Impact of corporate governance disclosure practices on the performance of selected banking companies in India

Abstract

This study examines how corporate governance disclosure, measured via a Corporate Governance Disclosure Index (CGDI) based on SEBI’s Clause 49 requirements, affects the financial performance of Indian banks from 2022 to 2025. Using panel data for 30 listed banks (both public sector and private sector), we model return on assets (ROA) and return on equity (ROE) as functions of CGDI and control variables (size, capital adequacy, etc.). We employ fixed-effects and random-effects regressions, and address potential endogeneity of CGDI through two-stage least squares (2SLS) estimation. Our findings indicate a significant positive relationship between disclosure practices and performance: banks with higher CGDI tend to exhibit better ROA and ROE, even after controlling for bank-specific factors. Comparisons reveal that private banks generally have higher disclosure scores than public banks, and that the performance effect of disclosure is robust across ownership types. These results support agency and stakeholder theories, suggesting that greater transparency reduces information asymmetry and builds trust (enhancing performance)[1]. We discuss implications for regulators and bank boards, recommending stricter enforcement of Clause 49 (LODR) standards and improved disclosure practices. This paper contributes updated evidence on governance– performance links in Indian banking, and highlights the role of disclosure in improving bank efficiency and investor confidence.