Title: An investigation of the relationship between Corporate Governance and firm performance: the market emergence of the Autocratic firm

Authors: Edward J. Lusk, Michael Halperin, Graziella Capone De Palma

Addresses: The State University of New York (SUNY), School of Business and Economics, Plattsburgh, NY, USA; Department of Statistics, The Wharton School, University of Pennsylvania, Philadelphia, PA, USA. ' Lippincott Library of the Wharton School, The University of Pennsylvania, Philadelphia, PA, 19014, USA. ' The Division of Accountability for Continental Automotive Systems, Sao Paulo, SP, Brazil

Abstract: We investigate whether Corporate Governance (CG) is associated with firm performance in the market and with certain key GAAP financial measures. CG is measured by the index developed by Gompers et al. (2003). Based upon a longitudinal panel-sample of traded firms for the years 2000, 2002 and 2004, we formed three CG portfolios: Autocratic, Democratic, and a Middle group. Our findings show a reversal from the initial work of Gompers et al., and suggest a new operating profile: Autocratic forms of governance better serve the firm in the market but still make stockholders wary.

Keywords: corporate governance; agency costs; market performance; operating performance; firm valuation; firm performance; GAAP financial measures; autocratic firms.

DOI: 10.1504/IJCG.2008.020627

International Journal of Corporate Governance, 2008 Vol.1 No.2, pp.135 - 145

Published online: 05 Oct 2008 *

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