Literature has revealed the existence of several external and internal disciplining mechanisms that are hypothesized as factors influencing corporate governance. This paper reviews the theoretical and empirical litera...Literature has revealed the existence of several external and internal disciplining mechanisms that are hypothesized as factors influencing corporate governance. This paper reviews the theoretical and empirical literature on five internal mechanisms of corporate governance, namely, dividend payouts, financial leverage, institutional shareholding, board duality, and board size. These mechanisms have received the greatest deal of attention in the literature. The paper makes an original contribution to the literature as it is the first of its type, to the best of our knowledge, to provide a comprehensive idea on these five internal mechanisms of corporate governance. This study will help in investigating the relationship between internal corporate governance mechanisms and firm performance with the main aim of extending the existing literature on firm performance by empirically investigating the contribution of these mechanisms in the smooth conduct of business operations. The empirical evidence amassed favors a smaller board size, non-existence of duality and favorable dividend mechanisms as effective internal governance mechanisms affecting firm performance. At the same time, there is no conclusive evidence on the relationship between leverage and institutional ownership as internal governance mechanisms influencing agency cost and firm performance.展开更多
文摘Literature has revealed the existence of several external and internal disciplining mechanisms that are hypothesized as factors influencing corporate governance. This paper reviews the theoretical and empirical literature on five internal mechanisms of corporate governance, namely, dividend payouts, financial leverage, institutional shareholding, board duality, and board size. These mechanisms have received the greatest deal of attention in the literature. The paper makes an original contribution to the literature as it is the first of its type, to the best of our knowledge, to provide a comprehensive idea on these five internal mechanisms of corporate governance. This study will help in investigating the relationship between internal corporate governance mechanisms and firm performance with the main aim of extending the existing literature on firm performance by empirically investigating the contribution of these mechanisms in the smooth conduct of business operations. The empirical evidence amassed favors a smaller board size, non-existence of duality and favorable dividend mechanisms as effective internal governance mechanisms affecting firm performance. At the same time, there is no conclusive evidence on the relationship between leverage and institutional ownership as internal governance mechanisms influencing agency cost and firm performance.
