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Corporate governance mechanisms, accounting results and stock valuation in Canada

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Purpose – The purpose of this paper is to investigate the relationship between corporate governance
practices or mechanisms and firm value, as measured by accounting and market data.
Design/methodology/approach – Partial least square analyses were performed on a sample of 355
observations from 199 Canadian listed companies. The greater variability allowed under the Canadian
principles-based institutional setting than under the rules-based USA SOX environment is well-suited
for these tests.
Findings – Results suggest that some governance practices, namely the percentage of independent
directors on the board, the use of stock options and the frequency of board meetings are significantly
and negatively related to the firm’s net book value or income. However, most individual governance
practices appear to have no significant impact on the firms’ market value.
Research limitations/implications – The potential interrelationships between corporate
governance practices and contextual variables are not specifically taken into account, except for the
firms’ industrial sector. It is also possible that certain governance mechanisms jointly impact firm value.
Practical implications – This study does not support the current emphasis by regulators on governance
practices which mainly concern the monitoring function of the board as opposed to its strategic one.
Originality/value – The paper uses Canada as a laboratory where companies are “invited” rather
than “required” to follow corporate governance best practices. This greater corporate discretion in the
choice of governance practices provides the variability necessary to test the effect of governance on
firm value. Furthermore, in the interest of triangulation, a model seldom seen in the governance
literature is used to examine the impact of governance mechanisms on firm value and performance, as
measured by accounting and market data.

Keywords Canada, Corporate governance, Accounting information, Equity capital,Boards of directors, Corporate governance practices, Book value of equity, Accounting performance,Market value of equity

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Informasi Detail

Judul Seri

International Journal of Managerial Finance

No. Panggil

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Penerbit

: Emerald Group., 2012

Deskripsi Fisik

International Journal of Managerial Finance Vol. 8 No. 4, 2012 pp. 332-343

Bahasa

English

ISBN/ISSN

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Klasifikasi

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Tipe Isi

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Tipe Media

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Tipe Pembawa

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Edisi

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Subjek

AKUNTANSI

Info Detail Spesifik

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Pernyataan Tanggungjawab

Asmawati/Syahrial

Versi lain/terkait

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