Title: Corporate governance and performance during normal and crisis periods: evidence from an emerging market perspective

Authors: Karen Watkins, Jaap Spronk, Dick Van Dijk

Addresses: Department of Economics, Universidad Popular Autonoma del Estado de Puebla, 21 Sur 1103, Col. Santiago, CP 72160, Puebla, Pue., Mexico. ' Rotterdam School of Management, Erasmus University, Burg. Oudlaan 50, 3062 PA Rotterdam, P.O. Box 1738, 3000DR Rotterdam, The Netherlands. ' Econometric Institute, Erasmus University Rotterdam, Burg. Oudlaan 50, P.O. Box 1738, 3000 DR, Rotterdam, The Netherlands

Abstract: This paper examines the effects of internal corporate governance arrangements on emerging markets| firm performance. Unlike most literature on the topic, we study both normal and crisis periods. Using 176 Mexican companies as case study, we find through a random effects panel data model significant outcome differences, according to corporate governance characteristics. In general, bank links represent negative governance schemes, while having family ties, belonging to business groups, and being export-oriented constitute positive governance mechanisms. Nonetheless, these conclusions are not robust during all periods. For instance, during normal episodes having group affiliation weakens performance, while the contrary is found during crisis times.

Keywords: corporate governance; bank links; family ties; business groups; export orientation; ADRs; American depository receipts; firm performance; financial crisis; emerging markets; Mexico; case study; panel data.

DOI: 10.1504/IJCG.2009.032726

International Journal of Corporate Governance, 2009 Vol.1 No.4, pp.382 - 399

Published online: 18 Apr 2010 *

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