Does economic freedom help or hurt the emerging markets? the moderating effect of economic freedom on the corporate governance - financial performance relationship: a cross-country study

Download

index.pdf

Date

2019

Author

Gün, Görkem

Metadata

Show full item record

This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

Item Usage Stats

289
views

161
downloads

This study investigates the relationship between corporate governance and financial performance of firms from distinct perspectives. First, the governance-performance relationship is examined by using three different types of financial performance indicators, which include accounting-based, valuation-based, and market-based performance indicators. Second, the study examines the governance-performance relationship in the emerging economies., while a sample of G-7 economies is also used to provide a comparison between the emerging and the developed economies. Third, the moderating effect of economic freedom on the association between corporate governance and financial performance is examined. Using data from 27 countries (including 20 emerging economies and 7 developed economies), we find that corporate governance is positively associated with the accounting-based financial performance in the emerging economies. For the developed economies, there is a significantly positive association between corporate governance and valuation-based financial performance. Also, the moderating effect of economic freedom is significant on the governance-performance relationship. However, the moderation effect diminishes as the level of economic freedom rises. The findings indicate that corporate governance is an important determinant of financial performance. Also, the economic and legal environment, including economic liberties, has a crucial role in the effectiveness of corporate governance. The outcomes are important for both business professionals and governmental authorities since the sole efforts of managers are not sufficient for effective corporate governance practices. The governmental institutions and agents are also responsible for providing the optimal environment in order for firms to implement the best corporate governance practices.

Subject Keywords

Corporations., Corporate Governance, Financial Performance, Economic Freedom, Moderation Effect, Emerging Markets.

URI

http://etd.lib.metu.edu.tr/upload/12623192/index.pdf
https://hdl.handle.net/11511/43365

Collections

Graduate School of Social Sciences, Thesis

Suggestions

OpenMETU
Core

Do corporate governance practices affect CEO compensation? The moderating effect of economic freedom on corporate governance - CEO compensation relationship: an international study Akgün, Şahin.; Sayarı Marcum, Naz,; Department of Business Administration (2019) This study analyzes the association between corporate governance and CEO compensation adopting the “Agency Theory” and “Managerial Power Theory”. First, we examine the direct relationship between corporate governance indicators (such as board structure, employee representatives on board, CEO duality, board independence, institutional share ownership, and insider share ownership) and CEO compensation. Second, the study concentrates on the moderating effect of firm performance on corporate governance – CEO co...
Do US Corporate Governance Standards Effectively Discourage Risk in the Emerging Markets? Sayari, Naz; Marcum, Bill (2018-06-01) This study provides an examination of the effect of various corporate governance factors on the management of the risks inherent in business and the potential divergent impact of these factors on US firms and firms in emerging countries. In particular, the study scrutinises corporate governance and corporate risk-taking behaviour across different political and socioeconomic environments. In a cross-sectional time-series setting, two-step generalised least squares regression outcomes reveal that the impact o...
Reducing risk in the emerging markets: Does enhancing corporate governance work? Sayari, Naz; Marcum, Bill (Elsevier BV, 2018-4) This study examines emerging market firms that adopt corporate governance standards similar to those in the US. The investigation highlights the impact governance standards may have on corporate risk taking, as measured by stock return volatility, under varying political and socioeconomic regimes. In a cross-sectional time-series setting, the analysis reveals that enhanced governance standards are associated with risk reductions among US domiciled firms, cross-listed American Depository Receipt companies (A...
Uncertainty, macroprudential policies and corporate leverage: Firm-level evidence Yarba, Ibrahim; Güner, Zehra Nuray (2020-06-01) This paper investigates the impact of macroprudential policies and uncertainty of economic environment on corporate leverage dynamics over the last decade. This is the first study to investigate the impact of macroprudential policies and uncertainty on leverage dynamics of Turkish non-financial firms using firm-level data. We argue in this paper that persistence of uncertainty should be a more appropriate factor affecting credit dynamics rather than uncertainty. In that sense, we construct a measure of unce...
Do Stock Index Futures Affect Economic Growth? Evidence from 32 Countries Şendeniz Yüncü, İlkay; Aydoğan, Kürşat (2018-01-26) This article investigates the relationship between stock index futures markets development and economic growth using time-series methods for 32 developed and developing countries. Evidence of cointegration between stock index futures and real economy in 29 countries suggests the presence of co-movements among the variables, indicating long-run stationarity in those countries. Our findings show that there is Granger-causality from stock index futures markets development to economic growth for middle-income c...

Citation Formats

G. Gün, “Does economic freedom help or hurt the emerging markets? the moderating effect of economic freedom on the corporate governance - financial performance relationship: a cross-country study,” Thesis (M.S.) -- Graduate School of Social Sciences. Business Administration., Middle East Technical University, 2019.