Does corporate governance performance affect the firm’s operational liquidity? A study of S&P, BSE 500 firms

Ajaz Ul Islam ()
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Ajaz Ul Islam: National Institute of Technology (NIT) Srinagar J&K

Journal of Management & Governance, 2025, vol. 29, issue 3, No 3, 669-697

Abstract: Abstract Amidst the evolving landscape of corporate governance, understanding its profound impact on firms’ operational liquidity is paramount for navigating the complexities of modern financial markets. The study meticulously examined the relationship between corporate governance performance and operational liquidity within a sample of S&P BSE 500 companies spanning from the financial year 2011-12 to 2021-22. The examination revealed a significant relationship between operational liquidity and overall corporate governance performance. Moreover, a closer analysis of the sub-indices pertaining to corporate governance confirmed these results, revealing a substantial correlation between these indicators. The results indicate that enhanced corporate governance practices can facilitate the firm’s liquidity position to be more streamlined, thereby reducing the risk of expropriating shareholders’ wealth and preventing the accumulation and misuse of liquid assets. These study’s findings have a significant impact on a wide range of stakeholders, including policymakers, managers, and investors.

Keywords: Corporate governance; Liquidity; Board; Auditors; Shareholders (search for similar items in EconPapers)
JEL-codes: G29 G30 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s10997-024-09712-0

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