An investigation of the relationship between Corporate Governance and firm performance: the market emergence of the Autocratic firm

Edward J. Lusk, Michael Halperin and Graziella Capone De Palma

International Journal of Corporate Governance, 2008, vol. 1, issue 2, 135-145

Abstract: We investigate whether Corporate Governance (CG) is associated with firm performance in the market and with certain key GAAP financial measures. CG is measured by the index developed by Gompers et al. (2003). Based upon a longitudinal panel-sample of traded firms for the years 2000, 2002 and 2004, we formed three CG portfolios: Autocratic, Democratic, and a Middle group. Our findings show a reversal from the initial work of Gompers et al., and suggest a new operating profile: Autocratic forms of governance better serve the firm in the market but still make stockholders wary.

Keywords: corporate governance; agency costs; market performance; operating performance; firm valuation; firm performance; GAAP financial measures; autocratic firms. (search for similar items in EconPapers)
Date: 2008
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