Keywords
How to Cite
Abstract
This paper studies the influence of internal corporate governance mechanisms - ownership concentration, board of directors, and indebtedness - on firm performance, and if such mechanisms depend on institutional frameworks. Based on a sample of 765 companies from seven countries of the European Union over a four-year period (2000-2003), we found that firm performance tends to increase as ownership is concentrated, protection to investors gets stronger, and indebtedness levels decrease, as well as the size of the board of directors. Moreover, in order to analyze the joint effect of the institutional framework and the mechanism of government, we found evidence that the legal protection offered to investors in each country determines the use of internal governance mechanisms. Also, our findings show that the estimated impact of corporate governance variables on firm performance more than doubles when discretionary accruals are eliminated from measured profitability.
Key words: Firm performance. Institutional framework. Legal protection. Governance mechanisms.
If a paper is approved for publication, its copyright has to be transferred by the author(s) to the Review of Business Management – RBGN.
Accordingly, authors are REQUIRED to send RBGN a duly completed and signed Copyright Transfer Form. Please refer to the following template: [Copyright Transfer]
The conditions set out by the Copyright Transfer Form state that the Review of Business Management – RBGN owns, free of charge and permanently, the copyright of the papers it publishes. Although the authors are required to sign the Copyright Transfer Form, RBGN allows authors to hold and use their own copyright without restrictions.
The texts published by RBGN are the sole responsibility of their authors.
The review has adopted the CC-BY Creative Commons Attribution 4.0 allowing redistribution and reuse of papers on condition that the authorship is properly credited.