| 46836 |
Creator |
07d0eeef2ae7be193b514315fc8909b4 |
| 46836 |
Creator |
65a432173c41143e59b409862be513fd |
| 46836 |
Creator |
251f22b93ab67ccbe5a1e14f44dca6c0 |
| 46836 |
Date |
2016-03-21 |
| 46836 |
Date |
2016-03-21 |
| 46836 |
Is Part Of |
repository |
| 46836 |
abstract |
This paper examines the effectiveness of internal corporate governance mechanisms
for improving the performance of financial firms in the UK. Using Generalised Methods
of Moments (GMM) estimates that control for dynamic endogeneity, this study shows
that firm performance as measured by Total Shareholder Returns (TSR) and Return on
Equity (ROE) is negatively associated with the level of non-compliance with the UK
Corporate Governance Code. The study also finds that having a higher number of internal
controls is most effective monitoring mechanism and is positively associated with
firm performance. However, against our expectations, board independence represented
by the number of non-executive directs (NEDs) is the least effective monitoring mechanism
and is negatively associated with the performance of firms. The study also shows that
directors’ share ownership is an effective incentive mechanism for aligning their
interests with shareholders as it is positively associated with firm performance.
However, results of the study suggest that directors’ remuneration is negatively associated
with performance. Finally, the study provides evidence which indicates that board
size impact the performance of firms differently in different time periods. As proposed
by agency theory the study provides evidence that shows the positive impact of effective
monitoring and incentive alignment for performance. It also provides support for the
resource dependence view that directors are a critical resource during difficult economic
times. |
| 46836 |
abstract |
This paper examines the effectiveness of internal corporate governance mechanisms
for improving the performance of financial firms in the UK. Using Generalised Methods
of Moments (GMM) estimates that control for dynamic endogeneity, this study shows
that firm performance as measured by Total Shareholder Returns (TSR) and Return on
Equity (ROE) is negatively associated with the level of non-compliance with the UK
Corporate Governance Code. The study also finds that having a higher number of internal
controls is most effective monitoring mechanism and is positively associated with
firm performance. However, against our expectations, board independence represented
by the number of non-executive directs (NEDs) is the least effective monitoring mechanism
and is negatively associated with the performance of firms. The study also shows that
directors’ share ownership is an effective incentive mechanism for aligning their
interests with shareholders as it is positively associated with firm performance.
However, results of the study suggest that directors’ remuneration is negatively associated
with performance. Finally, the study provides evidence which indicates that board
size impact the performance of firms differently in different time periods. As proposed
by agency theory the study provides evidence that shows the positive impact of effective
monitoring and incentive alignment for performance. It also provides support for the
resource dependence view that directors are a critical resource during difficult economic
times. |
| 46836 |
authorList |
authors |
| 46836 |
presentedAt |
ext-1b3e8c1082dfd35db1e4483ed121b023 |
| 46836 |
status |
peerReviewed |
| 46836 |
uri |
http://data.open.ac.uk/oro/document/478833 |
| 46836 |
uri |
http://data.open.ac.uk/oro/document/478850 |
| 46836 |
uri |
http://data.open.ac.uk/oro/document/478851 |
| 46836 |
uri |
http://data.open.ac.uk/oro/document/478852 |
| 46836 |
uri |
http://data.open.ac.uk/oro/document/478853 |
| 46836 |
uri |
http://data.open.ac.uk/oro/document/478854 |
| 46836 |
uri |
http://data.open.ac.uk/oro/document/487290 |
| 46836 |
type |
AcademicArticle |
| 46836 |
type |
Article |
| 46836 |
label |
Ahmad, Sardar ; Kodwani, Devendra and Upton, Martin (2016). Does governance make
a difference to corporate performance in the financial crisis? UK Evidence. In:
British Accounting and Finance Association Annual Conference, 21-23 March 2016, University
Of Bath, Bath, UK. |
| 46836 |
label |
Ahmad, Sardar ; Kodwani, Devendra and Upton, Martin (2016). Does governance
make a difference to corporate performance in the financial crisis? UK Evidence.
In: British Accounting and Finance Association Annual Conference, 21-23 March 2016,
University Of Bath, Bath, UK. |
| 46836 |
Title |
Does governance make a difference to corporate performance in the financial crisis?
UK Evidence |
| 46836 |
Title |
Does governance make a difference to corporate performance in the financial crisis?
UK Evidence |
| 46836 |
in dataset |
oro |