Assessing Corporate Governance Excellence: A Comparative Analysis of Primary Sector Companies

This study conducts a comprehensive evaluation of corporate governance practices across primary sector companies, focusing on five key public entities: ONGC, OIL, NMDC, NLC


I. Introduction
Corporate governance, a critical component of organizational management, refers to the structures, processes, and practices through which companies are directed and controlled (Jensen & Meckling, 1976;Cadbury (2002).Effective corporate governance ensures accountability, fairness, and transparency in a company's relationship with its stakeholders, including shareholders, employees, customers, and the community (Shleifer & Vishny, 1997;Spanos, 2005;Al-Haddad, 2011).The significance of robust governance mechanisms is particularly pronounced in the primary sector, which encompasses industries such as mining, oil, and gas, where companies face unique risks and environmental challenges (Aguilera & Cuervo-Cazurra, 2004).Over the years, the evolution of corporate governance practices has been subject to rigorous scrutiny, reflecting their pivotal role in enhancing corporate performance and ensuring stakeholder confidence (Mallin, 2016).Studies have shown that companies with strong governance frameworks tend to exhibit superior financial performance and resilience against market fluctuations (Bhagat & Bolton, 2008).This is especially relevant for primary sector companies, where governance practices are critical in managing environmental and operational risks (Claessens & Yafeh, 2012).The current research aims to evaluate the corporate governance practices of primary sector companies, focusing on their effectiveness and impact on firm performance.By applying a comprehensive methodological approach, including descriptive statistics and non-parametric tests, this study seeks to provide insights into governance trends and their implications for organizational excellence (Ahmed & excellence, particularly in sectors with high-risk profiles like the primary sector.This study builds on existing research by applying a comprehensive methodological framework to evaluate corporate governance practices, aiming to contribute valuable insights into governance trends and their impact on firm performance.

III. Research Methodology 3.1 Scope of the Study
The scope of this study encompasses a comprehensive analysis of corporate governance practices within primary sector companies over a decade.By evaluating corporate governance scores from a diverse set of companies, the research aims to identify trends, best practices, and areas for improvement in governance excellence.This study focuses on the period from 2011-12 to 2020-21, allowing for a robust examination of how governance practices have evolved in response to regulatory changes, market dynamics, and internal company policies.The findings are intended to contribute to the academic discourse on corporate governance by offering a comparative analysis that highlights the distinctive governance strategies within the primary sector, providing valuable insights for policymakers, scholars, and industry practitioners.This research adopts a multi-faceted methodological approach to evaluate corporate governance practices within primary sector companies.The study is structured around a comprehensive assessment model that considers seventeen critical points of governance (Das 2013), ensuring a holistic evaluation.

Objective of the Study
The primary objective of this research design is to evaluate the corporate governance scores of the primary sector companies and compare them to identify best practices and areas for improvement.The study aims to contribute to the literature by providing a detailed analysis of corporate governance excellence within the primary sector.

Sample Selection
The study focuses on five prominent primary sector companies: ONGC, OIL, NMDC, NLC, and CIL, selected based on their Net Worth as on 31 March 2021.These are the largest primary sector companies in the Indian economy which are under the control of the central government of India.The corporate governance scores for these companies were collected for a ten-year period i.e. 2011-12 to 2020-21.The study used secondary data collected from annual reports and corporate disclosures of these companies.The list of selected primary sector companies has been displayed in table 1.

H3:
There is no significant difference in Corporate Governance score of Primary Sector Companies.

Statistical Tools
The study applied descriptive statistical tools, including arithmetic mean, standard deviation, skewness, kurtosis, and coefficient of variation to analyze the data.The assumptions of normality and homogeneity of variance were tested using the Kolmogorov-Smirnov and Shapiro-Wilk tests, as well as Levene's test, respectively.The study applied pairwise comparison to further explore the differences, with adjusted pvalues calculated to identify significant differences between specific company pairs.All data analyses were performed using SPSS, and the results were presented in tabular and graphical formats to facilitate a clear understanding of the trends and differences in corporate governance practices among the companies.

Trend Lines Depicting Corporate Governance Scores of Primary Sector Companies:
The corporate governance scores of five primary sector companies over the last decade reveal distinct trends.ONGC shows a slight decline from 86 in 2013-14 to 80 in 2020-21, indicating potential governance challenges.OIL exhibits steady improvement, peaking at 84 from 2017-18 onward, reflecting consistent governance enhancement.NMDC maintains stability, with scores fluctuating marginally around 83, signalling sustained governance practices.NLC demonstrates significant progress from 75 in 2011-12 to 81 in 2020-21, suggesting strengthened governance.CIL shows an upward trend peaking at 85 in 2018-19, followed by a drop to 79 in 2020-21, indicating possible recent governance issues.These trends reflect varying degrees of governance practices and improvements across the companies.82 respectively.The value of Skewness was found negative for all the companies indicating variation to the higher side of mean.The value of Kurtosis was positive for OIL and NMDC which depicts that the distribution of Corporate Governance score is Leptokurtic i.e., score is around the mean, whereas it is negative for ONGC, NLC and CIL, which states that it is platykurtic i.e., away from the average.Coefficient of variance is least for NMDC (1.49 percent) indicating most consistent compliance of Corporate Governance norms followed by ONGC (2.88 percent), NLC (3.62 percent), OIL (4.14 percent) and CIL (5.92 percent) respectively.

Pair-wise Comparison
The pair-wise comparison of Corporate Governance scores of Primary Sector Companies has been conducted by employing Non-Parametric tests i.e., Kruskal Wallis test as the assumptions of normality and homogeneity was not satisfied.Table 4, present the results of the normality test.The analysis indicates that the null hypothesis of normality is rejected in case of all companies at 5 percent and 10 percent level of significance by Shapiro-Wilk test whereas in Kolmogorov-Smirnov test hypothesis is rejected for ONGC, OIL and NMDC.Therefore, it can be concluded that Primary Sector Companies do not satisfy the assumption of normality.

Test of Homogeneity of Variance
To examine the assumption of homogeneity of variance in the data, Levene's test has been applied.Table 5, reports the result of the homogeneity of variance.Levene's test is used to check the homogeneity of variance.The null is rejected at 5 percent and 10 percent level of significance which shows that variances in the Corporate Governance scores are not equal across all the companies.Thus, the assumption of homogeneity is also not satisfied.

K-W Test
The study rejected both the assumptions of normality and homogeneity of variance.Therefore, nonparametric test Kruskal Wallis test was applied to check the mean difference of Corporate Governance Scores in primary sector companies.The results of the test have been presented in Table 6.The Chi-Square value is 15.208 (df = 4) with p-value 0.004 which rejects the null hypothesis (H3) at 5 percent level of significance, implying that there is a significant difference among Corporate Governance scores of primary sector companies.8 reports the results of pair-wise comparison of Corporate Governance score of primary sector companies.It is evident from the analysis of adjusted p-value that there is a significant difference in Corporate Governance score of primary sector companies with respect to NLC and ONGC (P-Value=0.001).While in case of other pairs of companies, there is no significant difference in Corporate Governance indices.

V. Conclusion
The comparative analysis of corporate governance practices among primary sector companies reveals significant variations in their governance scores over the last decade.ONGC consistently exhibited strong governance, though with a slight decline towards the end of the study period, while OIL showed steady improvement, particularly after 2017-18.NMDC maintained stable governance practices with minimal fluctuation, whereas NLC demonstrated notable progress, indicating a strengthening of its governance framework.CIL, despite an initial upward trend, faced governance challenges in recent years, as reflected in its declining scores.The study highlights the importance of robust governance practices and the need for continuous improvement to address emerging challenges.The significant differences observed, especially between ONGC and NLC, underscore the need for tailored governance strategies that reflect the unique contexts of each company.Overall, this research contributes valuable insights into the corporate governance dynamics within the primary sector.This study underscores the critical need for enhanced corporate governance frameworks within primary sector companies, particularly emphasizing the importance of consistent governance practices to sustain corporate excellence.Policymakers should consider refining regulatory guidelines to address governance disparities across companies, fostering a more uniform and robust governance landscape.Future research could extend this analysis to secondary and tertiary sectors, exploring the impact of governance practices on overall corporate performance across various industries.

Figure- 1
Figure-1 Pair-wise Comparison of Corporate Governance Indices

Hypothesis for the study H1
: The Corporate Governance score is normally distributed across all Primary Sector Companies.H2: The variances in the Corporate Governance score are equal across all Primary Sector Companies.

Table 2 : Trend Lines of Corporate Governance Score of Primary Sector Companies
Descriptive statistical analysis has been presented in the Table3.The analysis states that ONGC has the highest mean score, 83.70 points, with standard deviation 2.41 followed by NMDC (82.20),OIL (81.20), CG Score CIL (80.40) and NLC (77.80) with standard deviation of 1.23, 3.36, 4.76 and 2.

Table 7
highlights the mean ranks of Corporate Governance indices of primary sector companies.It is evident from the table that ONGC has the highest mean rank i.e. 36.70 followed by NMDC with mean rank 28.20; OIL with mean rank 25.55; CIL with mean rank 25.20 and NLC with mean rank 11.85.Table