Several studies in this research field are focused on assessing the impact of board structure (e.g. independent and non-executive board members, female directors, foreign directors, CEO-Chairman duality etc.) on corporate efficiency using various empirical methodologies from pooled-OLS to various forms of system-GMM models.
Nevertheless, research findings provide contradictory evidence, whether governance mechanisms significantly impact corporate efficiency.
Any suggestions and/or links to recent publications that seem to deviate from the norm, would be much appreciated.
I'm working on that, in the sense that how firms can select a mix of governance mechanisms (e.g. board structure) in order to improve performance (do you think this is some kind of corporate efficiency?). However, individual corporate governance mechanisms are not independent of each other. There is interdependence among governance mechanisms and the choice of one mechanism will depend on the choice of another. There is an interaction both within and across different kinds of governance mechanisms.
Following this guideline, I try to evidence this equilibrium phenomenon in the corporate structures using a system-GMM model. This equilibrium hypothesis try to evidence no statistically significant relationships among corporate governance mechanisms and firm performance. It doesn’t mean that the mechanisms are ineffective, but this mix of governance mechanisms is chosen optimally, in equilibrium.
A question, how do you measure corporate efficiency?
Thanks.
Dear Sonia, thank you for your valuable comments.
Following relevant literature, I would consider as proxies of corporate efficiency, financial ratios such as ROAA (return on average assets), ROAE (return on average equity) etc.
See indicatively, works such as Andres, P., Vallelado, E. (2008), Corporate governance in banking: The role of board of directors. Journal of Banking and Finance, 32, 2570-2580.
I think more probity has to be brought on whether executive remuneration is equitable and justified given company performance (ROA, ROE). There are thoughts that executive act unethically just so they ensure their contracts are extended.
A question would be "if executive remuneration was equitable, would they want contract extensions?" Furthermore, does such remuneration reflect value they add to the company and even to the shareholders?
I expect it will be a stream of inter-disciplinary research. Browse the thematical collections of free papers on corporate governance at our web-site https://www.virtusinterpress.org/A-set-of-updated-thematic-paper-collections-from-Virtus-Interpress.html to find more than 30 collections of more than 1200 free papers.
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