Essays on Corporate Governance

Essays on Corporate Governance

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The second essay (Chapter 2) investigates whether product market competition acts as an external mechanism for disciplining management and also whether there is any relationship between the degree of competition a firm faces and its corporate governance. We find that firms in competitive industries or with low market power tend to have weak corporate governance structures. Results are robust to various competition measures at the firm and industry levels, and even after controlling for firm-specific variables. We further find that corporate governance quality has a significant effect on performance only when product market competition is weak. The overall evidence suggests that product market competition has a substantial impact on corporate governance and that it substitutes for corporate governance quality. Finally, we provide evidence that the disciplinary force of competition on management is from the fear of liquidation.On the other hand, BadGov takes the value of one if a fund has Morningstar stewardship grades of a#39;Da#39; and a#39;Fa#39; and zero if otherwise. We use the following examples to demonstrate the definitions of these variables employed in our regressions.


Title:Essays on Corporate Governance
Author: Wen-Hsiu Julia Chou
Publisher:ProQuest - 2008
ISBN-13:

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