Abstract

Corporate governance provides the guidelines to the companies how can be directed and controlled. The objective of this study is to examine the relationship between corporate governance mechanisms and profitability for the IT companies listed Indian stock Exchange. The focus was on some corporate governance mechanisms such as board size (BS), audit committee meeting (ACM), and audit committee independence (ACI). The dependent variables are return on assets (ROA), return on equity (ROE). While the control variable is firm size. The analysis results revealed a significant relationship between corporate governance variables board size, audit committee meeting, audit committee independence and firm size of the company and profitability measured by return on assets. However, the findings revealed that audit committee meeting and board size had insignificant relationship with profitability measuring by return on equity while audit committee independence and firm size significantly impacted. This study contributes to the literature by providing an analysis of the impact of corporate governance on profitability in Indian IT firms.

Keywords: Corporate Governance, Financial Performance, IT Firms, India.

JEL Classification: G3, G34.

Cite as: T. Prusty, Waleed M. Al-ahdal. (2018). Corporate Governance and profitability: Evidence from Indian IT companies. Financial Markets, Institutions and Risks, 2(3), 68-75. DOI: 10.21272/fmir.2(3).68-75.2018.

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