A Governance and Ethics Perspective on Firm Performance: Evidence from NIFTY 500 Companies

Abstract

This study examines the relationship between board characteristics, audit characteristics, ethical policies, and firm performance using panel data from Indian listed companies. The initial dataset comprises firms included in the NIFTY 500 index, of which 385 companies were retained in the final sample after excluding firms with incomplete data. The study covers ten years period from 2014–15 to 2023–24, resulting in a comprehensive panel dataset. Financial, governance, and ethical policy data were sourced from the CMIE Prowess database. Firm performance is measured using both accounting-based indicators—Return on Assets (ROA) and Return on Equity (ROE)—and a market-based measure, Tobin’s Q. The findings suggest that effective board governance mechanisms are more critical for enhancing firm performance than symbolic compliance with ethical policies. The study contributes to the corporate governance literature by providing robust India-specific evidence and underscores the importance of employing fixed effects estimation in governance–performance research.