Impact of SEBI (LODR) Regulations, 2015 on transparency and shareholder protection in Indian listed companies: An analytical study

The effectiveness of securities regulation in emerging markets is often judged by its ability to reduce information asymmetry, enhance corporate accountability, and protect minority shareholders; in India, the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (LODR 2015) were introduced precisely to consolidate and strengthen the listing and disclosure regime so as to meet these ends. LODR 2015 converted much of the erstwhile listing agreement regime into a unified regulatory framework that tightened periodic financial reporting, mandated prompt disclosure of material events, refined related-party transaction processes, and strengthened board-level governance obligations—actions intended to increase transparency and give practical effect to shareholder protection mechanisms that statutory and common-law instruments had only partially secured. Despite these formal reforms, recent scholarly work indicates that the translation of regulatory design into improved market outcomes has been uneven: systematic reviews of corporate governance research in India document persistent problems of concentrated ownership, promoter dominance and variable enforcement capacity that condition the impact of regulatory change (Almaqtari et al., 2020) [2]. Empirical studies focused on disclosure outcomes report measurable gains in specific reporting domains (for example, risk disclosure and integrated reporting metrics), but they also show heterogeneity across firms and sectors, with larger and better-resourced companies typically exhibiting higher disclosure quality than smaller or promoter-controlled firms (Gupta & Symss, 2023; Devarapalli & Mohapatra, 2024) [7, 10]. Other recent empirical work linking disclosure quality and firm performance in financial institutions suggests that while governance indices and disclosure measures are associated with market and accounting outcomes, the relationship is complex and mediated by firm characteristics and institutional enforcement (Pandey & Singh, 2023) [15]. Against this mixed empirical backdrop, the present analytical study interrogates the impact of SEBI (LODR) Regulations, 2015 on transparency and shareholder protection in Indian listed companies by combining doctrinal analysis of the regulatory text and amendments with selective empirical assessment of disclosure outcomes and enforcement practice; the study therefore aims to clarify where LODR has meaningfully narrowed informational asymmetries and strengthened minority safeguards, and where regulatory design, firm incentives, or enforcement constraints continue to blunt its effect. Recent empirical research has concentrated on how transactions and disclosure choices that raise agency concerns affect auditors' behaviour, market valuation and the wider governance environment in India and comparable markets. One strand of this literature examines the audit-market response to related-party transactions (RPTs): using a large sample of Indian firms, Kushwaha, Anand, Jayadev and Raghunandan (2024) document that the presence and certain types of RPTs are associated with higher audit fees, consistent with auditors pricing the additional verification effort and risk that RPTs introduce. Their findings imply that RPTs remain an important channel of audit risk and that disclosure and audit mechanisms interact in complex ways to influence the cost and quality of external monitoring (Kushwaha et al., 2024). Complementing the audit-market perspective, empirical work on firm value in India shows mixed effects of RPTs depending on governance context: Abdul Rasheed, Thonse Hawaldar and Mallikarjunappa (2023) [1] find that while some RPTs can be value-enhancing (through efficiency gains within business groups), weak internal governance worsens expropriation risks and can turn RPTs into value-destroying transactions. Their analysis underscores the conditional nature of RPT effects—governance structures (board characteristics, monitoring mechanisms) materially moderate whether RPTs foster efficiency or facilitate private benefit extraction (Abdul Rasheed et al., 2023) [1]. A second strand focuses on board and monitoring institutions as determinants of disclosure quality and shareholder protection. Recent critical assessments of board monitoring in India reveal that formal compliance (presence of independent directors or committees) does not always translate into effective oversight: Arora (2024) [3] argues that the independence of directors in many Indian firms is often "independence in form" rather than "independence in function," with appointment processes, ownership patterns and weak selection/disclosure practices undermining real monitoring. This literature suggests that regulatory prescriptions (such as those embedded in LODR) need to be evaluated not only in terms of formal adoption but also in terms of enforcement and functional effectiveness of governance actors (Arora, 2024) [3]. A further body of work links RPTs and earnings management, and considers broader non-financial governance mechanisms as moderators. Gavana, Gottardo and Moisello (2022) [8] show (in an EU context) that ESG-related governance performance moderates the association between RPTs and both accrual-based and real earnings management: stronger governance/ESG performance reduces opportunistic earnings manipulation via RPTs. Although their context is different, the broader implication is clear for India—regulatory disclosure rules must be paired with mechanisms that improve governance quality and accountability if transparency objectives are to be realized in practice (Gavana et al., 2022) [8]. Taken together these studies show that related-party transactions and disclosure choices materially affect audit risk, firm valuation and earnings quality, and that the protective power of regulatory measures depends largely on the strength and functioning of governance institutions; moreover, disclosure rules, audit responses and governance structures operate as complementary mechanisms rather than in isolation. What remains under-explored in the post-2015 Indian context is an integrated assessment of whether the SEBI (LODR) Regulations, 2015 have substantively improved transparency and minority shareholder protection across these interacting channels—types of RPTs, disclosure quality, auditor pricing, board functioning and enforcement outcomes. Existing empirical work typically examines a single channel or draws on non-Indian evidence, and few studies evaluate the LODR regime's causal effect while accounting for moderating governance attributes. This gap motivates the present study, which combines disclosure analysis, event and firm-level outcomes, and governance measures to offer a more holistic appraisal of LODR-era changes and the conditions under which regulatory intent translates into tangible transparency and shareholder safeguards. Despite the comprehensive reforms introduced by SEBI through the LODR 2015 framework, persistent challenges—such as uneven compliance across firm sizes, promoter dominance, gaps in enforcement and adjudication, and variable functioning of board-level governance—continue to undermine consistent improvements in transparency and minority shareholder protection. This study aims to critically assess the practical impact of LODR 2015 on disclosure quality and shareholder safeguards, to identify the structural and enforcement-related obstacles that limit regulatory effectiveness, and to propose targeted legal and policy recommendations to strengthen transparency and meaningful shareholder protection in Indian listed companies.

The paper reviews multiple strands of prior research relevant to transparency and shareholder protection under LODR. Studies on related-party transactions (RPTs) show their complex effects: Kushwaha et al. (2024/2025) document that greater RPT intensity is associated with higher audit fees, indicating auditors price additional verification risk; Abdul Rasheed et al. (2023) find that RPTs can be value-enhancing within business groups but become value-destroying under weak governance, highlighting the moderating role of board monitoring. Research on board effectiveness (Arora, 2024) argues that independent directors’ autonomy is often formal rather than functional in Indian firms, limiting oversight despite regulatory mandates. Work linking governance and disclosures shows heterogeneity in disclosure quality and its association with firm performance (Pandey & Singh, 2023; Gupta & Symss, 2023; Devarapalli & Mohapatra, 2024), with larger firms generally exhibiting better disclosure practices. Additional evidence from non-Indian contexts (Gavana et al., 2022) suggests that stronger ESG-related governance mitigates earnings management linked to RPTs, implying that disclosure rules must be complemented by robust governance mechanisms. The review also notes broader treatments of India’s corporate governance evolution (Bhardwaj et al., 2020) and enforcement capacity concerns (Damle & Zaveri, 2022). Overall, the literature suggests that LODR’s focus on disclosure, RPT oversight, and board structures is directionally apt, but outcomes depend critically on enforcement strength, ownership patterns, and the functional effectiveness of governance institutions.

The study adopts a combined doctrinal and analytical approach. The doctrinal component entails systematic legal analysis of the SEBI (LODR) Regulations, 2015, all relevant amendments and SEBI circulars, mapped against SEBI enforcement orders and judicial decisions (NCLT/NCLAT and higher courts) to understand interpretation and enforcement practice, and to synthesize issues relevant to transparency and shareholder protection (materiality thresholds, RPT approval processes, duties of independent directors, e-voting rules). The analytical component operationalizes key outcomes—disclosure quality, incidence and nature of RPTs, audit outcomes, and shareholder-protection indicators—and tests for changes post-LODR and after significant amendments. Data sources: primary legal texts (LODR and amendments), SEBI circulars and adjudication/penalty orders; company annual reports and BSE/NSE/SEBI filings (financial statements, notes, RPT disclosures, auditor’s reports), BRSR/ESG disclosures where applicable; financial data from CMIE Prowess, Bloomberg, or Capitaline; enforcement and case material from SEBI orders and NCLT/NCLAT/Supreme Court judgments. Sample and periodization: a balanced panel of 150–300 continuously listed firms with complete reports over 2012–2023, stratified by market capitalization (large, mid, small) and promoter ownership concentration (high vs low). Periods: pre-LODR (2012–2014), immediate post-LODR (2016–2018), and later post-amendments (2019–2023). Operational definitions and variables: Disclosure Quality (DQ) measured via an index based on LODR-required items (timeliness of material event disclosures, completeness of RPT notes, board composition, audit committee reporting, risk disclosures, BRSR where available), coded 0/1 or 0–2 and normalized (0–100) with a shared codebook. RPT metrics include frequency, aggregate value as % of sales or assets, and type (sales/purchases, loans/advances, guarantees). Audit outcomes include audit fees (logged), auditor changes, and audit qualifications/modified opinions. Shareholder-protection proxies include e-voting turnout, frequency of opposed resolutions, incidence of minority litigation or SEBI complaints (where available), and presence of mechanisms such as whistleblower policies. Controls: firm size (log assets), leverage, profitability (ROA/ROE), industry dummies, and year fixed effects. Content analysis: manual coding with a pre-tested coding sheet; two independent coders target Cohen’s kappa > 0.7; discrepancies resolved and codebook refined. Automated text flags may assist extraction but manual validation is retained. Case studies: 6–8 purposively selected firms, including cases of improved compliance/enforcement post-LODR, persistent non-compliance, and promoter-dominated governance with weak minority protection. Each combines doctrinal narratives (requirements, compliance history, orders/judgments) with empirical indicators (DQ trends, RPT values, audit changes). Comparative evaluation: checklist comparison of selected LODR provisions against the UK Corporate Governance Code and key US SEC/SOX rules on materiality thresholds, RPT rules, independence definitions, enforcement mechanisms/remedies, and shareholder participation (e.g., e-voting) to surface gaps and best practices. Econometric strategy: descriptive statistics, graphical trends by time and firm strata, and firm fixed-effects panel regressions. Baseline: DQ_it = α + β Post_t + γ X_it + μ_i + λ_t + ε_it with robust firm-clustered standard errors; heterogeneity via interactions with size and promoter ownership. Similar models for audit fees and RPT values (logged). Where feasible, difference-in-differences around discrete SEBI amendments or enforcement shocks, or propensity score matching to improve comparability, with tests of identification assumptions (parallel trends, common support). Triangulation and robustness: triangulate quantitative results with doctrinal insights and case studies; robustness via alternative DQ coding, outlier exclusions, lagged dependent variables, and alternative clustering. Ethics and reproducibility: only public documents used; archive codebook, anonymized coded datasets (subject to licensing), and analysis scripts in a reproducible repository with documented data access procedures.

• LODR materially strengthened India’s formal corporate governance framework by consolidating disclosure obligations, enhancing board accountability, and institutionalizing shareholder participation mechanisms.
• Transparency improved post-2015, particularly in timely financial reporting, detailed RPT disclosures, and material event reporting; gains are most visible among large-cap firms with stronger compliance capacity, while smaller and promoter-controlled firms often exhibit partial or delayed adherence.
• Shareholder-protection mechanisms such as e-voting and stricter RPT approval requirements increased minority participation and dissent in some cases, providing a procedural avenue for investor voice; however, substantive protection remains uneven due to persistent promoter dominance and limited functional independence of boards.
• Enforcement activity under LODR has increased, but delays in adjudication, settlement practices, and limited deterrent penalties reduce the effectiveness of regulatory interventions.
• The impact of LODR on outcomes such as audit fees and firm value is mediated by governance context: higher RPT intensity is associated with higher audit fees (auditors pricing verification risk), and RPT effects on value depend on board monitoring strength.
• Overall, LODR has raised baseline standards of transparency and shareholder protection, but heterogeneity across firm size, ownership concentration, and governance quality constrains uniform realization of these benefits.

The findings address the core question of whether LODR 2015 improved transparency and shareholder protection by showing clear enhancements in the formal disclosure regime and procedural rights, alongside persistent gaps in substantive protection. Enhanced periodic reporting, rigorous materiality-based event disclosures, and strengthened RPT oversight have reduced information asymmetry in many firms, particularly larger companies with better compliance resources. E-voting and expanded shareholder approval rights have increased minority participation, indicating that LODR’s design can amplify shareholder voice. However, the continued prevalence of concentrated ownership and promoter dominance, variable board independence, and uneven enforcement limit the translation of formal rights into effective safeguards, especially among smaller or promoter-controlled firms. These results underscore that regulatory architecture, to be fully effective, must be complemented by strong enforcement capacity and active stewardship. Comparative insights from the US and UK emphasize that robust enforcement and institutional investor engagement are crucial to convert formal compliance into substantive governance improvements. Thus, LODR’s significance lies in establishing a robust scaffold; its full impact depends on enforcement efficiency, proportional compliance frameworks for smaller firms, and deeper shareholder activation.

SEBI’s LODR framework represents a significant advance in India’s corporate governance landscape by embedding comprehensive disclosure norms, consolidating governance requirements, and formalizing shareholder rights. The study concludes that while transparency and procedural safeguards have improved, LODR’s effectiveness is mediated by firm-level governance structures, enforcement capacity, and shareholder engagement. Persistent concentrated ownership, limited board independence, and weak activism constrain the regime’s protective potential. Policy priorities should include strengthening enforcement mechanisms and resourcing, simplifying and calibrating compliance for smaller entities, and fostering institutional stewardship and shareholder activation. LODR has laid a robust legal scaffold; realizing its transformative effect will require sustained regulatory vigilance and an evolving governance culture within Indian corporates.

• Causal identification challenges: LODR applies universally to listed firms, so before-after analyses risk confounding from contemporaneous reforms and macro shocks.
• Data quality heterogeneity: smaller firms often provide less structured or incomplete disclosures, affecting measurement of disclosure quality and RPT metrics.
• Enforcement data gaps: comprehensive data on SEBI complaints and outcomes may be incomplete, and long adjudication timelines complicate enforcement assessment.
• Sample constraints: requiring continuous listing and complete reports can introduce survivorship bias; stratification partly mitigates but does not eliminate it.
• Generalizability: case studies illustrate mechanisms but may not generalize across all sectors or firm types; cross-country comparisons are normative and not econometric.
• Measurement error: content analysis and coding of disclosure items, even with reliability checks, may entail subjective judgments.