Corporate Governance and Firm Operating Performance

Posted: 17 Dec 2007

See all articles by Lawrence D. Brown

Lawrence D. Brown

Temple University - Department of Accounting

Marcus L. Caylor

Kennesaw State University

Abstract

Using a unique dataset provided by Institutional Shareholder Services (ISS), we relate 51 governance provisions to firm operating performance as proxied by return on assets and return on equity. We identify six corporate governance provisions that are significantly and positively linked to return on assets, return on equity or both using at least two of our six regressions. We examine nine governance provisions that have been recently mandated by the three major U.S. stock exchanges, and we find none of them to be significantly and positively related to firm operating performance. Our results reveal that the governance provisions recently mandated by the U.S. stock exchanges are less closely linked to firm operating performance than are those not so mandated.

Keywords: Corporate governance, Firm operating performance, U.S. stock exchanges

JEL Classification: D21, D60, G34, G33, G35, G38, M41

Suggested Citation

Brown, Lawrence D. and Caylor, Marcus L., Corporate Governance and Firm Operating Performance. Review of Quantitative Finance and Accounting, Forthcoming. Available at SSRN: https://ssrn.com/abstract=1072384

Lawrence D. Brown (Contact Author)

Temple University - Department of Accounting ( email )

Philadelphia, PA 19122
United States

Marcus L. Caylor

Kennesaw State University ( email )

1000 Chastain Road
Kennesaw, GA 30144
United States

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