Topic: BusinessAccounting

Last updated: April 22, 2019

4.1 Introduction
The purpose of this chapter is to describe the research methodology of this study. Since the aim of the study was to test the comparison of corporate governance practices in Indian Public & private sector companies and abroad companies. This chapter describes the method of data collection, the variable factors used and to test the hypothesis and data analysis methods employed to report the results.

The chapter is structured as follows. Section 4.2 discusses the research methodologies employed to introduce different research methods available and justify the research method adopted in this study. Section 4.3 discusses the sample selection and Section 4.4 explains the data collection methodology and types of data collected. Section 4.5 presents the design of variables for measurement, conceptualization and operationalization of the hypotheses. Section4.6 discusses the statistical methods used to analyze the data and finally Section 4.7 presents the conclusion of the chapter.

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Research Methodologies
In economic and social research the research method must be compatible with the theoretical paradigm. The term paradigm refers to the set of assumptions about the proper techniques for any specific inquiry. It refers to selection of what is to be studied, how the research is conducted, what should be studied, what data are collected and how it should be interpreted. The two main research paradigms used in social research are referred to as phenomenological or positivist.

In the phenomenological paradigm, researchers are seen as a part of the research process rather than being independent. It relies on people being studied to provide their own explanation of their situation or behaviour. The phenomenological approach is referred to as hermeneutic, qualitative, phenomenological, interpretive, reflective, inductive ethnographic or action research (A. J. Veal 2005).

The positivist paradigm takes the view that researchers are seen as independent of the research they are conducting. They view reality as objective and measureable; human beings are assumed to be rational; and research emphasizes facts and predictions and looks to explain cause and effects. The normal process for the positivist approach is to study the literature to establish a relevant theory and develop the hypotheses or propositions, which can be tested for association or causality by deducing logical consequences that are tested against empirical evidence. The positivist paradigm is also referred to as scientific, empiricist, quantitative or deductive.

The reasoning guiding a research design can be deductive or inductive. If the research process begins with examining of literature, developing the theoretical and conceptual structure, which is tested by empirical observation it is a deductive study, whereas in an inductive process, theory is developed from empirical observations (Collis & Hussey 2003).

The research method used to analyze data also depends on the paradigm adopted by the researcher. Although qualitative methods are associated with inductive reasoning and a phenomenological paradigm, and quantitative methods are usually applied to problems requiring a positivist and inductive approach, both qualitative and quantitative research methods are used by researchers.

Qualitative methods investigate how individuals think and react, and is directed towards deep understanding of their experiences, motivations and values. However, this method is often criticized as being too subjective, biased and lacking rigor.

Quantitative methodology espouses the collection of objective data, rigorous measurement and the use of statistical methods of analysis. It has the advantage of being able to generalize the results to large populations but is criticized for failing to explain ‘why’ the factors observed may have happened. This type of research fails to provide an in-depth understanding of the phenomenon under study.

The quantitative approach involves gathering and analyzing numerical data, where as the qualitative approach involves examining and reflecting on perceptions in order to gain understanding of social and human activities.

Data for research derives from two main sources. Original data, which is referred to as primary data, is collected at the source. For example, survey data, questionnaires, observations and experimental data. Data which already exists is referred to as secondary data, such as annual reports, books, published statistics and internal records kept by companies (A. J. Veal 2005). Evidence required to test the hypotheses in this study is based on annual reports and published statistics. Therefore data derived for this study is from secondary sources.

This study is based on a phenomenological paradigm used inductive reasoning and qualitative techniques. This study adopted a phenomenological approach, because phenomenological approach researchers are seen as a part of the research process rather than being independent. It relies on people being studied to provide their own explanation of their situation or behaviour. The reasoning is inductive because the theory is developed from empirical observations. The selection of the sample, the sources of data, the procedure in collecting and coding the data, and the qualification of variables and method of data analysis are described below.

4.3 Sample Selection
The objective of the study was to conduct a comparative study of the corporate governance practices of Indian Public & Private sector companies and abroad companies.

For the present study a sample of 50 Indian 50 foreign companies has been taken making a total of hundred companies which have a very good credibility and image in their respective industries and countries. Sample will be drawn using simple random sampling technique. Care is taken that sleeted companies represent all the major industries in the national and international level.
The sample was selected from India and abroad. 25 companies selected from the Indian public sector & 25 companies from Private sector and 50 companies from abroad. The aim was to study and compare the corporate governance practices in the companies. The 100 companies presented annual reports, which included a governance report. Furthermore these companies were performing well and were assumed to engage in good governance practices.
The study examined the data from the years 2001 to 2016. The reason for selection of the years was that the corporate governance became prominent in the late 1900s and early 2000s.

Table 4.1 Sampling Plan
Sl.NoIndustry Countries No. of companies
01 Steel Luxembourg 1
02 Consumer Electronics, Industrial & Farm Equipments, Electronics, Imaging, Electronics, Conglomerates, computer systems, Digital Imaging Japan 8
03 Telecommunications & Networking Equipments France 1
04 Automotive, Banking, Pharmaceuticals, Airlines, Conglomerates Germany 6
05 Chemicals, Financial Services, Pharmaceuticals & healthcare, Computer systems, retailing, telecommunications, Heavy equipments, food & beverages, electric utility, oil & gas, cosmetics, construction materials, restaurants, computer software & hardware, Aerospace & defense, airlines, digital imaging, Automotives, Couriers, semiconductors, pulp & papers, consumer goods USA 30
06 Management Consulting, Technology services, outsourcing Ireland 1
07 Pharmaceuticals, Food Processing Switzerland 2
08 Commercial Vehicles Sweden 1
09 Oil & Gas, Metals, Chemicals & Fertilizers, Engineer Production, PSU, Construction, Automobile, Steel, Telecommunication Services, Transport sector, Mining, Petroleum, Shipping, Electrical Generation, Finance, Coal & Lignite, Engineering & Manufacturing, Heavy Equipments Aerospace & defense India – Public sector 25
10 Automotive, pharmaceuticals, FMCG, IT services & Consulting, Banking Financial Services, Media & Entertainment, Conglomerates, Computer Services, Textiles, Engineering & Aviation, Electrical, Watches, Cement, Paints. India – Private sector 25
Total 100
4.4 Data Collection
The following section discusses the method of data collection and types of data that were collected to conduct the study. The study assessed the comparative differences of corporate governance practices in Indian public & private sector and abroad companies. Being it is an extensive study, data will be collected from the secondary (web) sources using internet and from the published sources. Since the present study is qualitative nature, data has been collected from the respective websites of the companies.
4.4.1 Data Collection Methodology
Data on corporate governance and corporate reporting practices were collected from secondary sources. The present study aims to examine the governance practices prevailing in the corporate sector (Private & Public) within the Indian regulatory framework and abroad. The study is conducted to assess governance practices and processes followed by Indian corporate houses and abroad companies. The study also aims to assess the substance and quality of reporting of Corporate Governance practices in annual reports.

4.4.2 Types of Data collection
Corporate governance and reporting information were collected from annual reports. This study is about corporate governance practices of 50 companies in India (25 Public companies & 25 Private Companies) and 50 abroad companies. Annual reports of 2014-15 and 2015-16 have been used for this study.
The data analysis is done with the help of certain selected parameters and corporate governance score has been allotted. This study highlights the corporate governance practices and processes followed by the Indian Corporate houses and abroad companies. This study focuses on assessing the quality of reporting of various corporate governance practices in annual reports. The parameters cover the statutory requirements as stipulated by the Clause 49 of the listing agreement prescribed by the Securities and Exchange Board of India (SEBI).

4.5 Design of the Variables: Operationalisation and Measurement of Variables
Described below are the variables used to operationalised the constructs discussed here. They include the General corporate governance variables (confidentiality, code of conduct, board of directors, audit committee etc.) Objective variables (Review of Literature on Corporate Governance, Differences between Indian & Abroad Companies Corporate Governance Practices, Existence Of Corporate Governance Code etc)
In addition to the General variables and objective variables the hypothesis variables that are also used in the study they are (Poor corporate governance practices finds it difficult to globalize and enter foreign markets to enter, Good governance is essential to prevent financial crisis and to build image and credibility and Differences in the quality of governance between Indian abroad companies)
Table 4.2
Variables Used to Study the Corporate Governance Practices in
Indian (Public & Private) and Abroad Companies
S. No A. General Analysis Variables used in the study
1 Confidentiality
2 Code Of Conduct
3 Board Of Directors
4 Audit Committee
5 Remuneration Committee
6 Grievance Committee
7 Share Transfer System
8 Compliance Officer
9 Disclosure Document
10 Transparency
11 Website for the company
12 Whistle Blower policy
13 Ethics Committee
14 Meetings & Attendance
15 HRM Committee
16 Health, Safety &Environment Committee
17 Code Of Insider Trading
18 Secretarial Audit
19 Subsidiary Companies Committee
20 Shareholders Committee
21 Fairness
B. Analysis Variables used based on objectives of the study
22 Whether Corporate Governance practices are hosted in the companies websites
23 Differences between Indian & Abroad Companies Corporate Governance Practices
24 Existence Of Corporate Governance Code
25 Study of Independent Directors
26 Examination of Accounting Standards & Quality Of Financial Reporting System
27 Evaluation of General Accountability & Transparency Of Board And Management Functions
28 Study of Corporate Governance Mechanism
29 Examination Honest Corporate Culture & Internal Ethical Environment
30 Study of Belief Of The Companies On Corporate Governance
31 Evaluation of whether corporate governance Resolve Conflicts Between Owners And Managers
C. Analysis Variables used based on Testing the Hypotheses of the study
32 Poor corporate governance practices finds it difficult to globalize and enter foreign markets to enter
33 Good governance is essential to prevent financial crisis and to build image and credibility
34 Differences in the quality of governance between Indian abroad companies
Qualitative Data Analysis
Qualitative data analysis is non-statistical; its methodological approach is primarily guided by the concrete material at hand. In quantitative research, the sole approach to data is statistical and takes places in the form of tabulations. Findings are usually descriptive in nature although conclusive only within the numerical framework.

Qualitative analysis involves a continual interplay between theory and analysis. In analyzing qualitative data, we seek to discover patterns such as changes over time or possible causal links between variables.

Analysis of the data was carried out from the years 2001 and 2016. At this stage, companies with information were included in the study and the final sample was finalized to 100 companies from India 50 (25- public & 25 – private) remaining 50 are from abroad. To test the the hypotheses stated in the conceptual framework, the qualitative analysis was employed. The analysis included the relationship between the theory and changes observed over the period of time.

The corporate governance code was introduced in India in 2000 from there onwards companies are following and reporting their corporate governance practices. As a result many companies had produced governance reports in the research period. The 100 companies were selected 50 from India and 50 from abroad; they presented annual reports, which included a governance report.
4.7 Conclusion
The current chapter discussed the methodology to be used to test the hypotheses suggested in this study. It included the selection of the sample, data collection, and the, design of the variables, their measurement and, operationalization. Furthermore, the methodology employed to collect the data, and qualitative analysis used to analyses the data to test the corporate governance variables in India & Abroad was also discussed. The results from the qualitative analysis employed will be discussed in the next chapter.


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