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The Influence of Corporate Governance Systems on a Company’s Market Value

Ionica Oncioiu (), Anca-Gabriela Petrescu (), Florentina-Raluca Bîlcan (), Marius Petrescu (), Melinda Timea Fülöp () and Dan Ioan Topor ()
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Ionica Oncioiu: Faculty of Finance-Banking, Accountancy and Business Administration, Titu Maiorescu University, 040051 Bucharest, Romania
Anca-Gabriela Petrescu: Faculty of Economic Sciences, Valahia University, 130024 Targoviste, Romania
Florentina-Raluca Bîlcan: Faculty of Economic Sciences, Valahia University, 130024 Targoviste, Romania
Marius Petrescu: Faculty of Economic Sciences, Valahia University, 130024 Targoviste, Romania
Melinda Timea Fülöp: Faculty of Economics and Business Administration, Babeş–Bolyai University, 400591 Cluj-Napoca, Romania
Dan Ioan Topor: Faculty of Economic Sciences, 1 Decembrie 1918 University, 510009 Alba-Iulia, Romania

Sustainability, 2020, vol. 12, issue 8, 1-15

Abstract: Recent world events have refocused interest on the link between the existence of corporate governance and an entity’s effectiveness. The aim of this study was to identify the influence of the corporate governance system of an entity in order to measure its effects on market value. To achieve quality corporate governance and to increase an audit committee’s degree of effectiveness, one must take into consideration four core elements: members’ qualifications, authority, the resources necessary to develop the activity, and attention during the development of the activity. Our research methodology included a combination of qualitative analyses on theoretical aspects and a quantitative approach based on multiple regression and the estimation method. The main results showed that there is a solid link between strong corporate governance systems and effective audit committees, although we cannot state that the inclusion of an audit committee represents the key to success for a business. When studying the connection between audit committees and an entity’s market value, we found that this connection can lead to alleviating the problem of allocating power (principal–agent theory). We also found that the contribution of audit committees in corporate governance is to assess both the quality of financial reports and their approval and that creating an audit committee can have beneficial effects that can eventually lead to the consolidation of a company’s corporate governance.

Keywords: corporate governance; audit committee; market value; financial reports; sustainability (search for similar items in EconPapers)
JEL-codes: Q Q0 Q2 Q3 Q5 Q56 O13 (search for similar items in EconPapers)
Date: 2020
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