Corporate Governance Mechanisms and Firm Efficiency

Douglas Nanka-Bruce

Abstract


This paper uses technical efficiency to measure the performance impact of internal corporate governance
mechanisms. Specifically, it analyzes how the size, leadership and composition of the board of directors together
with external shareholders can be structured to enhance a firm’s technical efficiency. The study utilizes an
unbalanced pool of manufacturing firms in sixteen countries and offers support that active large external
shareholders’ who commit credible signals to minority investors of firms that have an insider-dominated or
balanced small board with a unified leadership can lead to enhanced technical efficiency. The results also
provide evidence of the convergence of American and European corporate governance practices. External
shareholders are also encouraged to elect an outsider-dominated board when insiders underperform, and not on
blind normative advice.

Full Text: PDF DOI: 10.5539/ijbm.v6n5p28

Creative Commons License
This work is licensed under a Creative Commons Attribution 3.0 License.

International Journal of Business and Management   ISSN 1833-3850 (Print)   ISSN 1833-8119 (Online)

Copyright © Canadian Center of Science and Education

To make sure that you can receive messages from us, please add the 'ccsenet.org' domain to your e-mail 'safe list'. If you do not receive e-mail in your 'inbox', check your 'bulk mail' or 'junk mail' folders.