The impact of corporate governance on firm value: Understanding the role of strategic change

Tanveer Bagh, Ahmed Imran Hunjra and Shaen Corbet

International Review of Economics & Finance, 2025, vol. 103, issue C

Abstract: This study explores the impact of corporate governance practices on firm value and examines the moderating role of strategic change within publicly traded US companies. Utilising a comprehensive sample of 1,827 firms, we employ dynamic panel two-step Generalised Method of Moments (GMM) and high-dimensional fixed-effect methodologies to analyse these relationships robustly. Our findings indicate that robust corporate governance significantly enhances firm value, and strategic change initiatives further strengthen this effect. By leveraging Bloomberg’s governance disclosure data, we construct an index differentiating between high and low levels of governance disclosure. The results demonstrate that firm value significantly improves when corporate governance disclosures exceed industry and year-adjusted averages. This research contributes to research surrounding corporate governance and firm valuation, providing critical insights designed to enhance organisational performance and shareholder value through effective governance and strategic agility.

Keywords: Corporate governance; Firm value; Strategic change; Dynamic panel GMM; Governance disclosures; Sustainable development (search for similar items in EconPapers)
JEL-codes: G32 G34 L25 M14 Q01 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:103:y:2025:i:c:s1059056025006355

DOI: 10.1016/j.iref.2025.104472

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