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Creator |
07d0eeef2ae7be193b514315fc8909b4 |
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Date |
2013 |
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Is Part Of |
repository |
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issuer |
ext-065646961f0dd960706886a6ec31231a |
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issuer |
ext-3287f54e97600c23ec6f6092de2111d0 |
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issuer |
ext-53322cf2a3949c2280dfd1a15fee67e3 |
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issuer |
ext-63484d1bfb3118159eb3d3106e653a0f |
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issuer |
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issuer |
ext-49c2de6ca42de474617ec8fea7d470ec |
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issuer |
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issuer |
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issuer |
ext-5ae8ca8126dad897808daba31877a2cb |
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issuer |
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issuer |
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issuer |
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issuer |
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issuer |
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issuer |
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issuer |
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issuer |
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abstract |
Various theories that underpin corporate governance research predict that strong internal
corporate governance mechanisms enhance the operating and financial performance of
firms. These theories also predict that strong internal corporate governance mechanisms
would increase firms’ chances of survival during a financial crisis. This thesis tests
these theoretical claims and makes a contribution by analysing the underlying governance-performance
relationship from multiple theoretical perspectives (i.e. agency theory, stewardship
theory and resource dependence theory) across three time periods. Adopting an index-based
approach, the thesis investigates the impact of non-compliance with the UK corporate
governance code on the performance of firms. The thesis also contributes to methodological
approaches in this context by investigating the impact of non-compliance on the survival
of firms during the financial crisis. Applying fixed and random effects models, a
sample of 274 UK listed firms is analysed for the period 2003-2010.
The results show that non-compliance is, unexpectedly, positively associated with
the performance of non-financial firms. This indicates that non-compliant firms outperformed
compliant firms. However, although statistically not significant, the results also
show that for non-financial firms, non-compliance decreases a firm’s chances of survival
during the financial crisis. For financial firms the results are mixed for different
measures of performance and across different time periods. The thesis extends knowledge
of the governance-performance relationship by showing that non-compliance has different
implications for firms across different time periods and industries.
The thesis makes another contribution to knowledge by investigating the. relationship
between individual corporate governance mechanisms and performance. In this regard,
it makes three contributions. First, it shows that board independence is negatively
associated with performance, which supports the stewardship theory. For non-financial
firms as predicted by resource dependence theory board independence is positively
associated with performance only in the crisis period. Second, it provides evidence
that extra board committees are negatively associated with the performance of firms
and renders support to the agency theory. Third, it shows that internal control mechanisms
are positively associated with performance in the period before the financial crisis,
but during the financial crisis they negatively affect the performance of firms in
both financial and non-financial sectors. This finding supports the two alternative
views from the agency theory perspective in this context.
These results demonstrate the benefits of the ‘comply or explain’ principle of corporate
governance which provides firms with a choice either to comply with the recommended
codes or explain their non-compliance. The results also imply that the effect of various
corporate governance mechanisms on the performance of firms varies between the financial
and non-financial sectors. Finally, the results imply that the governance-performance
relationship is very complex and could be better explained by adopting multiple theoretical
perspectives rather than using a single theory to understand it. |
| 61607 |
authorList |
authors |
| 61607 |
degree |
phd |
| 61607 |
status |
unpublished |
| 61607 |
status |
peerReviewed |
| 61607 |
uri |
http://data.open.ac.uk/oro/document/875632 |
| 61607 |
uri |
http://data.open.ac.uk/oro/document/875633 |
| 61607 |
uri |
http://data.open.ac.uk/oro/document/875634 |
| 61607 |
uri |
http://data.open.ac.uk/oro/document/875635 |
| 61607 |
uri |
http://data.open.ac.uk/oro/document/875636 |
| 61607 |
uri |
http://data.open.ac.uk/oro/document/875637 |
| 61607 |
uri |
http://data.open.ac.uk/oro/document/876178 |
| 61607 |
type |
Article |
| 61607 |
type |
Thesis |
| 61607 |
label |
Ahmad, Sardar (2013). Internal Corporate Governance Mechanisms and the Performance
of Firms in the Context of the Recent Financial Crisis: Evidence From the UK. PhD
thesis The Open University. |
| 61607 |
label |
Ahmad, Sardar (2013). Internal Corporate Governance Mechanisms and the Performance
of Firms in the Context of the Recent Financial Crisis: Evidence From the UK. PhD
thesis The Open University. |
| 61607 |
Title |
Internal Corporate Governance Mechanisms and the Performance of Firms in the Context
of the Recent Financial Crisis: Evidence From the UK |
| 61607 |
in dataset |
oro |