Impact of Companies Act 2013 on the levels of corporate governance in Pharmaceutical Sector

The paper is perhaps the first effort to measure the levels of corporate governance during the pre-Companies Act 2013 and post-Companies Act 2013 phases and to understand if the Act has resulted in an improvement in the levels of corporate governance or not. Two separate indices have been formed, one is primarily based on the SEBI clause 49 as prevailing immediately before the introduction of the Companies Act and the other on the basis of the SEBI (LODR) 2015. The indices have also taken into account the Voluntary guidelines on corporate governance 2009. Four categories of variables have been identified namely –Mandatory variables (based on SEBI-LODR), Non Mandatory variables (based on SEBI-LODR), Voluntary variables (based on Voluntary Corporate governance guidelines 2009) and Industry specific variables (based on literature). The study has taken a sample of 30 pharmaceutical companies. The sample is sub divided into Large Cap companies (12), Mid Cap (6) and Small Cap (12). The corporate governance score is tested on two-way factorial ANOVA. The results prove that a significant variation in the levels can be observed during the two periods of study.