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Corporate governance mechanisms and their impact on company performance: A structural equation model analysis

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  • Mohammad I Azim

Abstract

The purpose of this study is to use structural equation modelling (SEM) to investigate the extent to which different monitoring mechanisms – the board and its committees, shareholders and independent auditors – are complements (i.e. a positive covariance) or substitutes (a negative covariance) for each other. The lack of consistent results in previous corporate governance research may be attributable to attention not being paid to monitoring mechanisms’ substitution or complementary relationships. By using SEM, this study concludes that complementary and substitution relationships among monitoring mechanisms are present. Using data from the pre – and post – global financial crisis period, this study explains where such corporate government impacts occurred, the inconsistencies that are evident in previous studies and provides insights into corporate governance practices.

Suggested Citation

  • Mohammad I Azim, 2012. "Corporate governance mechanisms and their impact on company performance: A structural equation model analysis," Australian Journal of Management, Australian School of Business, vol. 37(3), pages 481-505, December.
  • Handle: RePEc:sae:ausman:v:37:y:2012:i:3:p:481-505
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    Cited by:

    1. repec:rss:jnljms:v2i9p2 is not listed on IDEAS
    2. 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.
    3. repec:eee:advacc:v:33:y:2016:i:c:p:59-67 is not listed on IDEAS
    4. repec:rss:jnljms:v2i10p2 is not listed on IDEAS

    More about this item

    Keywords

    complement; monitoring; performance; structural equation modelling; substitution;

    JEL classification:

    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • M42 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Auditing
    • M49 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Other

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