An emperical study on the effects of corporate governance mechanisms on the performance of publicly-listed firms in the Philippines

Date of Publication

2006

Document Type

Bachelor's Thesis

Degree Name

Bachelor of Science in Accountancy

Subject Categories

Accounting

College

Ramon V. Del Rosario College of Business

Department/Unit

Accountancy

Defense Panel Chair

Corazon Subido

Defense Panel Member

Rene Hapitan

Abstract/Summary

Corporate governance has been considered as a primary concern by many countries, including the Philippines. According to the agency theory, several corporate governance mechanisms can be designed to reduce the agency costs associated with the separation of ownership and control. These mechanisms are designed to align the interests of both shareholders and management. This study examines the effect of various corporate governance mechanisms on the performance of fifty-four (54) firms listed in the Philippine Stock Exchange in the years 1998, 2001 and 2004. Specifically, the study identifies which internal and external control mechanisms have the greatest impact on the performance of firms. The market valuation of each firm is used to measure its performance. This refers to the performance of firms as perceived by the stockholders and the investing public. The corporate governance mechanisms taken into consideration in this study include internal and external mechanisms. Internal mechanisms include the structure of the board of directors, incentive shareholding, the audit committee and debt financing, while the key external mechanism is the market for corporate control. Using panel data, regression analysis was employed to quantitatively measure the extent of the effect of the different corporate governance mechanisms on firm performance. Also, the group gathered secondary information from the annual reports and financial statements of the Philippine firms regarding the different corporate governance mechanisms included in the model estimation. To validate the quantitative results, the group conducted interviews with experts in the field of corporate governance. Their responses provided support for the conclusions of the group. The results of this study show that percentage of non-executive directors, percentage of non-executive and independent directors, the presence of the audit committee, leverage, probability of takeover, the market for corporate control and sales, have a significant effect on the performance of firms. The results serve as a good starting point for policy makers and standard setters whose concern is the improvement of corporate governance in the Philippines. Also, it gives recommendations that relate to the effectiveness of the various internal and external governance mechanisms. Lastly, it provides some areas that could be delved into for future research on corporate governance and its effects on the performance of firms in the Philippines.

Abstract Format

html

Language

English

Format

Print

Accession Number

TU13502; CDTU013502

Shelf Location

Archives, The Learning Commons, 12F, Henry Sy Sr. Hall

Physical Description

124 leaves ; 28 cm. + 1 computer optical disc

Keywords

Corporate governance--Philippines

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