Corporate Governance and Firm Financial Performance: A Meta-Analysis Study

Abstract

Based on the meta-analysis of 67 empirical research papers, this research extends prior reviews / meta-analysis studies by investigating the link of corporate governance (CG hereafter) mechanisms with firm financial performance. Further, this research contributes to the extant literature by making comparison of usefulness of CG mechanisms in both developed and developing countries. CG mechanisms appear to play differential role in driving corporate financial performance in both developed and developing countries. In developed countries board meeting and female representation on board has significant positive impact on firm financial performance, while board independence and board size has significant negative relationship. Inconsistent with the results of developed countries, firm financial performance appear to be negatively associated with board independence, board meeting, and managerial ownership and positively associated with ownership concentration. This difference can be attributed to different institutional settings in both developed and developing countries.

Keywords

• Corporate Governance, Firm Financial Performance, Board of Directors, Independent Directors, Board Size