Abstract
The aim of this paper is to empirically test the impact of internal governance mechanisms on the financial and stock market performance of Moroccan listed companies. Board of directors’ characteristics such as independence and transparency, concentration, and presence of employees in the ownership structure, as well as some cognitive aspects of governance, represent the basis for discussion. Secondary data of a sample of 44 listed companies in the Casablanca Stock Exchange was analyzed using multiple linear regression. The results of this empirical study revealed that the financial and stock market performance of the companies that are captured by the return on equity (ROE) and the market to book ratio (M to B) significantly correlate with the adoption of the hybrid corporate governance approach. The relevance of this study is to enrich researches that deal with corporate governance and its impact on business performance in the context of Moroccan listed companies.
Highlights
The efficiency of internal corporate governance mechanisms has been analyzed in the context of the main approaches of corporate governance, according to their contribution in maximizing the company’s value creation and performance (Madhar, 2016).The disciplinary approach stipulates that decision delegation within companies, which is often carried out in a universe of imperfect information, generates the risk that agents no longer pursue the objectives of maximizing shareholder profit, as a result of divergent interests on both sides.Companies’ value creation is analyzed within the framework of this vision in terms of reducing value lost due to conflicts of interest between shareholders and agents, without taking into consideration the productive dimension
We have developed a rating grid of governance system’s quality for each company, based primarily on the mentioned theoretical framework, the regulatory framework regulating corporate governance in Moroccan listed companies’ context, the best practices provided by soft laws, the quality rating systems of corporate governance practices that are used by international credit risk rating agencies, the latest survey
The main objective of this research is to study the impact of internal corporate governance mechanisms on Moroccan listed companies’ financial and stock market performance
Summary
The efficiency of internal corporate governance mechanisms has been analyzed in the context of the main approaches of corporate governance, according to their contribution in maximizing the company’s value creation and performance (Madhar, 2016). Companies’ value creation is analyzed within the framework of this vision in terms of reducing value lost due to conflicts of interest between shareholders and agents, without taking into consideration the productive dimension. This latter allows companies to capture growth opportunities through the development of a sustained and value-generating competitive advantage. The contribution of the cognitive governance approach that focuses on the impact of corporate governance practices on innovation, competency building, and growth opportunities (Arena, 2013)
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