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Corporate governance and financial performance: an emerging economy perspective

Haque, Faizul and Arun, Thankom G (2016) 'Corporate governance and financial performance: an emerging economy perspective.' Investment Management and Financial Innovations, 13 (3(1)). pp. 228-236. ISSN 1812-9358

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This paper investigates the influence of firm-level corporate governance on financial performance of the listed firms in Bangladesh. Agency theory suggests that better corporate governance reduces expropriation costs, which, in turn, enhances investors’ confidence in the firm’s future cash flow and growth prospects, leading to higher firm valuation. Likewise, a decrease in private benefits is likely to cause an improved operating performance. This paper uses a questionnaire survey-based corporate governance index (CGI), comprising of the three dimensions – shareholder rights, independence and responsibilities of the board and management, and financial reporting and disclosures. The study results partly confirm the prediction of the agency theory, with a statistically significant positive relationship between a firm’s corporate governance quality and its valuation, even though the relationship between firm level corporate governance and operating performance seems inconclusive.

Item Type: Article
Uncontrolled Keywords: corporate governance index, agency theory, financial performance, Bangladesh
Subjects: H Social Sciences > HG Finance
Divisions: Faculty of Social Sciences
Faculty of Social Sciences > Essex Business School
Faculty of Social Sciences > Essex Business School > Essex Accounting Centre
SWORD Depositor: Elements
Depositing User: Elements
Date Deposited: 09 Jul 2018 15:01
Last Modified: 06 Jan 2022 13:51

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