Prediction of Corporate Governance-Performance Relationship With a Dynamic Model

Abstract

The objective of this study is to examine whether there is a relationship between the performances and corporate governance levels of companies traded in corporate governance index between 2007 and 2015 in Turkey, which is an emerging market. Different from the previous studies conducted in Turkey, the analysis is conducted with a dynamic method, the System Generalized Moments Method (system GMM). Furthermore, the analysis covered a long sampling period from the date when corporate governance is started to be calculated until today (2007 -2015). Analysis results demonstrated that there is a positive and statistically significant relationship between corporate governance scores and accounting-based ROA and market-based Tobin's Q ratios.

The financial impacts of board mechanisms on performance: The case of listed Moroccan banks

“…According to (Alper & Aydoğan, 2017;Munisi & Randøy, 2013), the two models OLS and the fixed effects, cause problems of estimates inconsistency under the assumption of endogeneity presence. Therefore, we imply in this study a dynamic model that suits and apprehends the dynamic nature of the relationship between corporate governance and financial performance.…”