Does Corporate Governance Associate with Productivity for Sustainable Growth? Indian Experience

Abstract

This paper discusses importance of Corporate Governance on the productivity of the firm and this study in particular has chosen role of CG on Total Factor Productivity as the core of this paper. The main goal is to prove CG as the causal factor for TFP. Main attention was paid to Ordinary Least Squares based econometric modelling of TFP to identify the leading financial performance variables, that CG needs to focus. This topic was chosen because, unless productivity of firms improve the real macroeconomic growth remains a mirage. The major findings of the paper are CG needs to develop specific strategies to enhance Operating Cash flow to Sales, Debt Service Coverage and Return on Revenue to create significant impact on TFP. The above findings suggest that there exist a financial value chain that establishes logically and with correlation signs that CGPI is a critical causal factor for productivity.