Governance mechanisms, simultaneity and firm value in Australia
by Lukas Y. Setia-Atmaja
International Journal of Corporate Governance (IJCG), Vol. 1, No. 3, 2009

Abstract: This study examines whether firms determine governance mechanisms such as dividend, board independence, board size and debt simultaneously, and whether firm value is associated with these mechanisms. Using panel data on a sample of Australian publicly listed firms over the period 2000-2005 (1530 firm-year observations), the study finds that dividends, board independence, board size and debt are jointly determined. The research also finds that board independence is positively associated with firm value. In contrast, debt appears to be negatively associated with firm value, while dividend and board size are not significantly related to firm value. For policy makers, the findings could serve to justify initiatives to encourage more independent directors on boards.

Online publication date: Sat, 28-Nov-2009

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