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| Author: | Ward, A.J. Brown, J.A. Rodriguez, D. |
| Title: | Governance bundles, firm performance, and the substitutability and complementarity of governance mechanisms |
| Journal: | Corporate governance
2009 : SEP, VOL. 17:5, p. 646-660 |
| Index terms: | corporate governance industries management institutional investors incentives agency theory |
| Freeterms: | stockholders |
| Language: | eng |
| Abstract: | This study focuses on detailing the role of firm performance as a key determinant of how the governance mechanisms of monitoring and incentive alignment serve as complements/substitutes in addressing agency issues. It is herein proposed that it is best to look at the mechanisms as a bundle of mechanisms to protect shareholder interests, and that firm performance is a key determinant of the bundle's composition. Firm performance is introduced as a critical contingency intensifying shareholders' concerns over governance issues. It is proposed that when firms are performing poorly, outside monitoring by institutional investors can complement internal monitoring by boards of directors etc. |
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