Is Corporate Governance Relevant During the Financial Crisis?

Gupta, Kartick; Krishnamurti, Chandrasekhar; Tourani‐Rad, Alireza

doi:10.2139/ssrn.1972586

Cited by 24 publications

(36 citation statements)

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“…Cash flow per share, dividend yield ratio, and leverage have a salient impact on ROA and ROE during the non-crisis period, while they have no significant impact during the crisis period. This is consistent with Gupta et al (2013), who suggest that during the crisis stock markets became less efficient in incorporating firm-specific information into stock prices. Considering the macroeconomic factors, the consumer confidence index and macro-level exports have significant impacts on firm performance during all years, indicating the strength of the consumer confidence index and exports on firm performance.…”

Section: Discussionsupporting

confidence: 90%

“…In contrast, the dividend yield ratio, audited by Big Four accounting firms, and audit opinion all have significantly negative impacts on firm performance during the non-crisis period, but do not have a significant effect during the crisis. One possible reason we provide for the above five impact changes from significant in the non-crisis period to insignificant in the crisis period is that during the crisis stock markets became less efficient in incorporating firm-specific information into stock prices (Gupta et al, 2013). Aebi et al (2012) pinpoint that corporate governance variables are mostly insignificantly related to banks' performance during the crisis, rather than during the non-crisis period.…”

Section: Resultsmentioning

confidence: 98%

“…Following the early work of Mitton (2002), a number of recent studies have attempted to identify some of the major determinants of firm performance. The empirical studies focus their analyses either on corporate governance evidence (e.g., Baek et al, 2004;Gupta et al, 2013;Liu et al, 2012) or financial firms (Akhigbe et al, 2012;Dietrich & Wanzenried, 2011;Jin et al, 2011). For instance, some scholars present that corporate governance is an important factor in firm value (La Porta, Lopez-de-Silanes, Shleifer, & Vishny, 2000;Lemmon & Lins, 2003;Mitton, 2002), while others find that firm performance is not related to governance (Cai, Qian, & Liu, 2009;Gupta et al, 2013).…”

Section: Dependent Variables: Firm Performancementioning

confidence: 99%

“…Jin, Kanagaretnam, and Lobo (2011), Aebi, Sabato, and Schmid (2012), and Akhigbe, Madura, and Marciniak (2012) study the factors influencing U.S. bank performance during the financial crisis. Mitton (2002) and Gupta, Krishnamurti, and Tourani-Rad (2013) use several countries to explore whether corporate governance factors impact firm performance. Related studies have focused on a single country, such as Kim and Lee (2003), Baek, Kang, and Suh Park (2004), and Kang, Lee, and Na (2010) exploring South Korean firms, and Aebi et al (2012) and Akhigbe et al (2012) examining U.S. firms.…”

Section: Introductionmentioning

confidence: 99%

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Why did some firms perform better in the global financial crisis?

Chen

Ning

2017

Economic Research-Ekonomska Istraživanja

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We explore what firm and macroeconomic factors assisted Chinese firms to resist the global financial crisis. We find that firms with higher top ten shareholder ratios or firms that are older exhibited saliently higher performance during the crisis, but performed poorly during the non-crisis period. Firm size has a notably negative impact on firm performance. Firms audited by the Big Four accounting firms have a significantly negative correlation with performance. During the crisis, stock markets became less efficient in incorporating firm-specific information into stock prices, signifying that the determinants of firm performance vary across non-crisis and crisis periods.

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Section: Discussionsupporting

confidence: 90%

Section: Resultsmentioning

confidence: 98%

Section: Dependent Variables: Firm Performancementioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 2 more Smart Citations

Why did some firms perform better in the global financial crisis?

Chen

Ning

2017

Economic Research-Ekonomska Istraživanja

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“…() find a significant positive impact of governance during the Asian Financial Crisis (AFC), whereas Gupta et al . () find that well‐governed firms do not outperform firms with poor governance across a sample of developed countries. In contrast, Aldamen et al .…”

Section: Introductionmentioning

confidence: 96%

Corporate governance and family firm performance during the Global Financial Crisis

Aldamen

Duncan

Kelly

et al. 2019

Accounting & Finance

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We investigate the impact of corporate governance on accounting and market performance relationships of family firms during the Global Financial Crisis (GFC). We expect the monitoring aspects of corporate governance to complement the long-term orientation of family firms, improving the value relevance of accounting and market performance during times of exogenous financial shocks such as the GFC. We find that the family-firm value is more sensitive to book value than earnings changes. We also find better corporate governance, irrespective of whether it is a family firm or non-family firm, is associated with better accounting and market performance during the GFC.

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Governance disclosure quality and market valuation of firms in UK and Germany

et al. 2020

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This study develops a “comply or explain” index which captures compliance and quality of explanations given for non‐compliance with the corporate governance codes in UK and Germany. In particular, we explain, how compliance and quality of explanations provided in non‐compliance disclosures, and various other internal corporate governance mechanisms, affect the market valuation of firms in the two countries. A dynamic generalised method of moments (GMM) estimator is employed as the research technique for our analysis, which enabled us to control for the potential effects of endogeneity in our models. The findings of our content analysis suggest that firms exhibit significant differences in compliance, board independence and ownership structure in both countries. The “comply or explain” index is positively associated with the market valuation of UK firms suggesting that compliance and quality governance disclosure are value relevant in the UK. Institutional blockholders' ownership is, however, negatively associated with the market value of firms, which raises questions about the monitoring role of institutional shareholders in both countries. We argue that both compliance and explanations given for non‐compliance are equally important, as long as valid reasons and justifications for non‐compliance are provided by the reporting companies. These findings thus imply that the “comply or explain” principle is working well and that UK and German companies could benefit from the flexibility offered by this principle. With respect to the role of board size, board independence, ownership structure, and institutional ownership of firms, this study offers policy implications.

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Is Corporate Governance Relevant During the Financial Crisis?

Cited by 24 publications

References 0 publications

Why did some firms perform better in the global financial crisis?

Why did some firms perform better in the global financial crisis?

Corporate governance and family firm performance during the Global Financial Crisis

Governance disclosure quality and market valuation of firms in UK and Germany

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