Corporate governance and alternative performance measures: evidence from Australian firms
- 9 December 2011
- journal article
- research article
- Published by SAGE Publications in Australian Journal of Management
- Vol. 36 (3), 371-386
- https://doi.org/10.1177/0312896211413035
Abstract
We examine the extent to which individual monitoring mechanisms enhance firm performance and shareholder value. We use a sample of Australian firms, from 1994 to 2003, to analyse the relationship between firm performance and corporate governance. This provides a long time series of governance data by international standards and allows us to study governance–performance dynamics over an extensive period. We use Stern Stewart & Co’s economic value added (EVA) as an alternative performance measure and provide a comparison to Tobin’s Q. However, similar to the international evidence, we do not find a significant relationship between either of the performance measures and corporate governance. Using various econometric techniques we show that our results are also robust to endogeneity biases that can arise in the governance–performance relation.Keywords
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