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Corporate Governance, Firm Performance and Financial Leverage across Developed and Emerging Economies

Author

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  • Ploypailin Kijkasiwat

    (Faculty of Business Administration and Accountancy, Khon Kaen University, 123 Mittraphap Rd., Muang Khon Kaen 40002, Thailand)

  • Anwar Hussain

    (Department of Business Administrations, Ghazi University, Dera Ghazi Khan 32200, Pakistan)

  • Amna Mumtaz

    (Lahore Business School, The University of Lahore, Sargodha Campus, Lahore 40100, Pakistan)

Abstract

This research inquiry analyzed the association between corporate governance and firm performance through the mediating role of financial leverage based on panel data of 2568 firms during the period from 2002 to 2017. The study uses a two-step dynamic panel as well as a generalized method of moments (GMM) to estimate these relationships. The findings demonstrated financial leverage mediates the relationship between corporate governance and firm performance in the context of developed economies, and also in emerging economies. Additionally, firm performance is negatively associated with corporate governance through excessive leverage. The study suggests it is the responsibility of the board to use low financial leverage to enhance firm performance. In emerging countries, firms with a large-sized board use low leverage, whereas in developed countries, firms with a small-sized board use low leverage to enhance corporate performance.

Suggested Citation

  • Ploypailin Kijkasiwat & Anwar Hussain & Amna Mumtaz, 2022. "Corporate Governance, Firm Performance and Financial Leverage across Developed and Emerging Economies," Risks, MDPI, vol. 10(10), pages 1-20, September.
    • Handle: RePEc:gam:jrisks:v:10:y:2022:i:10:p:185-:d:919829
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    References listed on IDEAS

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    1. Ana Belén Tulcanaza-Prieto & Younghwan Lee & Wendy Anzules-Falcones, 2024. "The Moderating Role of Corporate Governance in the Relationship between Leverage and Firm Value: Evidence from the Korean Market," Risks, MDPI, vol. 12(1), pages 1-19, January.

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