Corporate Governance and Firm Performance: Theory and Evidence from Literature

29 Pages Posted: 27 Aug 2008 Last revised: 28 Sep 2008

Pallab Kumar Biswas

University of Otago

Md. Hamid Ullah Bhuiyan

University of Dhaka - Department of Accounting and Information Systems

Date Written: August 25, 2008

Abstract

This paper is an attempt to give a short description of the theoretical literature focusing on different conceptual models of corporate governance and empirical studies relating to whether good corporate governance leads to better firm performance. Majority of the literature has been found to focus on the relationship between shareholders, directors, and management. The findings of these empirical studies are mixed and as a result, it is often difficult for users to draw any firm conclusion on the relationship. On the other hand, studies undertaken considering the overall corporate governance mostly provide evidence of significant relationship between corporate governance and firm performance. However, whether better corporate governance causes higher firm performance is still remains a valid research question for reasons like ambiguity regarding the direction of causality.

Keywords: Agency Theory, Board Structure, Corporate Governance

Suggested Citation

Biswas, Pallab Kumar and Bhuiyan, Md. Hamid Ullah, Corporate Governance and Firm Performance: Theory and Evidence from Literature (August 25, 2008). Available at SSRN: https://ssrn.com/abstract=1257617 or http://dx.doi.org/10.2139/ssrn.1257617

Pallab Kumar Biswas (Contact Author)

University of Otago ( email )

P.O. Box 56
Dunedin, Otago
New Zealand
+64 3 679 8108 (Phone)

Md. Hamid Ullah Bhuiyan

University of Dhaka - Department of Accounting and Information Systems ( email )

Ramna, Dhaka, 1000
Bangladesh

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