Does Corporate Performance Of Listed Companies In India Improve With Independent Directors On Board?

As the separation between ownership and control in public listed companies steers the managershareholder agency problem and therefore, independent directors on board have become an essential element of good corporate governance and laws of different countries have also mandated the same. However, the question arises "Does the existence of independent directors on the board lead to improved corporate performance as well?" The present study aims to investigate the impact of independent directors on the financial performance of select companies listed on the S&P BSE-100 Index during the period 2016-17 to 2022-23. The study employs regression analysis on longitudinal data using panel least squares, fixed effects model, and random effects model. The results of the study confirm that the higher the percentage of independent directors on the board, the higher the corporate performance measured with return on assets. The results provide insight to owners of the business to decide the board structure of their companies wisely to protect their interest to get desired financial results.