Corporate governance and firm value: Evidence from Canadian capital markets

Gupta, Parveen P.; Kennedy, Duane B.; Weaver, Samuel C.

doi:10.22495/cocv6i3c2p4

Cited by 85 publications

(75 citation statements)

References 13 publications

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“…The regression result indicates relationship between corporate governance and profit margin of firms seems strongpositive and statisticallysignificant. Theresult is consistent with the findings of Shleifer and Vishny (1997), La Porta, Lopezde-Silanes and Shleifer(1999) and Gupta, Kennedy, and Weaver (2009). The second model exhibited in Table 3depicts relationship betweenCGI and PMincluding AGE of firms andregression results show positive relationship of CGIand AGE with PM.…”

Section: Regression Analysissupporting

confidence: 89%

Corporate Governance and Financial Performance in Nepal

Lamichhane¹

2018

NCC Jnl

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Section: Regression Analysissupporting

confidence: 89%

Corporate Governance and Financial Performance in Nepal

Lamichhane¹

2018

NCC Jnl

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“…The study of Bozec et al (2010) shows a positive relation between governance and firm technical efficiency. In contrast, results from Klein et al (2005) as well as from Gupta et al (2006) show no significant relation between the ROB index and firm value (Tobin's Q). However, Klein et al (2005) find that sub-indexes measuring effective compensation, disclosure and shareholder rights practices have a positive impact on firm value.…”

Section: Governance-performance Relationshipmentioning

confidence: 67%

“…Evidence from Canadian markets includes Foerster and Huen (2004), Klein et al (2005), Gupta et al (2006) and Bozec et al (2010). Firms selected for these studies are listed on the TSX and are ranked by the Globe and Mail ROB, based on a set of corporate governance provisions.…”

Section: Governance-performance Relationshipmentioning

confidence: 99%

Governance practices and firm performance: Does shareholders’ proximity to management matter?

Bozec

Dia

2014

Int J Discl Gov

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Richard Bozecis a Full Professor of Accounting at the Telfer School of Management, University of Ottawa where he currently teaches advanced financial accounting courses. He is joining the growing number of researchers in the field of corporate governance who are shifting to more holistic analytical approaches, taking into account the variety of controls that interact to affect a firm's performance. ABSTRACT This article investigates the link between corporate governance practices and firm performance, a topic that received a lot of attention by regulators, interest groups and academics. Research in this field has recently shifted from the analysis of one or more specific governance provisions to the analysis of multiple aspects of corporate governance. In fact, most studies now use corporate governance indexes that capture a wide range of corporate governance provisions (index-based studies). The objective and main contribution of this article is to revisit the governance-performance relationship while taking into account shareholders' proximity to the locus of management. Shareholders' proximity is defined based on ownership concentration and whether or not the dominant/controlling shareholder holds top executive positions in the firm. The lowest level of proximity is evidenced in firms with dispersed ownership, the highest level in controlled entities where the controlling shareholder holds the CEO and/or Chair positions. Governance is measured on a global scale using the Report on Business (ROB) index. The study is conducted over a 4-year period (2002)(2003)(2004)(2005) using panel regressions in a two-stage least squares framework on a sample of Canadian publicly traded companies (470 firm-year observations). The results of the study show a positive relationship between the ROB global index (and sub-indexes) and Tobin's Q whether ownership is dispersed or is concentrated in the hands of a dominant or controlling shareholder. Shareholders' proximity to management has no impact on the governance-performance relationship. Overall, the results support a one-size-fits-all approach to governance, a policy adhesion that underlined the widespread adoption of Codes of Good Governance and legal/ regulatory changes in the years following Enron's collapse in the United States. Initiatives were in large part supported by a general consensus toward a stock market-centered model of governance. However, with the recent debt crisis in the United States, public perception has changed. The credibility of such a model for governing our institutions is called into question. Our study tempers these concerns by showing that governance controls should not account for ownership differences in the context of publicly traded companies. Instead, good governance practices based on an independent board of directors that promotes transparency and protects shareholders' rights should be prioritized whether or not ownership is dispersed or concentrated. From a corporate governance standpoint, this study sheds new light on controlled compani...

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“…1866 His findings showed no significant correlation between the proportion of outside directors 1867 on the board and Tobin's Q, 1868 suggesting that board independence was not 1863 Ibid at 15, 23 Table 5. 1864 The five studies here are Jog and Dutta (2004), Klein, Shapiro and Young (2005), Adjaoud, Zeghal and Andaleeb (2007), Gupta, Kennedy and Weaver (2009), as well as Toledo & Bocatto (2012). 1865 Ibid at 301.…”

Section: The Connection Between Sox Director Independence Requirementmentioning

confidence: 79%

Are Independent Directors Effective Corporate Monitors? An Analysis of the Empirical Evidence in the USA and Canada

Lai

2014

SSRN Journal

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This thesis explores whether independent directors in the USA and Canada are effective in holding management accountable by: (1) analyzing how the policy of relying on independent directors developed and operates; (2) introducing the main theoretical critiques of independent directors' monitoring effect; and (3) examining whether empirical studies in the field of management science and financial economics support the policy in both countries of relying on independent directors as corporate monitors.Empirical evidence shows that boards with a majority of independent directors, in some circumstances, were associated with better firm performance (in the post-SOX period) and fulfilled certain board tasks effectively in the United States. Canadian studies, however, have not shown a positive association with improved firm performance. Audit committees composed entirely of independent directors have been effective in ensuring the quality of financial reporting in the United States, but this effect has not been found in Canada. Compensation committees composed fully of independent directors neither constrained the level of executive compensation nor tied CEO pay to firm performance in either country. US firms with an audit committee member who had accounting expertise, rather than financial analysis or supervisory expertise, were associated with a higher quality of financial reporting, while Canadian firms with an audit committee member who has financial expertise, instead of financial literacy, were associated with a similar effect. Studies also showed that independent directors perform better in certain circumstances.Based on empirical evidence, US regulators should consider: (1) changing the current mandatory requirements for an independent board and a completely independent compensation committee to a comply-or-explain requirement; (2) narrowing the qualification of a financial expert to an individual who has accounting expertise; and (3) recruiting independent directors who have two or fewer outside directorships, hold more of the corporation's shares, have lower cost of acquiring corporate information, and have no social connections with the CEO. In Canada, weak evidence of the monitoring effectiveness of independent directors supports the existing comply-or-explain approach. Canadian regulators may only need to require or recommend that at least one audit committee member has financial expertise, instead of only financial literacy.ii

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Corporate governance and firm value: Evidence from Canadian capital markets

Cited by 85 publications

References 13 publications

Corporate Governance and Financial Performance in Nepal

Corporate Governance and Financial Performance in Nepal

Governance practices and firm performance: Does shareholders’ proximity to management matter?

Are Independent Directors Effective Corporate Monitors? An Analysis of the Empirical Evidence in the USA and Canada

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