The Effect of Strengthened Corporate Governance on Firm Performance in the United States

  • Dishant Pandya Assistant Professor of Finance, School of Business, Spalding University, Louisville, Kentucky, United States.
  • Ian Andrew Van Deventer Assistant Professor of Accounting, School of Business, Spalding University, Louisville, Kentucky, United States.

Abstract

In response to the accounting scandals of the late 1990s, regulators adopted changes to corporate-governance rules in 2003 in an effort to restore investor confidence in the stock market. The purpose of this study is to determine whether the changes to board leadership structure imposed on U.S. companies affected firm performance as measured by operating return on assets. This study was conducted with a sample of 857 publicly traded companies listed on the New York Stock Exchange and 11,632 firm-year observations from the period 1997-2012. Using a difference-in-difference estimator and multivariate analysis, we found a positive and significant indication that changes to board leadership structure improved the long-run performance of firms that were previously insider controlled. Our study indicates that some firms were not ideally structured prior to 2003 when the changes in corporate-governance rules took effect for publicly traded companies listed on the New York Stock Exchange.

Keywords: Corporate-governance rules, Firm performance, New York stock exchange, Operating return on assets.

Downloads

Download data is not yet available.
Statistics
142 Views | 77 Downloads
Citations
How to Cite
Pandya, D., & Van Deventer, I. A. (2021, July 19). The Effect of Strengthened Corporate Governance on Firm Performance in the United States. Journal of Accounting, Business and Finance Research, 12(2), 26-31. https://doi.org/https://doi.org/10.20448/2002.122.26.31
Section
Articles