DOES MONETARY POLICY MATTER FOR CORPORATE GOVERNANCE? FIRM-LEVEL EVIDENCE FROM INDIA

Abstract

The paper assembles data on over 1,000 manufacturing and services firms in India for the entire post-reform period from 1992 through 2002 to examine the association between corporate governance and monetary policy. The findings suggests that: (a) public firms are relatively more responsive to a monetary contraction vis-à-vis their private counterparts; and (b) quoted firms lower their long-term bank borrowings in favour of short-term borrowings, post monetary tightening, as compared with unquoted firms. A disaggregated analysis based on firm size and leverage above a certain threshold validates these findings. The study concludes by analyzing the broad policy implications of these findings.

Citation

Ghosh, S. and Sensarma, R. (2004), "DOES MONETARY POLICY MATTER FOR CORPORATE GOVERNANCE? FIRM-LEVEL EVIDENCE FROM INDIA", Hirschey, M., and, K.J. and Makhija, A.K. (Ed.) Corporate Governance (Advances in Financial Economics, Vol. 9), Emerald Group Publishing Limited, Leeds, pp. 327-353. https://doi.org/10.1016/S1569-3732(04)09013-9