Author(s) :

Alka Pandey, Saurabh Kumar, O.P. Gupta.

Volume/Issue :

Abstract :

Corporate governance is a combination of various practices, mechanisms, and processes with the help of which management and control of any organization can be executed. Banks are the key financial institutions in Indian financial system and play a vital role in the channelization of funds from the depositors to the borrowers. With changing scenario, and witnessing several scams, corporate governance gained popularity in this sector also. Corporate governance creates an environment of trust and transparency so that the interest of all the stakeholders can be preserved. The main objective of this study is to analyze the impact of Board Composition and CEO Duality on the financial performance of the select banks in India. The 4 selected banks are SBI, PNB; ICICI & HDFC studied over period of 11 years i.e. 2011 to 2021. It was found in this research that the Board Composition and Financial performance of select banks are insignificant to each other while the CEO Duality has a significant and positive relationship on financial performance.

No. of Downloads :

32

KEYWORDS:

Corporate Governance, Banks, Board Composition, CEO Duality

INTRODUCTION & OBJECTIVES:

The banking sector of India is dominated by public sector banks and contributing maximum percentage towards the GDP of the Indian economy, the number of total public sector banks after the merger comes down to 12 (Times, 2019). The Cadbury committee report was the first document for corporate governance all over the world, which defines corporate governance as The system by which companies are directed and controlled.” Corporate governance is the composition of rules to deal with the conflicts of ownership and management so that there is the protection of shareholders and investors by enhancing shareholder value, protecting rights, the composition of the role of the board of directors, integral control system, and disclosure norms. Basel committee in the year 1999 and clause 49 of the listing agreement are two major landmarks for the development of corporate governance, which includes comprehensive disclosure of the related information to ensure reliability and transparency. The integration of the country through liberalization and globalization into the world have opened many business opportunities. During the last three decades, the number of world financial crisis and several scams like the Satyam scam (Hindu, 2015) and Robert Maxwell scam (Partridge, 2019) have shaken the trust and faith of shareholders and investors. Thus, to strengthen the trust of stakeholders on their investments and stakes, the practice of corporate governance cannot be ignored. The relationship between the board, stakeholders, and its management is regulated by corporate governance practices of the banking sector. Corporate governance is an ethical code necessary to resolve the conflict of interest, high-risk behavior, self-serving behavior, and abuse of power. Most of the recent studies show that the des-regulation in the banking sector has brought the issues of corporate governance also. Corporate governance is of great significance for banks as it provides for effective and better management of businesses of banks and acts as a support system for banks for maintaining a high level of business ethics and enhancing its value. Every bank whether it is public or private following the norms of corporate governance to safeguard the interest of the shareholders, to safeguard the interest of all other related parties like customers, employees, etc. to bring transparency in working and to furnish clear and accurate information to all concerned parties, to bring fairness and accountability for its customers. So, by implementing corporate governance practices the banks are becoming more transparent in their functioning and this way increasing the trust of its stakeholders. Research Objectives • To ascertain the impact of Board composition on the financial performance of select banks. • To evaluate the role of CEO Duality on the financial performance of select banks. • To examine the association between corporate governance and financial performance of select banks

DOI:

10.58426/cgi.v3.i2.2021.43-59