Does Corporate Governance Determine Corporate Performance and Dividends During Financial Crisis: Evidence from Poland

Abstract

This study seeks to investigate the relationship between corporate governance, measured by Corporate Governance Index (CGI), and firm’s performance and dividend payouts during the financial crisis in Poland. The empirical approach in the study lies in constructing a comprehensive measures of the corporate governance for 298 non-financial companies listed on Warsaw Stock Exchange in the years 2006-2010. The results shows a positive association between corporate governance and performance measured by Tobin’s q. Moreover, I find evidence that higher corporate governance leads to an increase in cash dividends. Finally, the results presents that during the recent financial crisis corporate governance is positively associated with return on assets. However, in the period of the financial crisis better governed companies paid dividends less generously than do firms with lower corporate governance standards.