Does good corporate governance lead to better firm performance? Strategic lessons from a structured literature review

Abstract

The objective of this paper is to disclose proven relationships between good corporate governance variables and the financial and/or non-financial performance of companies based on a meta-analysis of relevant studies. A meta-analysis was performed by means of academic research published between 2006 and 2016 in the five highest-ranked academic journals according to the Association of Business Schools (ABS) ranking. The relevant academic studies were selected on the basis of the relationship between corporate governance and performance. Our study provides evidence for the correlation between five corporate governance variables (board independence, board diversity, CEO characteristics, remuneration and oversight) and company performance. Furthermore, several mediating and moderating factors influencing the relationship between corporate governance variables and company performance were identified in this meta-study. The overview of corporate governance variables and their relation to company performance serves as input for a better understanding of this relationship and subsequently the ongoing dialogue on enhancing corporate governance in practice.

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