Corporate governance and company's performance
Theoretically, the principles of corporate governance are consistent with the concept of wealth maximisation and strategic management. It is to ensure the shareholder goal - wealth maximisation - is implemented. Given this objective, is there truly any correlation between corporate governance and...
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Main Author: | |
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Format: | Thesis |
Published: |
2006
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Subjects: | |
Online Access: | http://library.oum.edu.my/repository/283/1/corporate_governence.pdf http://library.oum.edu.my/repository/283/ |
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Summary: | Theoretically, the principles of corporate governance are consistent with the concept of
wealth maximisation and strategic management. It is to ensure the shareholder goal -
wealth maximisation - is implemented. Given this objective, is there truly any correlation
between corporate governance and company's wealth maximisation, reflected by its
performance? In the past, certain studies discovered a strong correlation. Most others
found weak results or no link between corporate governance and performance. To
contribute further to the earlier findings, this study examined the relationships of board
size, director independence, number of board meetings, non-duality role of Chief
Executive, role of non-executive Chairman, number of board committees, voluntary
training, continuous communication with investors and existence of director to whom
concerns can be conveyed; for selected PLCs, against their ROE, ROA, EPS and share
price. Results for individual relationships between each proxy of corporate governance
and proxy of performance were inconsistent. In general however, the results imply weak
relationships exist between corporate governance and' company's performance. The
findings from this study will become handy in the wake of shareholders' activism and
provide guidance to corporate players in understanding their role; it may also offer
relevant authorities or policy setters, ideas to mitigate any loopholes in policing corporate
governance. (Author's abstract) |
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