Fuzzy bundling of corporate governance practices and performance of Indian firms

Abstract

PurposeThis paper aims to develop a framework that aids in achieving the desired state of financial performance for corporate enterprises based on distinct configurations of corporate governance (CG) practices.Design/methodology/approachThis study uses a fuzzy-based system to arrive at a definitive configuration of CG practices that lead to a specific level of firm’s performance.FindingsThis analysis of the panel data of 92 National Stock Exchange–listed companies conducted for RONW on selected CG variables shows that eight fuzzy configurations lead to a particular state of RONW. The authors compare the results with the conventional regression-based scoring models.Originality/valueCorporate enterprises can use the derived bundles of CG practices leading to a specific set of financial performance (RONW) to aid the decision-making process in defining and implementing their governance structures. The regulators can modify or customize the law-mandated CG practices to reduce redundancies and promote the national agenda of economic efficiency.