Abstract
Our finding contributes towards the understanding of movements regarding the adoption of corporate governance practice in emerging countries such as Romania and its impact on business performances of a company. We have developed two econometric models to assess the business performances of the companies listed on Bucharest Stock Exchange, in order to point out the impact of corporate governance on business performances. Our results are inconsistent for the period 2001–2011, but if we consider only 2011, the results document a positive correlation between corporate governance quality and market value of companies, such it is reflected by Tobin’s Q. Therefore, our results contribute to the studies relating corporate governance and business performances, as it confirms a positive relationship between the two variables which appears once the Romanian emerging economy has began to adopt the best corporate governance practices. Firstly, our research has important implications for managers in order to know that the adoption of the best corporate governance practices could contribute to the financial success of the firm. Secondly, the results are useful for any investor who needs to consider the quality of corporate governance as a good predictor for the best rate of return of theirs investments. Moreover, our findings have also implications on policy-makers and regulatory authorities in European developing countries and offer them a barometer of adopting the best corporate governance practices in European space.
Highlights
The term corporate governance has emerged in common usage in the 70’s, in the United States, in the middle of the Watergate scandal, when it was revealed that U.S companies were involved in U.S politics, by making contributions to various political par-Journal of Business Economics and Management, 2016, 17(3): 458–474 ties
Corporate governance is increasingly recognized as a key element in attracting investments and increasing the business performance and competitiveness of a company
A first objective of our research consist in developing a methodology for assessing the quality of corporate governance, including an index of corporate governance, adapted to the national development framework of the Romanian economy and to the Corporate Governance Code of the Bucharest Stock Exchange
Summary
The term corporate governance has emerged in common usage in the 70’s, in the United States, in the middle of the Watergate scandal, when it was revealed that U.S companies were involved in U.S politics, by making contributions to various political par-Journal of Business Economics and Management, 2016, 17(3): 458–474 ties. The term corporate governance has emerged in common usage in the 70’s, in the United States, in the middle of the Watergate scandal, when it was revealed that U.S companies were involved in U.S politics, by making contributions to various political par-. Uncontrolled development of financial innovations, especially derivatives, contributed to the dematerialization of business operations and favoured the creative accounting practices designed to manipulate those who analyze financial statements (Le Roy, Marchesnay 2005). Sustainable development and, globalization require new performance standards, that go beyond economic goals. In the new context of sustainable development, new social and environmental standards come to complete the business performances. Positive relationship between the qualstructed by using 39 ity of CG and firm’s quality financial criteria performance.
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