Corporate Governance and Firm Performance: Insights from International Perspective


Student thesis: Doctoral Thesis

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  • Chengyu QI

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Awarding Institution
Award date9 Sep 2016


This thesis work examines the effects of internal and external corporate governance practices on firm performance using a time- series cross-sectional framework including firms from 22 international countries and United States. The investigation follows the famous work of Aggarwal at el.’s (2009) to conduct the same governance index using corporate governance attributes provided by Institutional Shareholder Services (thereafter ISS). Previous researches have demonstrated the positive correlation between corporate governance and firm performance in many different ways. This work extends the existing literature by employing econometric tools as pooled OLS, panel regressions and several robust tests using a firm-year panel data set to re-investigate the continuity of the positive effects of governance practices on firm performance by extending the sample firms from both range and depth. Empirical results provide efficient evidences that the significant positive correlation between governance practices and firm performance not only hold under multi-country setting, but also strongly sustain within 5-year time horizon (2003- 2007).

As argued by many insightful papers (such as LLSV, 1998), this work also investigates the role played by a country’s legal system in firm’s choice of adopting governance practices. The investigation focuses on how company-level governance practices and country-level legal investor protection jointly affect firm performance, and the empirical results indicate that under any legal regime, firms with good corporate governance practices over perform firms with weak corporate governance practices. However, firms with good governance practices operating in strong legal environments show no valuation improvement relative to similar companies operating in weak legal environments. At the same time, a stronger country-level regime does not reduce the valuation discount of companies with weak governance practices.

    Research areas

  • Corporate Governance, International Countries, Legal System