Corporate Governance and Firm Performance: Evidence from Emerging Markets

Abstract

Corporate governance practices have garnered significant attention in recent years, especially concerning their impact on firm performance. This study investigates the relationship between corporate governance mechanisms and firm performance in emerging markets. Utilizing a comprehensive dataset spanning multiple emerging economies, we employ various governance metrics and financial performance indicators to assess the extent to which governance practices influence firm outcomes. Our findings suggest a significant positive correlation between effective corporate governance and firm performance in emerging markets. Specifically, robust governance structures, including board independence, executive compensation transparency, and shareholder rights protection, are associated with higher profitability, increased market value, and improved operational efficiency. However, the impact of specific governance mechanisms may vary across different contexts, reflecting the unique institutional environments prevalent in emerging markets. This study contributes to the existing literature by shedding light on the crucial role of corporate governance in enhancing firm performance within the dynamic landscape of emerging economies.