Evaluating the Impact of Corporate Governance Determinants on Risk and Profitability of Indian Firms.

The study examines the impact of Corporate Governance (CG) determinants on a firm's default risk and profitability for mid, small and large-cap Indian companies. In this paper, the authors examine the Indian firms' probability of default and their profitability depending on CG determinants by studying data on two dependent and 15 independent variables for 125 companies indexed in Nifty's (Indian stock exchange). We used panel data, panel regression model, and Altman test as statistical tools for analysis. The results show that defaulting companies have a higher concentration of ownership, lower voting interest, poorer financial transparency, and less efficient board composition. The findings also suggest the significance of considering the comprehensive use of CG information in corporate credit decisions, ultimately affecting the profitability determining Return on Assets (ROA) and Return on Net Worth (RONW) of the firm. Large-cap, mid-cap, and small-cap companies should include information on CG in their default prediction models for better performance, in addition to the financial information. This paper extends the present literature within the Indian context, particularly by examining Firm Performance (FP) and financial distress risk to the extent of CG mechanisms adopted. [ABSTRACT FROM AUTHOR]