Internal corporate governance mechanisms and corporate performance: evidence for UK firms
AbstractThis study investigates the relationship between internal corporate governance mechanisms and corporate performance for a large sample of UK firms. The aim is to extend the existing literature on firm performance by empirically investigating the role of debt-maturity structure of firms and managerial compensation in affecting corporate performance. Also, the study attempts to provide new insights on the subject by considering potential interaction effects between managerial ownership and other governance mechanisms available to firms. The results support the existence of a non-linear impact of both managerial ownership and managerial compensation on company performance. Debt-maturity structure is also found to be significantly related to performance. Finally, there is strong evidence that managerial ownership and managerial compensation work as substitute mechanisms in mitigating agency problems and, therefore, generating good performance.
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Bibliographic InfoArticle provided by Taylor and Francis Journals in its journal Applied Financial Economics Letters.
Volume (Year): 1 (2005)
Issue (Month): 4 (July)
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Web page: http://www.tandf.co.uk/journals/titles/17446546.asp
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- Marc Goergen & Luc Renneboog, 1999. "Strong Managers and Passive Institutional Investors in the UK," Working Papers 1999.21, Fondazione Eni Enrico Mattei.
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- Chrisostomos Florackis & Aydin Ozkan, 2006. "What Reduces the Impact of Managerial Entrenchment on Agency Costs? Evidence for UK Firms," Discussion Papers 06/03, Department of Economics, University of York.
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