Does Sustainability Assurance enhance the connection between Corporate Governance and Firm Performance in India?
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Author(s)Deepa C. BhatLink to ORCID Index: https://orcid.org/0009-0000-8192-2151
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Sandeep S. ShenoyLink to ORCID Index: https://orcid.org/0000-0002-9848-9718
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Dasharathraj K. ShettyLink to ORCID Index: https://orcid.org/0000-0002-5021-4029
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Abhilash AbhilashLink to ORCID Index: https://orcid.org/0000-0003-1546-9453
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DOIhttp://dx.doi.org/10.21511/imfi.21(3).2024.18
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Article InfoVolume 21 2024, Issue #3, pp. 211-221
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Creative Commons Attribution 4.0 International License
Scholarly attention to the association between corporate governance and firm performance, considering sustainability assurance as a moderator is scarce. This study aims to examine the moderating role of sustainability assurance in the nexus between corporate governance and firm performance in India. The data relating to 35 environmentally sensitive companies among the top 100 National Stock Exchange (NSE) listed entities were gathered from the ProwessIQ Database and annual reports of companies during 2016–2022. The fixed effect regression model was employed. The results show an insignificant effect of board effectiveness on firm performance as measured by return on assets (ROA), return on equity (ROE), and Tobin’s Q. Similar findings were documented on the audit committee effectiveness and firm performance nexus, except for Tobin’s Q (β = 0.316). In addition, the study did not support the moderating role of sustainability assurance on the board effectiveness and firm performance nexus, indicating the presence of ineffective corporate governance mechanisms. However, the results show that sustainability assurance significantly and negatively moderates the relationship between audit committee effectiveness and ROA (β = –0.021), ROE (β = –0.074), and Tobin’s Q (β = –0.996). This implies that the practice of external assurance of sustainability reports by firms with audit committee effectiveness is an additional burden due to the extra cost involved. Further, the result indicates the learning curve effect among Indian companies. Thus, the findings suggest the need for regulatory focus on encouraging sustainable business practices in terms of effective corporate governance and sustainability assurance.
Acknowledgment
The authors are grateful to Manipal Academy of Higher Education (MAHE), Manipal, for providing financial assistance in the form of a “JRF Contingency Grant” for this research article.
- Keywords
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JEL Classification (Paper profile tab)G34, Q56, G32, M14
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References43
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Tables6
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Figures0
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- Table 1. Distribution of samples included in the analysis
- Table 2. Variable description
- Table 3. Descriptive statistics
- Table 4. Correlation matrix
- Table 5. Regression results of the impact of corporate governance on firm performance (Direct relationship)
- Table 6. Regression results of the moderating effect of sustainability assurance on the relationship between corporate governance and firm performance
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Rahul Kumar ,
Prince Bhatia ,
Deeksha Gupta
doi: http://dx.doi.org/10.21511/imfi.18(3).2021.28
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The role of accounting in sustainable development
Inna Makarenko 
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Alex Plastun
doi: http://dx.doi.org/10.21511/afc.01(2).2017.01
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Does board composition have an impact on CSR reporting?
Patrick Velte
doi: http://dx.doi.org/10.21511/ppm.15(2).2017.02
Problems and Perspectives in Management Volume 15, 2017 Issue #2 pp. 19-35 Views: 4337 Downloads: 1675 TO CITE АНОТАЦІЯCorporate social responsibility (CSR) reporting plays a key role in management control, particularly in light of the increased demand for non-financial reporting after the financial crisis of 2008–2009. This literature review evaluates 47 empirical studies that concentrate on the influence of several board composition variables on the quantity and quality of CSR reporting. The author briefly introduces the research framework that underpins current empirical studies in this field. This is followed by a discussion of the main variables of board composition: (1) committees (audit and CSR committees), (2) board independence, (3) board expertise, (4) CEO duality, (5) board diversity (gender and foreign diversity), (6) board activity, and (7) board size. The author, then, summarizes the key findings, discusses the limitations of the existing research and offers useful recommendations for researchers, firm practice and regulators.
