Corporate Governance and Alternative Performance Measures: Evidence from Australian Firms

19 Pages Posted: 21 Sep 2007

See all articles by Peter K. Pham

Peter K. Pham

Institute of Global Finance, UNSW Business School; Financial Research Network (FIRN)

Jo-Ann Suchard

Financial Research Network (FIRN); UNSW Business School

Jason Zein

UNSW Business School; Financial Research Network (FIRN)

Multiple version iconThere are 2 versions of this paper

Abstract

Despite the general acceptance of the role of corporate governance, empirical research has remained inconclusive regarding the extent to which individual monitoring mechanisms enhance firm performance and shareholder value. In particular, most previous studies have not convincingly overcome two critical difficulties: the potential endogeneity associated with monitoring mechanisms and the lack of an accurate and stable measure of performance. We use a sample of the top 150 Australian firms by market capitalisation from 1994 to 2003, to examine the relationship between firm performance (measured by Tobin's Q and Stern Stewart's EVA) and corporate governance. We control for the endogeneity of our governance measures, by using a fixed-effects panel regression. However, similar to the international evidence, we do not find a significant relationship between either of the performance measures and corporate governance. The results suggest that similar to Tobin's Q, EVA is too noisy as a performance measure to register any impact of governance mechanisms.

Keywords: Corporate governance, Firm value, EVA, Australia

JEL Classification: G32

Suggested Citation

Pham, Peter Kien and Suchard, Jo-Ann and Suchard, Jo-Ann and Zein, Jason, Corporate Governance and Alternative Performance Measures: Evidence from Australian Firms. Available at SSRN: https://ssrn.com/abstract=1015985 or http://dx.doi.org/10.2139/ssrn.1015985

Peter Kien Pham

Institute of Global Finance, UNSW Business School ( email )

UNSW Business School
High St
Sydney, NSW 2052
Australia

Financial Research Network (FIRN) ( email )

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

Jo-Ann Suchard (Contact Author)

UNSW Business School ( email )

high street
High St
sydney, NSW 2052
Australia

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

Jason Zein

UNSW Business School ( email )

Sydney, NSW 2052
Australia
+61 2 93855858 (Phone)
+61 2 93855858 (Fax)

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

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