The Effect of Corporate Governance on Firm Performance

Abstract

The main purpose of this study is to examine the impact of the corporate governance mechanism on firm performance. The variables, employed in this study to measure firm performance, include return on assets, stock return and Tobin's Q. The empirical results indicate that firm performance is in negative and significant relation to board size, CEO duality, stock pledge ratio and deviation between voting right and cash flow right. On the other hand, firm performance is in positive and significant relation to board independence and insider ownership.