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Effects of corporate governance practices on firm performance

Author

Listed:
  • Neculai TABARA

    (“Alexandru Ioan Cuza” University of Iasi)

  • Mihaela UNGUREANU

    (“Alexandru Ioan Cuza” University of Iasi)

Abstract

Corporate governance is mainly focused on ensuring that managers act in shareholders' interest. Therefore, this concept has emerged as essential to minimize conflicts in the company and to discourage managers to take leverage decisions that enhance their own benefits, to the detriment of shareholders. The degree to which managers can deviate from optimal behavior critically depends on the strength of corporate governance. Therefore, one can hypothesize that there must be a relationship between leverage financial performance of the enterprise and corporate governance quality. The aim of this paper is precisely to test this hypothesis and support the idea that firms with better governance system are more profitable and with a higher market value. It is also concerned the link between business results, quality of governance, costs of accumulating experience by managers and therefore the degree of performance and market value.

Suggested Citation

  • Neculai TABARA & Mihaela UNGUREANU, 2012. "Effects of corporate governance practices on firm performance," The Journal of Accounting and Management, Danubius University of Galati, issue 3, pages 89-95, December.
    • Handle: RePEc:dug:jaccma:y:2012:i:3:p:89-95
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    File URL: http://journals.univ-danubius.ro/index.php/jam/article/view/1722/1425
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