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An Integrated Corporate Governance Framework and Financial Performance in South African-Listed Corporations

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  • Collins G. Ntim

Abstract

This paper investigates the relationship between an integrated corporate governance (CG) index and financial performance using a sample of 169 South African (SA) listed corporations between 2002 and 2007. We find a statistically significant and positive association between a broad set of good CG practices and financial performance. In a series of sensitivity analyses, we find that our results are robust to endogeneity, different financial performance proxies, alternative CG weighting scheme and firm-level fixed-effects. We further distinctively examine the link between complying with SA context specific stakeholder CG provisions and financial performance. In line with political cost and resource dependence theories, our results reveal a statistically significant and positive nexus between compliance with stakeholder CG provisions and financial performance.
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  • Collins G. Ntim, 2013. "An Integrated Corporate Governance Framework and Financial Performance in South African-Listed Corporations," South African Journal of Economics, Economic Society of South Africa, vol. 81(3), pages 373-392, September.
    • Handle: RePEc:bla:sajeco:v:81:y:2013:i:3:p:373-392
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    File URL: http://hdl.handle.net/10.1111/saje.2013.81.issue-3
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    10. Baek, Jae-Seung & Kang, Jun-Koo & Suh Park, Kyung, 2004. "Corporate governance and firm value: evidence from the Korean financial crisis," Journal of Financial Economics, Elsevier, vol. 71(2), pages 265-313, February.
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    1. Collins G. Ntim, 2013. "Corporate Governance, Affirmative Action and Firm Value in Post-apartheid South Africa: A Simultaneous Equation Approach," African Development Review, African Development Bank, vol. 25(2), pages 148-172, June.
    2. Isaih Dzingai & Michael Bamidele Fakoya, 2017. "Effect of Corporate Governance Structure on the Financial Performance of Johannesburg Stock Exchange (JSE)-Listed Mining Firms," Sustainability, MDPI, vol. 9(6), pages 1-15, June.
    3. Collins G. Ntim, 2012. "Director shareownership and corporate performance in South Africa," African Journal of Accounting, Auditing and Finance, Inderscience Enterprises Ltd, vol. 1(4), pages 359-373.
    4. Esen KARA & Duygu ACAR ERDUR & Lale KARABIYIK, 2015. "Effects Of Corporate Governance Level On The Financial Performance Of Companies: A Research On BIST Corporate Governance Index (XKURY)," Ege Academic Review, Ege University Faculty of Economics and Administrative Sciences, vol. 15(2), pages 265-274.
    5. Melinda-Timea FÜLÖP & Mirela-Oana PINTEA, 2015. "The Link Between Corporate Governance And Performance - Evidence From Romania," Management Intercultural, Romanian Foundation for Business Intelligence, Editorial Department, issue 33, pages 81-90, April.
    6. Frank Sampong & Na Song & Kingsley Osei Boahene & Kwame Ansong Wadie, 2018. "Disclosure of CSR Performance and Firm Value: New Evidence from South Africa on the Basis of the GRI Guidelines for Sustainability Disclosure," Sustainability, MDPI, vol. 10(12), pages 1-28, November.
    7. Areneke, Geofry & Kimani, Danson, 2019. "Value relevance of multinational directorship and cross-listing on MNEs national governance disclosure practices in Sub-Saharan Africa: Evidence from Nigeria," Journal of World Business, Elsevier, vol. 54(4), pages 285-306.
    8. Muniandy, Balachandran & Hillier, John, 2015. "Board independence, investment opportunity set and performance of South African firms," Pacific-Basin Finance Journal, Elsevier, vol. 35(PA), pages 108-124.
    9. Crisóstomo, Vicente Lima & Brandão, Isac de Freitas & López-Iturriaga, Félix Javier, 2020. "Large shareholders’ power and the quality of corporate governance: An analysis of Brazilian firms," Research in International Business and Finance, Elsevier, vol. 51(C).
    10. Collins Gyakari Ntim, 2012. "Does the South African stock market value an independent dual board leadership structure?," Economics and Business Letters, Oviedo University Press, vol. 1(1), pages 35-45.
    11. Tesfaye T. Lemma & Mehrzad Azmi Shabestari & Martin Freedman & Mthokozisi Mlilo, 2020. "Corporate carbon risk exposure, voluntary disclosure, and financial reporting quality," Business Strategy and the Environment, Wiley Blackwell, vol. 29(5), pages 2130-2143, July.
    12. Rezvan Pourmansouri & Amir Mehdiabadi & Vahid Shahabi & Cristi Spulbar & Ramona Birau, 2022. "An Investigation of the Link between Major Shareholders’ Behavior and Corporate Governance Performance before and after the COVID-19 Pandemic: A Case Study of the Companies Listed on the Iranian Stock," JRFM, MDPI, vol. 15(5), pages 1-30, April.
    13. Vicente Lima Crisóstomo & Priscila Azevedo Prudêncio & Isac Freitas Brandão, 2023. "Corporate Reputation in Brazil: The Effects of the Shareholding Control Configuration, Corporate Governance, and Corporate Social Responsibility," Corporate Reputation Review, Palgrave Macmillan, vol. 26(4), pages 243-263, November.

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    More about this item

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

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