Corporate Governance and Firm Operating Performance
31 Pages Posted: 1 Oct 2005
Date Written: December 7, 2006
Abstract
Using a unique dataset provided by Institutional Shareholder Services (ISS), we relate 51 governance provisions to firm operating performance as proxied by return on assets and return on equity. We show that seven (six) governance provisions are significantly and positively related to return on assets (equity) using at least two of three econometric approaches. We identify 10 corporate governance provisions that are positively linked to return on assets, return on equity or both using at least two of our three econometric approaches. Nine of the corporate governance provisions we examine have recently been mandated by the three major U.S. stock exchanges but only one of them, nominating committee is comprised solely of independent outside directors, is significantly and positively related to firm operating performance. Our results reveal that the corporate governance reforms recently mandated by the three major U.S. stock exchanges are not more closely linked to firm operating performance than are those not so mandated.
Keywords: Corporate governance, Firm operating performance, U.S. stock exchanges, Nominating committee
JEL Classification: D21, D60, G34, G33, G35, G38, M41
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
Corporate Governance and Equity Prices
By Paul A. Gompers, Joy L. Ishii, ...
-
What Matters in Corporate Governance?
By Lucian A. Bebchuk, Alma Cohen, ...
-
Governance Mechanisms and Equity Prices
By Martijn Cremers and Vinay B. Nair
-
Did New Regulations Target the Relevant Corporate Governance Attributes?
By Reena Aggarwal and Rohan Williamson
-
Governance Mechanisms and Bond Prices
By Martijn Cremers, Vinay B. Nair, ...
-
Corporate Governance and Merger Activity in the U.S.: Making Sense of the 1980s and 1990s
-
Corporate Governance and Merger Activity in the U.S.: Making Sense of the 1980s and 1990s
-
The Costs of Entrenched Boards
By Lucian A. Bebchuk and Alma Cohen