Reducing Risk through Governance: Impact of Compensation, Defense, and Accounting Practices

I-Jan Yeh, Ching-Liang Chang, Joe Ueng and Vinita Ramaswamy
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I-Jan Yeh: Department of Public Policy, Shih Hsin University, Taipei, Taiwan
Ching-Liang Chang: College of Management, Yuan Ze University, Zhongli, Taiwan
Joe Ueng: Department of Economics, Finance, and Decision Information Sciences, University of St. Thomas, Houston, TX, USA
Vinita Ramaswamy: Cameron School of Business, University of St. Thomas, Houston, TX, USA

International Journal of Risk and Contingency Management (IJRCM), 2014, vol. 3, issue 2, 43-53

Abstract: The main purpose of this study is to investigate the determinants of formal governance policy. Many firms have a formal governance policy. Others, however, have no such a policy. This study examines what kind of firm's characteristics that encourage companies to adopt a formal governance policy. Data were collected from Corporate Library. A sample of 3,068 firms from the database of 2010 Corporate Library was analyzed. Results show that when firms have a better financial performance and better corporate governance practice, they are more likely to have a formal governance policy. Specifically, when firms have a better board rating, compensation policy, takeover defense strategy, and accounting practice, firms are more likely to have a formal governance policy.

Date: 2014
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Persistent link: https://EconPapers.repec.org/RePEc:igg:jrcm00:v:3:y:2014:i:2:p:43-53

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