Board governance and corporate performance in the UK
Shaukat, Amama; Trojanowski, Grzegorz
Date: 2014
Working Paper
Publisher
University of Exeter
Abstract
We examine the link between the monitoring capacity of the board and corporate performance of UK
listed firms. We also investigate when and how firms use the flexibility offered by the voluntary
governance regime to make governance choices. We find a strong positive association between the
board governance index we construct and ...
We examine the link between the monitoring capacity of the board and corporate performance of UK
listed firms. We also investigate when and how firms use the flexibility offered by the voluntary
governance regime to make governance choices. We find a strong positive association between the
board governance index we construct and operating performance. Our results imply that adherence to
the board-related recommendations of the UK Code of Corporate Governance helps mitigate agency
problems, but investors do not value it correspondingly. Moreover, in contrast to prior UK findings
suggesting efficient adoption of Code recommendations, we find that firms at times use Code flexibility
opportunistically, which challenges the effectiveness of the voluntary approach to governance
regulation.
Finance and Accounting
Faculty of Environment, Science and Economy
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