The Relationship between Corporate Governance and Financial Performance: An Empirical Study

Does it pay to have good corporate governance within a firm? The focus of this paper is to examine whether good corporate governance yields higher financial performance than poor corporate governance. Using the rankings of the Best and Worst Board of Directors published inBusiness Week, the results...

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Bibliographic Details
Published in:The journal of corporate citizenship 2002-12, Vol.8 (8), p.35-48
Main Authors: Stanwick, Peter A., Stanwick, Sarah D.
Format: Article
Language:English
Subjects:
Analysis
Boards of directors
Business structures
Business studies
Case studies
Corporate governance
Corporate strategies
Economic aspects
Empirical research
Enterprises
Ethics
Evaluation
Fiduciary management
Financial management
Financial performance
Government performance
Investors
Money management
Prices and rates
Profit
Securities
Shareholders
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Summary:Does it pay to have good corporate governance within a firm? The focus of this paper is to examine whether good corporate governance yields higher financial performance than poor corporate governance. Using the rankings of the Best and Worst Board of Directors published inBusiness Week, the results showed that overall board performance does impact firm performance. The results support both short-term and long-term benefits of a strong board and firm performance. In addition, board independence, board quality and shareholder accountability all had a significant positive impact on firm performance.
ISSN:1470-5001
2051-4700