Corporate Governance, Firm Performance and Financial Leverage across Developed and Emerging Economies

Ploypailin Kijkasiwat (), Anwar Hussain and Amna Mumtaz
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Ploypailin Kijkasiwat: Faculty of Business Administration and Accountancy, Khon Kaen University, 123 Mittraphap Rd., Muang Khon Kaen 40002, Thailand
Anwar Hussain: Department of Business Administrations, Ghazi University, Dera Ghazi Khan 32200, Pakistan
Amna Mumtaz: Lahore Business School, The University of Lahore, Sargodha Campus, Lahore 40100, Pakistan

Risks, 2022, vol. 10, issue 10, 1-20

Abstract: This research inquiry analyzed the association between corporate governance and firm performance through the mediating role of financial leverage based on panel data of 2568 firms during the period from 2002 to 2017. The study uses a two-step dynamic panel as well as a generalized method of moments (GMM) to estimate these relationships. The findings demonstrated financial leverage mediates the relationship between corporate governance and firm performance in the context of developed economies, and also in emerging economies. Additionally, firm performance is negatively associated with corporate governance through excessive leverage. The study suggests it is the responsibility of the board to use low financial leverage to enhance firm performance. In emerging countries, firms with a large-sized board use low leverage, whereas in developed countries, firms with a small-sized board use low leverage to enhance corporate performance.

Keywords: corporate governance; firm performance; financial leverage; emerging countries; developed countries (search for similar items in EconPapers)
JEL-codes: C G0 G1 G2 G3 K2 M2 M4 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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