty companies as samples from NIFTY 50 Index from India, is
taken. The data is collected for financial year 2007-08 relating to variables that are – share
price, ROCE, EPS, D/E, P/E, Corporate Governance Score (that includes financial
reporting, risk management, future strategy, recent changes, corporate social responsibility,
awards and recognitions etc.). The scores are calculated in light of Narayan Murthy
Committee report on corporate governance. For the analysis of data, cross-sectional
regression analysis demonstrated significant relationship between share price (dependent
variable) and independent variables (EPS, Sales, Net Fixed Assets and corporate
Governance factors). This type of research is first of its kind in India, especially when I
took an Indian code of corporate governance standard as the underlying report for
constructing the model.