Operational governance and firm value
by Karen Schnatterly
International Journal of Strategic Change Management (IJSCM), Vol. 1, No. 4, 2009

Abstract: Most governance research has focused on high-level mechanisms operating at the interface of owners and top managers. Yet there is evidence that operational governance mechanisms function within the firm and can be used to prevent value loss. In this study, we supplement the existing evidence of the importance of operational governance mechanisms and examine these mechanisms to assess their association with value creation. We find those operational governance mechanisms such as clarity of policies and procedures, opportunities for communication, a compensation system that rewards more employees for performance and strong accounting systems discriminate among high-, median- and low-value firms, while high-level mechanisms do not.

Online publication date: Tue, 02-Feb-2010

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