Impact
of Corporate Governance Disclosure Practices on Corporate Profitability: A Case
Study of IT Sector Companies
Dr. Meenu Maheshwari
Assistant
Professor
Department of
Commerce and Management
University of
Kota, KOTA(Raj.)
Ms. Sapna Meena
Research
Scholar,
Department of
Commerce and Management
University of
Kota ,KOTA(Raj.)
Abstract
In today’s era Corporate Governance is getting
important place in the corporate world because legal authorities, government of
the country regulates the company in various ways to protect the interest of
stakeholders and to fair development of the society. Various researches assume
that the performance of the company is depends on Corporate Governance
practices of the company. This study tries to find the impact of Corporate Governance
disclosure on profitability of IT Sector Companies viz., HCL, Infosys Ltd.,
TCSL, Wipro Ltd. for the period of 2016-17. All these four IT sector Companies
included in BSE Top 100 Index. For this purpose Corporate Governance Disclosure
Practices of sampled companies measured on the of eighteen governance
parameters which are based on SEBI ( Listing Obligation and Disclosure
Regulations ) Regulations 2015 and Companies Act 2013. This study has used
Return on Capital Employed (ROCE) as a dependent variable for the measurement
of profitability of IT Sector Companies. The study has taken Wilcoxon signed
rank test and Spearman’s rank correlation test as statistical tools to determine
the impact of Corporate GovernancePerformance on Corporate Profitability during
the mentioned year. After the analysis of various data the study found that all
four IT Sector Companies have excellent Corporate Governance Disclosure
Practices but Infosys Ltd. scored highest (95 marks out of 100). All four IT
Sector Companies’ ROCE rate is more than 20% but TCSL earned highest ROCE rate
(38.93%). This result showed that the Correlation between
Profitability and Corporate Governance Performance Score forall four IT sector
companies is not significant at 5% level of significance.
Keywords: Corporate Governance, Clause 49,
SEBI (Listing Obligation and Disclosure Requirements) Regulations 2015, Companies Act 2013, Profitability, ROCE,
BSE Top 100 Index.
Introduction
In the era of
Globalization and liberalization where competition is at its peak, it has
become necessary to regularize companies for fair business operations for the interest
and development of society. Every business has aim to maximize their profit. It
is not a choice between profits and ethics, but profit must be in an ethical
manner. This mantra has lead to the evolution of Corporate Governance.
Corporate Governance is getting attention for satisfying the divergent
interests of the stakeholders of the business enterprises. Corporate Governance
also shows the level of corporate performance. It deals equitable treatment of
all stakeholders, transparency and fairness in corporate structure. Every
major government functionary, political party and industry association has
started advocating the need for better Corporate Governance practices. At world
level, many new standards are being established for Corporate Governance which
are timely updated according to requirement for more transparency. In India,
SEBI is only the apex body who controls and regulates corporate bodies for the
protection of investors in competitive stock market.According to SEBI “Corporate Governance is the acceptance by
management of the inalienable rights of shareholders as the true owners of the
corporations and of their own role as trustees on behalf of the shareholders.
It is about commitment to values about ethical business conduct and abort
making a distribution between personal and corporate funds in the management of
a company”. In present scenario SEBI has issued SEBI (Listing Obligations and Disclosure
Requirements) Regulations 2015, which is mandatory for all Indian companies.
The present study examines the Corporate Governance
Disclosure Practices in ITSector Companies which are included
in BSE Top 100 Indexbased on SEBI
(Listing Obligations and Disclosure Requirements) Regulations, 2015 and tries to find the impact of Corporate
Governance on Corporate Profitability.
Review
of Literature
The
part of this study consist review of literature related to Corporate Governance
and its impact on profitability of the firm. In this section, it has been tried
to understand that how corporate Governance affects firm’s profitability. For
this purpose various reviews included at national as well as international
level are as follows-
Gupta
and Newalkar (2015) studied on impact of Corporate Governance on profitability
of thirty companies which were listed in National Stock Exchanges. The study
used four Corporate Governance mechanisms viz. Board Size, Chief Executive
Status, Annual General Meeting and Audit Committee for the determination of
Corporate Governance level in companies. Firm’s performance has been measured
by three variables viz. Return on Equity
(ROE), Return on Asset (ROA) and Market Book Value (MB). To know the
relationship between Corporate Governance practices and firm’s performance the
study applied Pearson Correlation and Multiple Regression Analysis. The study
found that Corporate Governance mechanism has positive impact on profitability
of the firm.
Ali
(2016) conducted a study to compare the impact of Corporate Governance on
financial performance of the company between USA (developed country) and Pakistan
(developing country). The Corporate Governance has been measured by boards
ownerships ,effective size and structure .Its Independency ,CEO Duality and
Board’s Education and Experience whereas the firm’s financial performance is
measured by the Return on Assets and Return on Equity . The study revealed that
Corporate Governance codes are followed in both countries but in Developed
Countries has better Corporate Governance than Developing countries. The variables
like Board ownerships, Board education and experience, effectiveness and CEO
Duality have positive relationship with the firms’ performance but Board size
has negative correlation. The study also found that there is no relationship
between independency of director with firm’s performance.
Dzingai
and Fakoya (2017) examined the effect of Corporate Governance structures on
financial performance of mining firms which are listed in Johannesburg Stock Exchange
(JSE). Corporate Governance structure has been measured by board independence
and board size while ROE has been taken as a financial performance of the firm.
Results revealed that there is positive relationship between ROE and board
independence and weak negative relationship between board size and ROE. The
study has suggested that effective Corporate Governance through a small
effective board and monitoring by an independent board result in increased firm
financial performance.
Datta
(2018) drawn his study on impact of Corporate Governance on financial
performance in ten Insurance Companies of Bangladesh .The study measured
Corporate Governance in sampled Companies on the basis of four variables such
as Board size, Board composition ,Board meeting and Board audit Committee as Independent
Variables and performance has been measured on the basis of Return on Equity
(ROE).The study found that board size and board meeting have positive related
with ROE while there is negative relationship between board composition .The
study also revealed that there is no significant relationship between audit
committee and ROE.
Research
Methodology
1)
Objectives of the study
The main objectives of the study are
as follow:
·
To determine the Corporate Governance
Disclosure Practices ofIT Sector
Companies.
·
To construct Corporate Governance Index
on the basis of Mandatory and Non- Mandatory requirement issued by SEBI in SEBI
(Listing Obligations and Disclosure Requirements) Regulations 2015 and
Companies Act 2013.
·
To make comparative analysis of
Corporate Governance Disclosure Practices by using index score in companies.
·
To know the impact of Corporate Governance
on profitability of IT sector companies on the basis of Return on Capital
Employed.
2)
Sample size and Collection of data
The study has
been taken four IT Sector Companies viz., HCL, Infosys Ltd., TCSLtd. and Wipro
Ltd. which are included in BSE Top 100 Index for determination the impact of
Corporate Governance on Corporate Profitability during the period of 2016-17.
Only secondary data have been used. All data were collected from annual reports
of the companies which have been timely updated on company’s website.
3)
Statistical tools and Techniques
Wilcoxon signed
rank -test used for the measurement of level Corporate Governance disclosure
practices of selected companies. Also, Spearman’s Rank Correlation has been
used as a statistical tool to know the relationship between Corporate
Governance practices and profitability.
4)
Hypotheses
H10:IT Sector Companies do not show
compliance with Corporate Governance standards and disclosure practices
mentioned in SEBI (Listing Obligations and Disclosure Requirements) Regulations
2015.
H11:IT Sector Companies show compliance
with Corporate Governance standards and disclosure practices mentioned is SEBI
(Listing Obligations and Disclosure Requirements) Regulations 2015.
H20:
There
is no correlation between Profitability (ROCE) and Corporate Governance
Performance Scores of IT Sector Companies for the year 2016-17.
H21:
There is a significant correlation between Profitability (ROCE) and Corporate
Governance Performance Scores of IT Sector Companies for the year 2016-17.
Interpretation
and Analysis
This
study presents a comparative analysis of Corporate Governance Disclosure
Practices and its impact on Corporate Profitability among IT Sector Companies
included BSE Top 100 Index for the period of 2016-17. The study uses Corporate
Governance Disclosure Index model has been constructed by taking an idea of S.C.
Das model on the basis of mandatory and non- mandatory requirements under the
Companies Act 2013 and the SEBI (Listing Obligations and Disclosure Requirements)
Regulations 2015. The Index has been designed on a hundred-point scale
consisting 18 parameters with their sub parameter both mandatory and
non-mandatory. On the basis of these scores, ranks will be awarded 90 to 100
Excellent, 75 to 89 Very Good, 60-74 Good, 50 to 59 Satisfactory, 0-49 Bad. Corporate
Profitability has been measured on the basis of Return of Capital Employed
(ROCE) as a dependent variable.
1) Corporate Governance Disclosure
Practices of IT Sector Companies
Table
-1
Performance Evaluation of Corporate
Governance Standards ofIT Sector
Companies
For the
Financial Year 2016-2017
|
S.
No. |
Governance
Parameters |
Points |
Total score |
HCL |
Infosys |
TCSL |
Wipro |
|
1) |
Statement of Company’s Philosophy on
Code of Governance |
1 |
1 |
1 |
1 |
1 |
1 |
|
2) i) ii) iii) iv) v) |
Composition of the board and BOD
meetings held. Not less than 50% of the Board of
Directors comprising of non-executive directors. At least one woman director. Where Chairman is Non-Executive
Director-At least 1/3 of the board comprise Independent Director where
Chairman is Executive- At least ½ of the board comprise Independent Director. At least four BOD meetings in a year. Attendance record of BOD meetings. |
1 1 1 1 1 |
5 |
1 1 1 1 1 |
1 1 1 1 1 |
1 1 1 1 1 |
1 1 1 1 1 |
|
3) i) ii) iii) iv) v) |
Chairman
and CEO Duality Promoter Executive Chairman-
cum-MD/CEO Non-Promoter Executive
Chairman-cum-MD/CEO Promoter Non-Executive Chairman Non-Promoter Non-Executive Chairman Non-Executive Independent
Chairman |
1 2 3 4 5 |
5 |
1 - - - - |
- - - - 5 |
- - - 4 - |
1 - - - - |
|
4) |
Disclosure of tenure & age limit
of directors |
2 |
2 |
2 |
2 |
2 |
2 |
|
5) i) ii) iii) iv) v) vi) |
Disclosures regarding
to Independent Director (ID) Definition
of ID. Familiarization
program to ID & Details of such training imparted to be disclosed in the
annual report. Separate
meeting of the ID. Selection
criteria the terms and condition of appointment shall be disclosed on the
website of the company. Formal
letter of appointment of ID. Limit
of No. of Directorship for ID (If
whole time director then three or If not whole time director then seven) |
1 1 1 1 1 1 |
6 |
1 1 1 1 1 1 |
1 1 1 1 1 1 |
1 1 1 1 1 1 |
- 1 1 1 1 1 |
|
6) i) ii) |
Disclosure
of : Remuneration
policy Remuneration
of directors |
1 1 |
2 |
1 1 |
1 1 |
1 1 |
1 1 |
|
7) |
Directorship
and Committees’ Membership/Chairmanship of directors across all companies |
2 |
2 |
2 |
2 |
2 |
2 |
|
8) i) ii) |
Code
of Conduct Information
on Code of Conduct Affirmation
of compliance |
1 1 |
2 |
1 1 |
1 1 |
1 1 |
1 1 |
|
9) |
Post
board meeting follow up system and compliances of the Board procedure. |
2 |
2 |
2 |
- |
- |
2 |
|
10) A) i) ii) iii) iv) v) vi) vii) |
Board
Committees : AUDIT
COMMITTEE : Transparency in composition of the
committee.(Qualified and Independent) Compliance of minimum requirement of
No. of Independent Directors in the committee. (Minimum three director and
2/3of the member should be ID) Compliance of minimum requirement of
the number of committee meetings. (At
least four times). Information about literacy &
financial expertise of the committee. Information about participation of
Head of Finance, Statutory Auditors, Chief Internal Auditors, and other
invitees in the committee meetings. Disclosure of audit committee charter
& terms of reference. Disclosure of Committee report |
1 1 1 1 1 2 1 |
8 |
1 1 1 1 1 2 1 |
1 1 1 1 1 2 1 |
1 1 1 1 1 2 1 |
1 1 1 1 1 2 1 |
|
B) i) ii) iii) vi) v) vi) |
NOMINATION AND
REMUNERATION COMMITTEE : Formation of the committee Information about number of committee
meetings. Compliance of minimum requirement of
No. of Non-Executive Directors in the committee. (At least 3 members) Compliance of the provisions of
independent director as chairman of the committee Information about participation of
meetings. Disclosure of Committee report. |
1 1 1 1 1 1 |
6 |
1 1 1 1 1 1 |
1 1 1 1 1 1 |
1 1 1 1 1 1 |
1 1 1 1 1 1 |
|
C) i) ii) iii) iv) v) |
SHAREHOLDERS’/STAKEHOLDERS’
RELATIONSHIP COMMITTEE : Transparency in composition of the
committee Information about nature of complaint
& queries received and disposed-item wise. Information about number of committee
meetings Information about action taken and
investors/shareholder survey Disclosure of Committee report |
1 1 1 1 1 |
5 |
1 1 1 1 1 |
1 1 1 1 1 |
1 1 1 1 1 |
1 1 1 1 1 |
|
D) i) ii) |
Risk
Management Committee Formation of committee Disclosure of committee charter report |
1 1 |
2 |
1 1 |
1 1 |
1 1 |
1 1 |
|
E) i) ii) iii) iv) |
Additional
committee Health and Safety & Environment
Committee CSR and Sustainable Development
Committee Investment Committee Other Committee |
1 1 1 1 |
4 |
- 1 1 1 |
- 1 1 1 |
1 1 - 1 |
- 1 - 1 |
|
11) i) ii) iii) iv) v) vi) vii) viii) ix) x) xi) xii) |
Disclosure
and Transparency : Significant related party transaction
having potential conflict with the interest of the company Non-compliance related to capital
market matters during the last 3 years. Board disclosure-Risk Management Information to the board on Risk
Management Publishing of Risk Management Report Management Discuss And Analysis Information to Shareholders- ·
Appointment
of new director/re-appointment ·
Quarterly
results & presentation ·
Share-Transfers ·
Directors’
responsibility statement Shareholder right Audit Qualification Training of board members Evaluation of non-executive directors Resignation of Director with reason |
2 2 2 2 1 2 1 1 1 1 2 2 2 2 1 |
24 |
2 2 2 2 1 2 1 1 1 1 2 2 2 2 1 |
2 2 2 2 1 2 1 1 1 1 2 2 2 2 1 |
2 2 2 2 1 2 1 1 1 1 2 2 2 2 1 |
2 2 2 2 1 2 1 1 1 1 2 2 2 2 1 |
|
12) i) ii) iii) |
General
Body Meetings : Location and time of General Meetings
held in last 3 years Details of Special Resolution passed
in the last 3 AGM Details of resolution passed last year
through Postal Ballot including the name of conducting official and voting procedure |
1 1 1 |
3 |
1 1 1 |
1 1 1 |
1 1 1 |
1 1 1 |
|
13) |
Means
of Communication and General Shareholder Information |
2 |
2 |
2 |
2 |
2 |
2 |
|
14) |
Whistle-Blower
Policy & Vigil Mechanism |
2 |
2 |
2 |
2 |
2 |
2 |
|
15) |
CEO/CFO
certification |
2 |
2 |
2 |
2 |
2 |
2 |
|
16) i) |
Compliance
of Corporate Governance and Auditors’ Certificate : Clean certificate from auditors |
5 |
5 |
5 |
5 |
5 |
5 |
|
17) |
Code
for prevention of insider trading practices |
5 |
5 |
5 |
5 |
5 |
5 |
|
18) i) ii) iii) iv) v) |
Disclosure
of stakeholders’ interest : Environment, Health & Safety
measures (EHS) Human Resource Development initiative
(HRD) Corporate Social Responsibility (CSR) Industrial Relation (IR) Disclosures of policies on EHS, HRD,
CSR, & IR |
1 1 1 1 1 |
5 |
- - 1 - - |
- 1 1 1 - |
1 1 1 - - |
- - 1 - 1 |
|
|
TOTAL |
100 |
100 |
91 |
95 |
94 |
90 |
Table
2
Measurement
ofGrading
of Corporate Governance Performanceof
IT Sector Companies
For the year 2016-17
|
Name
of the Company |
Scores |
Rank |
|
HCL |
91 |
Excellent |
|
Infosys
Ltd |
95 |
Excellent |
|
TCSL
|
94 |
Excellent |
|
Wipro
Ltd |
90 |
Excellent |
Observations:
Ø All companies of IT sector have their own philosophy
on code of governance during the financial year 2016-17.
Ø It has been found that IT sector companies have
separate post of Chairman and MD/CEO and have proper balance of Executive
Director, Non-Executive Director and Independent Director as per requirement of
SEBI’s Regulation 2015.
Ø According to SEBI’s Regulations Company’s BOD should
be meet for minimum four times with maximum gap of 120 days. It has been
observed that the directors of the companies met more than 4 times in a year with
the maximum gap 120 days in IT sector sampled companies.
Ø All companies gave details of the training program
and familiarization program for ID and also disclose tenure and age limit of
Board members in their annual report according to SEBI’s Regulations.
Ø All IT sector companies comply mandatory
requirements regarding statuary committees, insider trading, related party
transactions, remuneration policy towards the Director’s remuneration.
Ø Companies inform their shareholders regarding the
appointment of new director, quarterly result of the company and director’s
responsibility statement and give detail about AGM and details of special
resolution passed in the AGM.
Ø All companieshave an auditor’s certificate of
compliance with Corporate Governance Practices.
Ø From table 2 it has been observed that all four IT
sector companies have Excellent Corporate Governance Disclosure Practices but
Infosys Ltd. score highest in 2016-17 and Wipro Ltd. score lowest.
2) Comparison of IT Sectors Companies
with SEBI (LODR) Regulations, 2015 for the year 2016-17
For
the eighteen parameters with their sub -parts of SEBI (LODR) Regulations, 2015 scores
have been obtained for all the four IT Sector Companies (HCL, Infosys Ltd.,
TCSL and Wipro Ltd.)on the basis of their fulfillment of requirements.The
following hypothesis has been formulated to test whether these four companies
show compliance with SEBI (LODR) Regulations, 2015 practices during the study
period.
H10:
IT Sector Companies (HCL, Infosys Ltd., TCSL, Wipro Ltd.) do not comply with SEBI’s
(LODR) Regulations,2015 in year 2016-17
H11:
IT Sector Companies (HCL, Infosys Ltd., TCSL, Wipro Ltd.) comply with SEBI’s
(LODR) Regulations, 2015 practices in year 2016-17.
Using
IBM SPSS22, Wilcoxon signed rank test has been applied to test whether all of
these fourIT Sector Companies show compliance with SEBI’s (LODR) Regulations,
2015.
Table -3
Wilcoxon
signed rank-test results of IT Sector Companies
|
Pair |
SEBI (LODR)
Regulations 2015 practices of Listing Agreement v/s Score of Company |
2016-17 |
|
|
Z |
p-value |
||
|
1 |
HCL |
-0.431 |
0.666 |
|
2 |
Infosys
Ltd. |
-1.249 |
0.212 |
|
3 |
TCSL |
-1.027 |
0.305 |
|
4 |
Wipro Ltd. |
-0.072 |
0.943 |
From
the above table, it is concluded that p-value for all the IT Sector Companies
is greater than 0.05. This implies that at 5% level of significance, all the
fourIT Sector Companies shows compliance with SEBI (LODR) Regulations, 2015
practices in the year 2016-17.
3) Inter – Company Comparison of IT
Sector Companies in the Performance of the Companies for the year 2016-17
The
inter-company comparison for performance ofall the fourIT Sector Companies (HCL
Infosys ltd, TCSL, Wipro ltd) has been performed on the basis of the eighteen
parameters and their sub parts. The following hypothesis has been formulated:
H20:
There is no significant difference found in the performance ofall the four IT
Sector Companies (HCL Infosys ltd, TCSL, Wipro ltd)when intercompany comparison
is drawn in year 2016-17
H21:
Atleast performance of one of the company is significantly different from
others for the year 2016-17
Using
IBM SPSS22, Kruskal Wallis test has been applied to test whether these fourcompanies
showsany difference in the performance when inter-company comparison is drawn
for the year 2016-17.
Table 4
Mean ranksof IT Sector Companies for year 2016-17
|
Company |
2016-17 |
|
|
N |
Mean Rank |
|
|
HCL |
18 |
37.33 |
|
Infosys |
18 |
37.39 |
|
TCSL |
18 |
35.61 |
|
Wipro |
18 |
35.67 |
|
Total |
72 |
- |
Table 5
Result of Kruskal Wallis test of inter-company
comparison of IT Sector Companies
For the year 2016-17
|
|
2014-15 |
|
Chi-Square |
0.338 |
|
Degree
of freedom |
3 |
|
p-value |
0.953 |
From
above tables, it is clear that mean rank of Infosys Ltd. is maximum for the
year 2014-15. Also p-value is 0.585, which is greater than 0.05. This implies
that null hypothesis is accepted at 5% level of significance. There is no
significant difference found in the performance of all the four IT Sector
Companies (HCL Infosys ltd, TCSL, Wipro ltd) when inter –company comparison is
drawn in year 2016-17.
4) Profitability of IT Sector
Companies
Table- 6
ROCE of IT
Sector Companies
For the Year
2016-17
(inCrore)
|
S.No. |
Particular |
HCL |
Infosys Ltd. |
TCSL |
Wipro Ltd. |
|
|
|
|
|
|
|
|
|
|
A) |
Capital Employed |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets |
45769.44 |
83355.00 |
103252.00 |
789820.00 |
|
|
|
Less - |
Current liabilities |
-11341.65 |
-14013.00 |
-14512.00 |
-229485.00 |
|
|
|
|
|
|
|
|
|
|
|
Capital Employed |
34427.79 |
69342.00 |
88740.00 |
560335.00 |
|
|
|
|
|
|
||
|
B) |
EBIT |
|
|
|
|
|
|
|
|
|
|
|
||
|
|
Profit Before Tax |
10542.75 |
19951.00 |
34513.00 |
110393.00 |
|
|
|
Add - |
Interest |
89.09 |
NIL |
32.00 |
5183.00 |
|
|
|
|
|
|
||
|
|
|
EBIT |
10631.84 |
19951.00 |
34545.00 |
115576.00 |
|
|
|
|
|
|
||
|
C) |
ROCE |
|
|
|
|
|
|
|
EBIT X
100 |
10631.84 X100 |
19951 X100 |
34545 X100 |
115576 X100 |
|
|
|
Capital Employed |
34427.79 |
69342 |
88740.00 |
560335.00 |
|
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
ROCE(in %) |
30.88% |
28.77% |
38.93% |
20.63% |
Observations:-
Ø From the above table it has observed that IT sector
companies have satisfactory financial performance. All companies earned more
than 20% ROCE but TCSL has highest rate of ROCE.
Ø It has been observed that Wipro Ltd. has highest
Capital Employed and EBIT but the ROCE rate is lowest among the selected
companies.
Ø Infosys Ltd. do not have any interest burden while
remaining companies have interest burden.
5) Comparison of Profitability (ROCE)
and Corporate GovernancePerformance of IT Sector Companies
Table
-7
Profitability
(ROCE) and Corporate Governance Performance Scores of IT Sector Companies
For
the year 2016-17
|
Company name |
2016-17 |
|
|
ROCE |
CG
Scores |
|
|
HCL
Ltd |
30.88% |
91 |
|
Infosys
Ltd. |
28.77% |
95 |
|
TCSL
Ltd. |
38.93% |
94 |
|
WIPRO
Ltd. |
20.63% |
90 |
Observations:-
Ø From the above table it has been found that Infosys
has highest Corporate Governance Score but in ROCE rate it has on third
position in all companies while TCSL got the highest ROCE rate but it has on
second position in Corporate Governance Score.
Ø HCL is on third position in Corporate Governance
Score while ROCE rate is on second position.
Ø Wipro Ltd. has lowest Corporate Governance Score as
well as ROCE rate.
6)
Correlation
betweenProfitability (ROCE)and
Corporate Governance Performance Scores of the IT Sector Companies
Thecorrelation coefficient
for the year 2016-17 has been
calculated and testedbetween Profitability (ROCE)and Corporate Governance
Performance Scoresof IT Sector Companiesviz., HCL,Infosys Ltd., TCSL and
Wipro Ltd. The following hypothesis has been formulated to test the
significance of correlation between the Profitability and Corporate Governance
Performance Scores.
H30:
There is no correlation between Profitability and Corporate Governance
Performance Scores of IT Sector Companies for year 2016-17.
H31:
There is significant correlation between Profitability and Corporate Governance
Performance Scores of IT Sector Companies for year 2016-17.
Using
IBM SPSS22, Spearman’s Rank Correlation Coefficients have been calculated and
tested at 5% level of significance for the year 2016-17.
Table -8
Spearman’s Rank Correlation between Profitability
(ROCE) and Corporate Governance Performance Scores of IT Sector Companies
For the year 2016-17
|
Year |
N |
Correlation Coefficient |
p-value |
|
|
2016-17 |
4 |
0.400 |
0.600 |
From
the above table,it is clear that the correlationis not significant between Profitability
(ROCE) and Corporate Governance Performance Scores for the year 2016-17 at 5%
level of significance in IT Sector Companies.
Conclusion
After
all analysis and interpretation it has been found thatthere is no significant correlation between Corporate Governance
Disclosure Practices and Corporate Profitability. Using IBM SPSS22
Wilcoxon signed rank test and Spearman’s rank correlation test had been applied
to test compliance IT sector companies with SEBI (LODR) Regulations 2015 and
its impact on profitability of company. Table 2 showed that all four companies
have excellent Corporate Governance Performance Scores but Infosys scored
highest. From table 3 the study found that all four IT sector companies show
compliance with SEBI (LODR) Regulations, 2015. Table 4 and 5 reveals that there
is no significant difference in the performance of IT sector companies. While
table 8 shows that there is no significant correlation between Corporate
Governance Performance Scores and Profitability of the Companies.
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