The Effect of Corporate Governance on Financial Performance: Evidence From a Shareholder-Oriented System

Abdullah, Hariem and Tursoy, Turgut (2023) The Effect of Corporate Governance on Financial Performance: Evidence From a Shareholder-Oriented System. Iranian Journal of Management Studies, 16 (1). pp. 79-95.

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Despite the vast literature, the relationship between corporate governance and firm performance is hotly debated in the research field of corporate finance. This study examined the effect of Corporate Governance (GC) on the performance of firms in non-financial sectors listed on the Frankfort Stock Exchange in Germany over the period 2002-2018. To this end, we measured firm performance based on accounting data, using ROA and ROE. The results provided evidence that the characteristics of the audit committee and board of directors have significant and negative effects on firm financial performance, whereas the effect of CEO duality is not statistically significant. Large board size could bring about the issue of deferred decision making by the board members in the insider-controlled CG system of Germany. Furthermore, IFRS adoption in 2005 was found to have a positive effect on firm performance. These results can raise considerable interest in managers and shareholders, precisely when they prioritize the financial performance of their companies.

Item Type: Article
Uncontrolled Keywords: corporate governance, audit committee, board of directors, financial performance, IFRS, shareholder-oriented system.
Subjects: Social Science > Banking
Social Science > HB Economic Theory
Social Science > HD Industries. Land use. Labor > HD28 Management. Industrial Management
Social Science > HF Commerce > HF5601 Accounting
Social Science > HG Finance
Social Science > HJ Public Finance
Depositing User: ePrints deposit
Date Deposited: 18 Sep 2023 13:37
Last Modified: 18 Sep 2023 13:37

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