Corporate governance and firm performance.

Abstract

In recent years, the spate of accounting scandals such as the downfall of Enron Corporation and the bankruptcy of WorldCom have placed an increased emphasis on good corporate governance. This raises the question whether increased time and effort spent to improve corporate governance practices by management can enhance firm performance. In this study, we investigate whether corporate governance practices and firm financial performance are associated. We also examine if four widely-debated components of good governance are associated with better firm performance.