Corporate Governance Mechanisms and Firm Performance:Evidence from Finland

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http://urn.fi/URN:ISBN:951-555-807-7
Julkaisun nimi: Corporate Governance Mechanisms and Firm Performance:Evidence from Finland
Tekijä: Nandelstadh von, Alexander; Rosenberg, Matts
Muu tekijä: Swedish School of Economics and Business Administration, Department of Finance and Statistics, Finance
Svenska handelshögskolan, Institutionen för finansiell ekonomi och ekonomisk statistik, Finansiell ekonomi
Kuuluu julkaisusarjaan: Working Papers - 497
ISSN: 0357-4598
ISBN: 951-555-807-7
Tiivistelmä: This paper examines the association between corporate governance attributes and firm performance of Finnish firms during 1990 – 2000. The empirical results suggest that corporate governance matters for firm performance. First, univariate test results indicate that firms characterized by a high (efficient) level of corporate governance have delivered greater stock returns, are higher valued based on the measure of Tobin’s Q, and exhibit higher ratios of cash flow to assets, on average, in comparison to their counterparts characterized by a low (inefficient) level of corporate governance. Second, controlling for a number of well-known determinants of stock returns, we find evidence that firms categorized by inefficient corporate governance have delivered inferior returns to shareholders during the investigation period. Finally, after controlling for several common determinants of firm value, we find that firms characterized by efficient corporate governance have been valued higher during the investigation period, measured by Tobin’s Q.This paper examines the association between corporate governance attributes and firm performance of Finnish firms during 1990 – 2000. The empirical results suggest that corporate governance matters for firm performance. First, univariate test results indicate that firms characterized by a high (efficient) level of corporate governance have delivered greater stock returns, are higher valued based on the measure of Tobin’s Q, and exhibit higher ratios of cash flow to assets, on average, in comparison to their counterparts characterized by a low (inefficient) level of corporate governance. Second, controlling for a number of well-known determinants of stock returns, we find evidence that firms categorized by inefficient corporate governance have delivered inferior returns to shareholders during the investigation period. Finally, after controlling for several common determinants of firm value, we find that firms characterized by efficient corporate governance have been valued higher during the investigation period, measured by Tobin’s Q.
URI: http://hdl.handle.net/10227/183
URN:ISBN:951-555-807-7
Päiväys: 2003
Avainsanat: corporate governance mechanisms
agency costs
firm performance
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