Empirical Evidence on the Link Between Compliance with Governance of Best Practice and Firms' Operating Results
This study provides robust evidence in support of the agency theory argument that corporate governancematters for a firm’s operating performance. Using the corporate governance ratings as the governance proxyfrom Horwath 2006 Corporate Governance Report (mid-sized Australian ASX companies) andMid-Ca...
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| Format: | Article |
| Language: | English |
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University of Wollongong
2012-12-01
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| Series: | Australasian Accounting, Business and Finance Journal |
| Subjects: | |
| Online Access: | http://ro.uow.edu.au/aabfj/vol6/iss5/5 |
| _version_ | 1818513957269274624 |
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| author | Tek B. Lama |
| author_facet | Tek B. Lama |
| author_sort | Tek B. Lama |
| collection | DOAJ |
| description | This study provides robust evidence in support of the agency theory argument that corporate governancematters for a firm’s operating performance. Using the corporate governance ratings as the governance proxyfrom Horwath 2006 Corporate Governance Report (mid-sized Australian ASX companies) andMid-CapCorporate Governance Report 2007 (The University of Newcastle 2006; 2007), I examine 60 sample firms toreveal that a firm’s governance is positively and significantly related to firm performance as measured by returnon equity, earning yield and return on assets. This study extends the findings of these two reports which founda disturbing trend in the corporate governance practice of Australian mid-cap companies – both a decrease incompanies with excellent corporate governance, and an increase in companies with significant corporategovernance deficiencies. The findings of this study suggest that those mid-size companies who have allowedcorporate governance to deteriorate have adversely affected their shareholder returns. |
| first_indexed | 2024-12-11T00:08:42Z |
| format | Article |
| id | doaj.art-393a42dbcca244bfbbe217fddf349283 |
| institution | Directory Open Access Journal |
| issn | 1834-2000 1834-2019 |
| language | English |
| last_indexed | 2024-12-11T00:08:42Z |
| publishDate | 2012-12-01 |
| publisher | University of Wollongong |
| record_format | Article |
| series | Australasian Accounting, Business and Finance Journal |
| spelling | doaj.art-393a42dbcca244bfbbe217fddf3492832022-12-22T01:28:14ZengUniversity of WollongongAustralasian Accounting, Business and Finance Journal1834-20001834-20192012-12-01656380Empirical Evidence on the Link Between Compliance with Governance of Best Practice and Firms' Operating ResultsTek B. LamaThis study provides robust evidence in support of the agency theory argument that corporate governancematters for a firm’s operating performance. Using the corporate governance ratings as the governance proxyfrom Horwath 2006 Corporate Governance Report (mid-sized Australian ASX companies) andMid-CapCorporate Governance Report 2007 (The University of Newcastle 2006; 2007), I examine 60 sample firms toreveal that a firm’s governance is positively and significantly related to firm performance as measured by returnon equity, earning yield and return on assets. This study extends the findings of these two reports which founda disturbing trend in the corporate governance practice of Australian mid-cap companies – both a decrease incompanies with excellent corporate governance, and an increase in companies with significant corporategovernance deficiencies. The findings of this study suggest that those mid-size companies who have allowedcorporate governance to deteriorate have adversely affected their shareholder returns.http://ro.uow.edu.au/aabfj/vol6/iss5/5Corporate governanceAgency theoryMid-capBest practiceHorwath report |
| spellingShingle | Tek B. Lama Empirical Evidence on the Link Between Compliance with Governance of Best Practice and Firms' Operating Results Australasian Accounting, Business and Finance Journal Corporate governance Agency theory Mid-cap Best practice Horwath report |
| title | Empirical Evidence on the Link Between Compliance with Governance of Best Practice and Firms' Operating Results |
| title_full | Empirical Evidence on the Link Between Compliance with Governance of Best Practice and Firms' Operating Results |
| title_fullStr | Empirical Evidence on the Link Between Compliance with Governance of Best Practice and Firms' Operating Results |
| title_full_unstemmed | Empirical Evidence on the Link Between Compliance with Governance of Best Practice and Firms' Operating Results |
| title_short | Empirical Evidence on the Link Between Compliance with Governance of Best Practice and Firms' Operating Results |
| title_sort | empirical evidence on the link between compliance with governance of best practice and firms operating results |
| topic | Corporate governance Agency theory Mid-cap Best practice Horwath report |
| url | http://ro.uow.edu.au/aabfj/vol6/iss5/5 |
| work_keys_str_mv | AT tekblama empiricalevidenceonthelinkbetweencompliancewithgovernanceofbestpracticeandfirmsoperatingresults |