Corporate governance, external market discipline and firm productivity

Date

2011

Authors

Tian, Gloria
Twite, Garry

Journal Title

Journal ISSN

Volume Title

Publisher

Elsevier

Abstract

Using a sample of Australian companies over the 2000-2005 period, we examine the impact of internal corporate governance on firm's total factor productivity, taking into account the interaction between internal governance and external market discipline. Our empirical findings point to a substitution effect between product market competitiveness and firm-level corporate governance. Overall, internal corporate governance mechanisms - more efficient boards and greater CEO stock-based compensation - are effective instruments for improving firm productivity. However, internal governance is less effective when a firm faces a highly competitive product market. We find only weak empirical support for an association between firm's ownership structure and productivity, and no support for an association between industry takeover intensity and firm productivity.

Description

Keywords

Keywords: Corporate governance; External market discipline; Firm productivity

Citation

Source

Journal of Corporate Finance

Type

Journal article

Book Title

Entity type

Access Statement

License Rights

DOI

10.1016/j.jcorpfin.2010.12.004

Restricted until

2037-12-31