Title: The value relevance of the development of a corporate governance system

Authors: Chung-Cheng Hsu; Chin-Fang Chao; Ming-Chia Chen

Addresses: Department of Accounting, Ling Tung University, No. 1, Lingtung Road, Nantun District, Taichung City, 408, Taiwan ' Department of Finance, Ling Tung University, No. 1, Lingtung Road, Nantun District, Taichung City, 408, Taiwan; Graduate Institute of Business, Feng Chia University, No. 100 Wenhwa Rd., Seatwen, Taichung City, 407, Taiwan ' Department of Hospitality Management, Ming Dao University, No. 369, Wen-Hua Rd., Peetow, Changhua County 52345, Taiwan

Abstract: This study first examines whether it is appropriate to integrate the 13 observed corporate governance mechanisms into the multiconstruct of information transparency, ownership structure, board structure, and firm value, and further explores whether a company's simultaneous adoption of the multiconstruct corporate governance mechanisms positively affect its firm value. This study collected data from 262 Taiwanese firms in the information technology industry as samples for the period 2006 to 2008. Results obtained using a structural equation model analysis shows that: 1) it is fitting to use the three constructs as measurements of corporate governance and the four indicators of firm value; 2) multiconstruct corporate governance indeed has significant impact on firm value. The findings conclude that companies should attempt to improve their corporate governance mechanisms and consequently benefit increased firm value.

Keywords: corporate governance; information transparency; ownership structure; board structure; firm value; value relevance; Taiwan; information technology; IT industry; structural equation modelling; SEM.

DOI: 10.1504/IJEBR.2013.052486

International Journal of Economics and Business Research, 2013 Vol.5 No.3, pp.302 - 318

Published online: 30 Dec 2013 *

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