The Ambivalent Results of Extant Research on the Impact of Strong Governance on Corporate Performance

Ira M. Millstein and Paul W. MacAvoy

Chapter 4 in The Recurrent Crisis in Corporate Governance, 2003, pp 32-42 from Palgrave Macmillan

Abstract: Abstract The ‘effectiveness’ of boards has been the subject of numerous investigations by analysts and financial experts. They have not resulted in a consensus position. The studies have centred on major events such as corporate takeovers, restructurings, or replacements of the CEO. A substantial body of work has developed regarding the relationship of these events, and how they were addressed in the context of corporate governance. But this body of work has been too narrowly focused for any general findings on the governance performance relationship. The initial difficulty in generating conclusive empirical results stems from the failure to develop a proxy for board ‘independence’. Most studies have relied on some measure of board composition, such as the number of outside versus inside directors, to indicate ‘independence’.1 However, on their face, these surrogates are not associated with reform practices and shed little light on the conduct of an independent board.

Keywords: Corporate Governance; Firm Performance; Institutional Investor; Corporate Performance; Board Size (search for similar items in EconPapers)
Date: 2003
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-1-4039-4688-1_4

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DOI: 10.1057/9781403946881_4

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