Title: Principal-principal internal governance mechanisms and the firms' performance: evidence from an emerging market

Authors: Ahmed Abousamak

Addresses: College of Business Administration, Al Ain University of Science and Technology, Al Ain, UAE; Faculty of Commerce, Suez Canal University, Egypt

Abstract: The current study investigates the effect of internal governance mechanisms, adopted by the most actively traded companies on the Egyptian Stock Market in 2008-2009, and the performance of these firms. To investigate the aforementioned phenomenon, the current study develops two indices namely: shareholders' rights and investor relations (SRIRI) and ownership and control structure (OCSI). After controlling for the variables that may affect this relationship, the current study regresses the firms' performance measured by market, accounting, and hybrid type methods of valuation on the aforementioned indces. OCSI has more explanatory power than SRIRI, however, the results are inconclusive. The non-complementariness of the two corporate governance indices is evidenced. Considering the time and small sample size constraints, the current study contributes to the existing literature by operationalising the independent and joint effect of two principal-principal corporate governance mechanisms on firms' performance in an emerging market such as Egypt.

Keywords: corporate governance; investor protection; firm performance; Egypt; emerging markets; principal-principal governance; internal governance; shareholder rights; investor relations; ownership structure; control structure; stock market; accounting; firm valuation.

DOI: 10.1504/IJEBR.2016.075312

International Journal of Economics and Business Research, 2016 Vol.11 No.2, pp.145 - 169

Received: 08 May 2015
Accepted: 26 Oct 2015
Published online: 11 Mar 2016 *

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