Corporate Governance, Managers' Independence, Exporting and Performance of Firms in Transition Economies

Using data on 157 large companies in Poland and Hungary this paper employs a Bayesian structural equation modeling to examine interrelationships between corporate governance, managers' independence from owners in terms of strategic decision-making, exporting and performance. It is found that managers' independence is positively associated with firms' financial performance and exporting. In turn, the extent of managers' independence is negatively associated with ownership concentration, but positively associated with the percentage of foreign directors on the firm's board. We interpret these results as an indication that (i) concentrated owners tend to constrain managerial autonomy at the cost of the firm's internationalization and performance, (ii) board participation of foreign stakeholders, on the other hand, enhances the firm's export orientation and performance by encouraging executives' decision-making autonomy.

Keywords: corporate governance, strategic independence, exporting, performance

JEL Classification: G32, G34, L21, L22, L25, P31

Suggested Citation: Suggested Citation

Filatotchev, Igor and Isachenkova, Natalia and Mickiewicz, Tomasz Marek, Corporate Governance, Managers' Independence, Exporting and Performance of Firms in Transition Economies (November 1, 2005). William Davidson Institute Working Paper No. 805, Emerging Markets Finance and Trade, Vol. 43, No. 5, pp. 65–80, September–October 2007, Available at SSRN: https://ssrn.com/abstract=905878 or http://dx.doi.org/10.2139/ssrn.905878