Moderating Role of Ownership Concentration and Director Shareholding on the Relationship Between Audit Committee and Firm Performance: Evidence from Nifty Pharma Companies

Authors:

Soniya. G, Dr. P.G. Thirumagal

Soniya. G, II MBA, Department of Management Studies, School of Management Studies,

Vels Institute of Science, Technology and Advanced Studies (VISTAS), Pallavaram, Chennai.

Dr. P.G. Thirumagal, Department of Management Studies, School of Management Studies,

Vels Institute of Science, Technology and Advanced Studies (VISTAS), Pallavaram, Chennai.

Abstract — The contribution of the audit committee in promoting financial transparency and accountability cannot be overemphasized. In this research paper, the effects of ownership concentration (OC) and director shareholding (DSH) in moderating the association between audit committee features and the company's performances in the pharmaceutical industry using NIFTY Pharma Index will be examined. The sample consists of a balanced panel dataset consisting of 20 pharmaceutical firms from the period of 2021-2025 (n=100). Some of the techniques that would be utilized for this analysis are OLS regression, Augmented Dickey-Fuller (ADF) unit root test, variance inflation factor (VIF), and CUSUM stability test. Financial performances of the organizations would be measured through Return on Asset (ROA), Return on Equity (ROE) and Tobin's Q. From the results that have been found, it can be noted that leverage affects firm performance negatively. Firm performance has an inverse association with firm size but a positive correlation with firm age. Although OC and DSH both have positive associations with firm performance, only OC marginally has statistical significance to Tobin's Q (p<0.10)..

Key Words: Audit Committee; Ownership Concentration; Directors' Ownership; Firm Performance; Corporate Governance; NIFTY Pharma; Tobin’s Q Ratio; Leverage; Return on Assets