Corporate Governance and Firm Performance
University of Alabama - Culverhouse College of Commerce & Business Administration
Charles R. Knoeber
North Carolina State University - Poole College of Management
March 15, 2012
OXFORD HANDBOOK IN MANAGERIAL ECONOMICS, Christopher R. Thomas, William F. Shughart II, eds., Oxford University Press, 2012
This paper reviews the literature on corporate governance and firm performance in economies with relatively dispersed stock ownership and an active market for corporate control, such as the US and the UK. We provide a conceptual overview, suggest important issues, and offer a pathway to this large literature. Section 1 outlines a framework of the basic agency problem between managers and shareholders and the corporate governance mechanisms that have evolved to address this problem. Section 2 deals with the relation between firm performance and inside ownership. Section 3 pertains to the relation between firm performance and monitoring by large shareholders, monitoring by boards, and shareholder rights regarding takeover of the firm. Section 4 considers the relation between governance regulation and firm performance. Section 5 deals with the relation between governance and firm performance in family firms, and section 6 provides a summary and identifies some remaining puzzles and unresolved issues for future research.
Number of Pages in PDF File: 26
Keywords: Corporate Governance, Firm Performance
JEL Classification: G34, K22
Date posted: March 17, 2012
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