A Critical Assessment of Interrelationship Among Corporate Governance, Financial Performance, Refined Economic Value Added to Measure Firm Value and Return on Stock

Leo Vashkor Dewri ()
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Leo Vashkor Dewri: East West University

Journal of the Knowledge Economy, 2022, vol. 13, issue 4, No 5, 2718-2759

Abstract: Abstract The purpose of this study is to measure firm value (FV) and return on stock (RoS) by considering corporate governance (CG), financial performance (FP), and refined economic value added (REVA) combinedly and also identify the convergence among these three parameters. The GMM estimator’s method was applied on the dataset of Dhaka Stock Exchange listed firms during the period 2013 to 2018. The sample contains 310 firms with 1860 firm years. The study reveals that CG, FP, and REVA characteristics are significantly conjuncted with FV and RoS. Firms, regardless of size, age, and nature, adopting good CG within business management practice can significantly improve FP and continuously generate positive economic value for both firms and shareholders over the period, thus enhance FV and RoS. Moreover, firms confirming continuous growth of FV are able to provide positive RoS to shareholders. This study ensures necessary guidelines for both firms’ manager and investors, as managers will be encouraged to implement good CG within the firms and confirmed to maintain healthy FP and continues REVA growth for the firm. Investors can assess firm performance and future growth opportunities before taking any investment decision.

Keywords: Firm value; Return on Stock; Corporate Governance; Financial Performance; Refined economic value-added (search for similar items in EconPapers)
Date: 2022
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DOI: 10.1007/s13132-021-00808-8

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