An Empirical Study on the Corporate Governance and Timelinessof Financial Reporting by Indian Public Sector Companies

Abstract

When the global economic crisis affected many countries around continents, Indian economy posed a strong resilience to its effect. This is due to the reason that most of the big banks operating in India are public sector band and have strong regulatory setup and are backed by guidelines of RBI. Also the recovery happened in India in a stable and faster manner backed by the whole Indian economy. The Indian economy is projected to grow at 8.6% in 2010-11 though inflation remains a main concern. And the indicators are positive regarding the foreign reserves and foreign direct investments. Bu, it has to make some progress in transparency and governance issues. As Corporate governance became the subject of attention in recent times, its presence is like a backbone for any corporate that emphasizes its role for survival and sustainable growth in the long run. It ensures transparency. Transparency includes the following eight concepts, namely accuracy, consistency, appropriateness, completeness, clarity, timeliness, convenience. and governance & enforcement. Out of these, Timeliness of financial reporting is one of the attributes of good corporate governance identified by the OECD and World Bank. Shareholders and other stakeholders need information while it is fresh and with high relevance. This paper examines the timeliness of financial reporting by 58 Indian public sector companies which constitute the Public Sector Undertaking Index (PSU Index) of Bombay Stock Exchange and compares their reporting patterns for the financial years 2006-2010. Timeliness was measured by counting the number of days that lapsed between year-end and the date of the auditor's report of the concerned companies. The reliable data were drawn from the Prowess (a Centre for Monitoring Indian Economy [CMIE]database) and the Annual reports of the respective companies for the years 2006-2010. This study used Chi-square test and Anova to analyze the data. There is a significant difference among the Indian public sector companies in their reporting patterns.