Independence of Independent Directors-A Working Paper

Independence of Independent Directors-A Working Paper

Dr Ramkesh Gupta
Assistant Professor,
CUIM-CHRIST (Deemed to be University)


The role of independent directors has always been advocated in promoting corporate governance. But scams like Satyam Computers have again raised the need of the powers of independent directors. Regulators are forced to relook into the strength of their powers that would protect the interests of shareholders. Independent director is a position meant to exercise unbiased judgment on issues related to company’s and minority shareholders interests. It means that independent director is duty-bound to watch the interests of the company as a whole. But are these independent directors truly independent in real terms?

In this study, the researcher looks into the different facets of the independent director and its relevance to the corporate functioning. The researcher tries to look into the independence and issues pertaining to independent directors through cases of Satyam Computers and Nagarjuna Finance.  Companies are bound to comply with the minimum regulatory requirements to be complied for the constitution of the boards. Literature has shown relationship between independent directors and profitability of such companies. The researcher therefore, tries to look into this aspect using the Indian data. Though no such relationship is found to be statistically significant in this study, there is need to investigate the relationship of independent directors with financial and other performances in greater details. Cross-country studies would provide more insights into such studies.

Year of Publication: 2012
ISBN: 0978-93-82305-05-07
Working paper: Vol 2(2012-13)
Pages: 23
Price: Out of Print