Corporate Performance and Governance: An Empirical Study of Insider Perspective on Governance

Using a proxy measure of corporate governance constructed from the annual changes in chief executive officer compensation and workers' employment, this paper studies the relationship between corporate governance and long-term financial performance of selected large US public firms. Resulting as...

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Bibliographic Details
Published in:The Business renaissance quarterly 2013-04, Vol.8 (1), p.17
Main Authors: Song, Jae H, Adams, Carl R, Rhee, Yinsog
Format: Article
Language:English
Subjects:
Chief executive officers
Compensation
Corporate governance
Decision making
Employees
Employment
Executive compensation
Financial institutions
Financial performance
Investments
Studies
Taxonomy
Wages & salaries
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Summary:Using a proxy measure of corporate governance constructed from the annual changes in chief executive officer compensation and workers' employment, this paper studies the relationship between corporate governance and long-term financial performance of selected large US public firms. Resulting associations between governance and performance indicate that a hierarchical governance mode is a less profitable type of governance and suggest a need to change a hierarchical governance mode toward a less-hierarchical mode as a business becomes more knowledge-intensive and workers' human assets become more indispensable. A challenge for managers is adapting less-hierarchical governance mechanisms to maintain some of the strengths of hierarchical governance. [PUBLICATION ABSTRACT]
ISSN:1930-7462