Impact of Corporate Governance Practices on Stock Prices of Selected Indian Listed Companies Motwani Shilpa S., Research Scholar, Dr. Pandya Hemal B., Associate Professor S.D. School of Commerce, Gujarat University, Ahmedabad, India Online published on 4 October, 2013. Abstract The concept of corporate governance has been incepted with the prime objective of meaningful disclosure of information to the shareholders. Since then, corporate governance has steered the Indian companies. This study shows that the concept of Corporate Governance is in its nascent stage and there is further scope for its development and improvement. This paper aims to study the impact of corporate governance practices on firm's performance as measured by Stock prices in Indian context for selected leading sectors over the period of five years. For evaluating the impact of Corporate Governance Practices on stock prices by different companies of different sectors, variables studied are- Return on Capital Employed (ROCE), Earning per Share (EPS), Debt-Equity Ratio (D/E), Price - Earnings Ratio (P/E), Return on Net Assets (RONW), Price to Book Value (P/B), Net Fixed Assets (NFA), Profit After Tax (PAT), Sales, Profit before depreciation Interest and tax (PBDIT), Depreciation, Inventory, Beta and CG Score calculated using a Corporate Governance Assessment Model. Purposive sampling method was adopted to choose 25 sample firms from those listed in BSE and NSE. The data was analyzed using t-test. Multiple regression analysis was conducted to identify the factors that affect stock prices. The study exclusively studies the impact of Corporate Governance Score on the share price of the companies. This study concludes that corporate governance has still a long way to go, to influence the firm's value; and that the importance of CG is diminishing in the eyes of investors as they prefer sales and profit over other variables to affect the share prices and not corporate governance. Top Keywords Corporate Governance Assessment Model, Stock Prices, SENSEX, NSE, BSE. Top |