Examining the impact of corporate governance reforms on firm performance in emerging markets: The mediating effect of board roles

Abstract

The notion of corporate governance has been given credence on the policy agenda in many countries across the globe, especially after the frequent non-stop worldwide cases of corporate fraud and scandals. This has brought about the massive campaign on corporate governance reforms on finding dynamic corporate practices, structures, and systems that ensure that firms remain profitable, attractive, and sustainable. This study examines the effect of board structural characteristics (BSC) to achieve firm performance (FP) via the mediating effects of board roles (BRs) (frequency of board meetings (FOBM) and board size (BZ)) and the intervening role of corporate governance (CG) code which is an innovative model. By collecting data for 392 listed companies in South Africa for the period 2006-2018 and by employing the generalized method of moments (GMM) model, the findings of the study reveal that FOBM and BZ mediate the relationship between BSC and FP. Furthermore, the study finds a novelty in the interactive effect of corporate governance reforms with BSC on BRs. The study uncovers significant incremental effects of corporate governance reforms interacting with the BSC. These interactions significantly increase the relation after the implementation of the CG code.