The Impact Of Internal Corporate Governance Structures On Firm Performance

Corporate CEOs are headline news. Stock prices rise and fall at word of their hiring and firing. Business media debate their merits and defects as if individual leaders determined the health of the economy. Yet we know surprisingly little about how CEOs are selected and dismissed or about their true power. This is the first book to take us into the often secretive world of the CEO selection process. Rakesh Khurana's findings are surprising and disturbing. In recent years, he shows, corporations have increasingly sought CEOs who are above all else charismatic, whose fame and force of personality impress analysts and the business media, but whose experience and abilities are not necessarily right for companies' specific needs. The labor market for CEOs, Khurana concludes, is far less rational than we might think. Khurana's findings are based on a study of the hiring and firing of CEOs at over 850 of America's largest companies and on extensive interviews with CEOs, corporate board members, and consultants at executive search firms. Written with exceptional clarity and verve, the book explains the basic mechanics of the selection process and how hiring priorities have changed with the rise of shareholder activism. Khurana argues that the market for CEOs, which we often assume runs on cool calculation and the impersonal forces of supply and demand, is culturally determined and too frequently inefficient. Its emphasis on charisma artificially limits the number of candidates considered, giving them extraordinary leverage to demand high salaries and power. It also raises expectations and increases the chance that a CEO will be fired for failing to meet shareholders' hopes. The result is corporate instability and too little attention to long-term strategy. The book is a major contribution to our understanding of corporate culture and the nature of markets and leadership in general.

This thesis contains the findings of an examination of the relationship between internal corporate governance structures and the financial performance of South African listed firms. Specifically, using a sample of 100 South African listed firms from 2002 to 2006 (a total of 500 firm-year observations) and corporate governance data collected directly from company annual reports, the thesis seeks to ascertain whether better-governed listed firms tend to be associated with higher financial returns than their poorly-governed counterparts. Unlike prior studies, the internal corporate governance-financial performance nexus is investigated by applying both the compliance-index and equilibrium-variable research methodologies. The results based on the compliance-index model suggest that there is a statistically significant and positive association between the quality of the sampled firms? internal corporate governance structures and their financial performance. This finding is robust whether an accounting (return on assets) or a market (Tobin?s Q) based measure of financial performance is used. Distinct from prior studies, an analysis of the impact of complying with the South African context specific affirmative action and stakeholder corporate governance provisions on the financial performance of South African listed firms is also investigated. The results indicate that compliance with the affirmative action and stakeholder corporate governance provisions impacts positively on the performance of South African listed firms. By contrast, the results based on the equilibrium-variable model are generally mixed. First, regardless of the financial performance measure used, board diversity, the frequency of board meetings, and the establishment of board committees except the presence of a nomination committee seem to have no impact on firm financial performance. Second, board size is statistically significant and positively associated with Tobin?s Q (Q-ratio), but statistically insignificant and negatively related to return on assets (ROA). Third, role or CEO duality is statistically significant and positively related to ROA, but statistically insignificant and negatively associated with the Q-ratio. Director shareownership is statistically insignificant and positively related to ROA, but statistically significant and negatively associated with the Q-ratio. Finally, the findings based on both the director shareownership squared and cubed do not support the statistically significant non-linear director shareownership-financial performance association reported by Morck et al. (1988). The findings from a series of robustness or sensitivity analyses carried out suggest that the empirical results reported are generally robust to potential endogeneity problems.

Focuses on corporate governance, broadly defined as the system of controls that helps corporations and other organizations effectively manage, administer, and direct economic resources. This book focuses on: the impact of deregulation and corporate structure on productive efficiency; and the effectiveness of the fraud triangle and SAS.

The purpose of this paper is to explore effect of internal corporate governance mechanisms on company performance. Whether a good corporate governance causes higher firm performance is still a valid research question for reasons like ambiguity regarding the direction of causality. An empirical study was conducted in studying the effect of different of corporate governance internal mechanisms on corporate performance. The result of showed that internal corporate governance mechanism represented by Ownership Structure, Board of Directors, Management Remuneration, Internal Control & Audit and Transparency & Disclosure have a great effect on corporate performance. The corporate performance evaluation criteria's used in this study: Financial Viability, Corporate Growth, Effectiveness, Efficiency, and Risk Reduction are affected by Internal corporate governance mechanisms. The study reveals also that corporate governance affects highly company performance in the medium to long term runs but in the short term performance does not necessarily depend on governance.

This book begins by analysing the various corporate governance mechanisms explored in the extant literature and determining their effectiveness in enhancing the firm value using multivariate analysis. The findings are of global relevance as the corporate governance regulations of most countries focus on independent directors as the mainstay of good governance. The empirical evidence from the first objective of this study corroborates the claim that independent directors do not strengthen the firms’ governance quality. The book is one of the few works to have analysed the possible reasons behind the ineffectiveness of the independent directors. Also, in view of the famous concept of the bundle of governance mechanisms, it might be possible that the independent directors strengthen the firms’ governance quality indirectly by strengthening other governance mechanisms. This aspect too has little precedence. This study adopts a novel moderation and mediation approach to analyse the monitoring behaviour of independent directors in relation to other governance mechanisms. The work is a must read for corporate players as well as researchers and scholars studying this discipline.

Internal Corporate governance refers to the controlling mechanism of various internal actors of a firm. The aim of the study is to explore the impact of internal corporate governance (CG) mechanism on firm performance in three Asian countries namely Bangladesh, Malaysia, and Singapore. Results show that Board Size, Board Independence and CEO Duality have impact on firm performance. Though the impact of CG on firm performance is significant in Singapore, the impact is not significant in Bangladesh and Malaysia. These findings of the study have significant implications to public policy makers and corporate managers to understand the evolution and effectiveness of internal CG practices in different Asian countries.