Firm Performances and the Onset of Shocks in India

Elangovan Avinash ()
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Elangovan Avinash: Collegium of World Economy (KGŚ), SGH Warsaw School of Economics

A chapter in Advances in Longitudinal Data Methods in Applied Economic Research, 2021, pp 445-458 from Springer

Abstract: Abstract A firm’s exhibition of its highest corporate governance (CG) standards determines its identity among the rest of the players within an economy. Albeit maintaining such standards, there are also external macroeconomic factors effecting firm performances that are beyond the control of the board and its stakeholders. This paper highlights the behavior of firms under such instances of macro shocks, in this chapter being, demonetization episode in India and the corporate tax cut reforms, that influence CG performances. A pooled estimation regression technique of top 30 listed firms in India is used to show the above relation with the period considered being, from FY2013-14 to FY2019-20. Regulatory frameworks on CG in India provide institutional stability for stakeholders and investors, which is evident with the increase in the number of listed firms in the stock market and rise in firms raising capital through the sale of shares (equity capital). With such frameworks on one hand, the influence of macro shocks and the instability that it causes on firm CG performances is depicted using a model. It can be seen that negative macroeconomic shocks lower debt-funded firm performance in India and there is a need for positive stimulus to increase firm performance and back to its equilibrium trajectory.

Keywords: Corporate governance; Macroeconomic shocks; Corporate debt; Policy; F34; M21; M48 (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:spr:prbchp:978-3-030-63970-9_31

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DOI: 10.1007/978-3-030-63970-9_31

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