Internal and external governance mechanisms: their impact on the performance of large UK public companies.

By C. Weir, D. Laing, Phillip J. McKnight. 2002

627 citations recorded by the source corpus.

This paper analyses the relationship between internal and external corporate governance mechanisms and the performance of UK companies within the context of the Cadbury Committee's Code of Best Practice. The results show, first, that the market for corporate control is an effective governance mechanism that may be regarded as a substitute for the other mechanisms. Second, there is a weak relationship between the internal governance mechanisms and performance. Third, there is also little evidence that with firms in the top and bottom performance deciles have different internal governance characteristics. The results therefore raise questions about the efficacy of imposing prescriptive internal governance mechanisms on companies, particularly given that the market for corporate control has been shown to be an effective means of reducing agency costs.

Subfields: Accounting

View Paper: https://www.semanticscholar.org/paper/787820a1e26c53b26fe3db745924326ff17045d0

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Citations in the corpus

Do women in top management affect firm performance? Evidence from Indonesia (2013, background): “Yermack (1996) suggests that smaller board size leads to higher financial performance.”
The influence of board independence, competency and ownership on earnings management in Malaysia (2009, background): “However, the advantage of the same person serves both post is that he/she will have a better understanding and knowledge on the firm operation and environment (Weir et al., 2002).”
Corporate governance and impact on bank performance (2013, background): “External corporate governance mechanisms on the other hand include: the government regulations and supervisions, and the market for corporate control [20] and [23].”
Firm Performance: Do Non-Executive Directors Have a Mind of Their Own? Evidence from Uk Panel Data (2007, neutral): “However, Weir et al. (2002) show that English firms with high performance have a greater”
The Impact of board characteristics on Firm Performance: Evidence from Nonfinancial Listed Companies in Kuwaiti Stock Exchange (2012, background): “Additionally, it has also been argued that elements of the corporate governance such as CEO duality, CEO tenure, audit committee size, board size and board composition have an influence on the firm and its financial performance (Fama & Jensen, 1983; Coles &Jarrell 2001; Weir et al., 2002).”
Board Characteristics and Firm Performance: Evidence from New Zealand (2011, methodology): “Following other studies (Boyd, 1995; Muth & Donaldson, 1998; Weir et al., 2002; Abdullah, 2004; McIntyre et al., 2007), I examine this variable using a dummy variable, which takes a value of 1 if the CEO and chairman are the same person and 0 otherwise.”
Corporate Governance Mechanisms and Performance of Public-Listed Family-Ownership in Malaysia (2011, result): “Weir et al. (2002) find that duality has no role in enhancing firm performance in U.K firms and this result is similar with Dalton et al. (1998), Vafeas and Theodorou (1998) and Brickley et al. (1997).”
Do Investors Really Value Corporate Governance? Evidence from the Hong Kong Market (2007, background): “Weir et al. (2002) argue that the market for corporate control is effective in reducing agency costs and question the efficacy of 3 imposing internal governance mechanism on companies.”
Agency costs, corporate governance mechanisms and ownership structure in large UK publicly quoted companies: A panel data analysis (2009, background): “There is a significant literature that recognises that models containing corporate governance or ownership variables suffer from endogeneity, for example, Hermalin and Weisbach (1991), Himmelberg, Hubbard, and Palia (1999), Weir et al. (2002) and Coles et al. (2005).”
Board Diversity and Firm Performance: The Indonesian Evidence (2010, neutral): “Other scholars fail to find any significant association between the two variables, such as Krivogorsky (2006) and Weir et al. (2002).”
Corporate Boards, Ownership Structure and Firm Performance in an Environment of Severe Political and Economic Crisis (2012, positive): “Several studies have argued that non-executive directors (NEDs) can help to enhance value by protecting shareholder interests against managerial opportunism (e.g., Fama and Jensen, 1983; Weir et al., 2002; Dahya et al., 2008).”
Shari’ah supervision, corporate governance and performance : conventional vs. Islamic banks (2015, methodology): “6 Yermack (1996) and Weir et al. (2002) have implemented similar measures in their studies.”