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Impact Of Corporate Governance On Performance Of Companies

  • Igor Todorovic
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    Corporate governance is system by which companies are directed and controlled, but also the relationship between companies and interest groups which determines its strategic direction and performance. Through appropriate application of the principles of corporate governance a company increases profitability and returns, improves its competitiveness, credibility and reputation and improves relations with key stakeholders such as investors, business partners, employees, customers, etc. Companies that insist on the highest standards of governance reduce many risks that arise from daily operations. Such companies are able, by better performance and returns, to attract investors whose investments could help finance further growth and development. The study will assess the level of implementation of corporate governance and level of performance in companies from the Republika Srpska. Results of implementation of the corporate governance in companies will be presented using Scorecard analysis for evaluation of the implementation of practices and principles of corporate governance on a sample of 19 companies which are listed on the Official market of the Banja Luka Stock Exchange. Level of performance will be assessed by determining the net profit margin and earnings per share for the same sample of companies. Results will be compared with results obtained by a similar analysis conducted for companies listed on the Vienna Stock Exchange to determine the impact of corporate governance on performance of companies.

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    Article provided by Economic Laboratory for Transition Research (ELIT) in its journal Montenegrin Journal of Economics.

    Volume (Year): 9 (2013)
    Issue (Month): 2 ()
    Pages: 47-54

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    Handle: RePEc:mje:mjejnl:v:9:y:2013:i:2:p:47-54
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    1. Leuz, Christian & Lins, Karl V. & Warnock, Francis E., 2007. "Do Foreigners Invest Less in Poorly Governed Firms?," Working Papers 07-2, University of Pennsylvania, Wharton School, Weiss Center.
    2. Michael J. Brennan. and H. Henry Cao., 1997. "International Portfolio Investment Flows," Research Program in Finance Working Papers RPF-271, University of California at Berkeley.
    3. Jun-Koo Kang & Rene M. Stulz, 1995. "Why Is There a Home Bias? An Analysis of Foreign Portfolio Equity Ownership in Japan," NBER Working Papers 5166, National Bureau of Economic Research, Inc.
    4. Merton, Robert C., 1987. "A simple model of capital market equilibrium with incomplete information," Working papers 1869-87., Massachusetts Institute of Technology (MIT), Sloan School of Management.
    5. Choe, Hyuk & Kho, Bong-Chan & Stulz, Rene M., 2004. "Do Domestic Investors Have an Edge? The Trading Experience of Foreign Investors in Korea," Working Paper Series 2004-6, Ohio State University, Charles A. Dice Center for Research in Financial Economics.
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