Determinants of Corporate Board Independence: Empirical Evidence from India

Abstract

The spate of scandals and the financial crisis in the recent past has resuscitated the interest of academicians and regulators in the subject of corporate governance. Since corporates employ several governance (agency-conflict controlling) mechanisms at one point of time and board independence is one of them, the central accent in this research is upon the investigation of determinants of corporate board independence in Indian institutional context. By counting on several model specifications, modulations, proxies and operationalizations, regression estimates discloses that inside ownership, leverage, dividend payout policy, institutional ownership and firm growth have a significant bearing on the level of board independence. The denouements of firm size and board affiliation level have also been recognized while analyzing the determinants of board independence. Overall, the outcomes of the empirical analysis have invigorated the applicability of agency theory standpoints in Indian context. Moreover, these findings have profound implications for corporate governance research and have also been able to abate the diversity in empirical evidences of performance consequences of board independence.