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Corporate Governance and Firms Financial Performance in the United Kingdom

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journal contribution
posted on 08.12.2020, 11:44 by Martin Kyere, Marcel Ausloos
The objective of this study is to examine empirically the impact of good corporate governance on financial performance of United Kingdom non‐financial listed firms. Agency theory and stewardship theory serve as the bases of a conceptual model. Five corporate governance mechanisms are examined on two financial performance indicators, return on assets and Tobin's Q, employing cross‐sectional regression methodology. The conclusion drawn from empirical test so performed on 252 firms listed on London Stock Exchange for the year 2014 indicates a positive or a negative relationship, but also sometimes no effect, of corporate governance mechanisms impact on financial performance. The implications are discussed. Thereby, so distinguishing effects due to causes, we present a proof that, when the right corporate governance mechanisms are chosen, the finances of a firm can be improved. The results of this research should have some implication on academia and policy makers thoughts.

History

Citation

International Journal of Finance and Economics, 2020, https://doi.org/10.1002/ijfe.1883

Author affiliation

School of Business

Version

VoR (Version of Record)

Published in

International Journal of Finance and Economics

Publisher

Wiley

issn

1076-9307

Acceptance date

18/06/2020

Copyright date

2020

Available date

23/07/2020

Language

en