An Empirical Study on Corporate Governance and Its Influence on Financial Stability in Indian Companies

Authors

Dr Ram Dhan Saini

Abstract

This research paper examines the relationship between corporate governance and financial stability in Indian companies, focusing on how effective governance practices contribute to reducing financial risk and enhancing sustainable growth. Utilizing a sample of Indian companies, the study analyses various governance mechanisms, such as board independence, audit committee effectiveness, ownership concentration, and transparency, to assess their impact on key financial stability indicators, including Return on Assets (ROA), Return on Equity (ROE), debt-to-equity ratio, and earnings volatility. The findings indicate that companies with stronger governance frameworks exhibit more stable financial performance and lower risk levels, demonstrating the importance of independent boards, robust audit committees, diversified ownership, and transparent disclosure practices. The study also highlights the implications for policymakers, corporate executives, and investors, suggesting that strengthening corporate governance regulations and practices can significantly contribute to financial stability and long-term economic growth in India. The paper concludes with recommendations for future research to explore additional aspects of governance and their potential impact on corporate stability, further enriching the understanding of governance dynamics in emerging markets.

Keywords

Corporate governance, financial stability, Indian companies, board independence, audit committees, ownership concentration, transparency, risk management, financial performance, emerging markets.

An Empirical Study on Corporate Governance and Its Influence on Financial Stability in Indian Companies. Dr Ram Dhan Saini. 2015. IJIRCT, Volume 1, Issue 2. Pages 1-13. https://www.ijirct.org/viewPaper.php?paperId=2409004