IDEAS home Printed from https://ideas.repec.org/a/eme/mrrpps/v34y2011i3p266-283.html
   My bibliography  Save this article

The effects of firm performance on corporate governance

Author

Listed:
  • M. Alix Valenti
  • Rebecca Luce
  • Clifton Mayfield

Abstract

Purpose - The purpose of this paper is to investigate the effects of prior firm performance on board composition and governance structure. Design/methodology/approach - A total of 90 companies listed on National Association of Securities Dealers Automated Quotations were used for this study. Hypotheses were tested using both general linear regression and logit regression analyses. Findings - The results showed that prior negative change in firm performance was significantly related to a decrease in the overall number of directors and a decrease in the number of outside directors. Research limitations/implications - The sample size used in this study was relatively small and the focus was on small to medium‐sized firms, so the results found here may not apply to firms larger than those used in our sample. Practical implications - Directors may want to consider the implications for governance practices found in this study, specifically, whether smaller boards with fewer outsiders are appropriate following periods of performance decline. Originality/value - This study is one of the first to examine the effects of trends in prior firm performance on board composition and chief executive officer duality.

Suggested Citation

  • M. Alix Valenti & Rebecca Luce & Clifton Mayfield, 2011. "The effects of firm performance on corporate governance," Management Research Review, Emerald Group Publishing Limited, vol. 34(3), pages 266-283, March.
    • Handle: RePEc:eme:mrrpps:v:34:y:2011:i:3:p:266-283
    DOI: 10.1108/01409171111116295
    as

    Download full text from publisher

    File URL: https://www.emerald.com/insight/content/doi/10.1108/01409171111116295/full/html?utm_source=repec&utm_medium=feed&utm_campaign=repec
    Download Restriction: Access to full text is restricted to subscribers
    File URL: https://www.emerald.com/insight/content/doi/10.1108/01409171111116295/full/pdf?utm_source=repec&utm_medium=feed&utm_campaign=repec
    Download Restriction: Access to full text is restricted to subscribers
    File URL: https://libkey.io/10.1108/01409171111116295?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Nawaz, Ahmad & Iqbal, Sana, 2015. "Does Social Performance Drives Corporate Governance Mechanism in MFIs? An Issue of Endogeneity," MPRA Paper 65312, University Library of Munich, Germany.
    2. Ahmad Nawaz & Sana Iqbal & Sadaf Ehsan, 2018. "Does Social Performance Drive Corporate Governance Mechanism In Case of Asian MFIs? An Issue of Endogeneity," Global Business Review, International Management Institute, vol. 19(4), pages 988-1012, August.
    3. Nawaz, Ahmad & Iqbal, Sana, 2015. "Financial Performance And Corporate Governance In Microfinance: Who Drives Who? An Evidence From Asia," MPRA Paper 65327, University Library of Munich, Germany.
    4. Santiago Lago-Peñas & Elena Rivo-López & Mónica Villanueva-Villar, 2016. "On the relationship between corporate governance and value creation in an economic crisis: Empirical evidence for the Spanish case," Working Papers. Collection C: Family business 1602, Universidade de Vigo, GEN - Governance and Economics research Network.
    5. Jehad S. Aldehayyat & Sliman S. Alsoboa & Mohammad H. Al-Kilani, 2017. "Investigating How Corporate Governance Affects Performance of Firm in Small Emerging Markets: An Empirical Analysis for Jordanian Manufacturing Firms," International Business Research, Canadian Center of Science and Education, vol. 10(1), pages 77-95, January.
    6. Reddy, Kotapati Srinivasa & Nangia, Vinay Kumar & Agrawal, Rajat, 2013. "Share repurchases, signaling effect and implications for corporate governance: Evidence from India," MPRA Paper 60147, University Library of Munich, Germany.
    7. Ya-Fang Wang & Yen-Fang Kuo, 2020. "Exploring the Family Effect on Innovative Capacity and Earnings Management," International Journal of Business and Economic Sciences Applied Research (IJBESAR), International Hellenic University (IHU), Kavala Campus, Greece (formerly Eastern Macedonia and Thrace Institute of Technology - EMaTTech), vol. 13(2), pages 39-61, September.
    8. Akshita Arora & Chandan Sharma, 2015. "Impact of Firm Performance on Board Characteristics: Empirical Evidence from India," IIM Kozhikode Society & Management Review, , vol. 4(1), pages 53-70, January.
    9. Iqbal, Sana & Nawaz, Ahmad & Ehsan, Sadaf, 2019. "Financial performance and corporate governance in microfinance: Evidence from Asia," Journal of Asian Economics, Elsevier, vol. 60(C), pages 1-13.
    10. Omar Farooque & Wonlop Buachoom & Nam Hoang, 2019. "Interactive effects of executive compensation, firm performance and corporate governance: Evidence from an Asian market," Asia Pacific Journal of Management, Springer, vol. 36(4), pages 1111-1164, December.
    11. Miguel Jaimes-Valdez & Carlos A. Jacobo-Hernandez & Sergio Ochoa-Jimenez, 2017. "Corporate Governance: International Context and Trends from 2005 to 2015," International Journal of Business and Management, Canadian Center of Science and Education, vol. 12(3), pages 158-158, February.
    12. Ong, Kah Weng, 2019. "The Effects Of Internal Factors And External Factors On Yum! Brands, Inc Performance," MPRA Paper 97267, University Library of Munich, Germany.
    13. Tuan Nguyen & An Nguyen & Stuart Locke & Krishna Reddy, 2017. "Does the human capital of board directors add value to firms? Evidence from an Asian market," Cogent Economics & Finance, Taylor & Francis Journals, vol. 5(1), pages 1385439-138, January.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eme:mrrpps:v:34:y:2011:i:3:p:266-283. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Emerald Support (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.