The impact of governance reform on performance and transparency

• 成果类型: Article
• 署名作者: Price, Richard; Roman, Francisco J.; Rountree, Brian
• 署名单位: Rice University; Texas Tech University System; Texas Tech University
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2010.08.005
• 发表日期: 2011
• 页码: 76-96
• 关键词: CORPORATE GOVERNANCE; performance; TRANSPARENCY; Dividend policy; earnings management

摘要

This study examines the influence of Mexico's efforts to improve corporate governance on firm performance and transparency. We utilize compliance data from the Code of 'Best' Corporate Practices, disclosed annually by public firms in Mexico, as a measure of corporate governance strength. We document a significant increase in compliance over 2000-2004 indicating Mexican companies view non-compliance as costly. However, we find no association between the governance index and firm performance, nor is there a relation with transparency. Instead, we find firms with greater compliance resort to the more costly mechanism of making dividend payments (higher propensity to pay and greater yield) to reduce agency conflicts. We conclude these associations are the direct result of the institutional features of the Mexican business environment, which is characterized by concentrated ownership of insiders, interlocked boards of directors, a lack of insider trading enforcement, and generally poor protection of minority investors. Our results show that monitoring mechanisms alone are not enough to fundamentally change economic behavior. (C) 2010 Elsevier BM. All rights reserved.