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Reducing Risk through Governance: Impact of Compensation, Defense, and Accounting Practices

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  • I-Jan Yeh

    (Department of Public Policy, Shih Hsin University, Taipei, Taiwan)

  • Ching-Liang Chang

    (College of Management, Yuan Ze University, Zhongli, Taiwan)

  • Joe Ueng

    (Department of Economics, Finance, and Decision Information Sciences, University of St. Thomas, Houston, TX, USA)

  • Vinita Ramaswamy

    (Cameron School of Business, University of St. Thomas, Houston, TX, USA)

Abstract

The main purpose of this study is to investigate the determinants of formal governance policy. Many firms have a formal governance policy. Others, however, have no such a policy. This study examines what kind of firm's characteristics that encourage companies to adopt a formal governance policy. Data were collected from Corporate Library. A sample of 3,068 firms from the database of 2010 Corporate Library was analyzed. Results show that when firms have a better financial performance and better corporate governance practice, they are more likely to have a formal governance policy. Specifically, when firms have a better board rating, compensation policy, takeover defense strategy, and accounting practice, firms are more likely to have a formal governance policy.

Suggested Citation

  • I-Jan Yeh & Ching-Liang Chang & Joe Ueng & Vinita Ramaswamy, 2014. "Reducing Risk through Governance: Impact of Compensation, Defense, and Accounting Practices," International Journal of Risk and Contingency Management (IJRCM), IGI Global, vol. 3(2), pages 43-53, April.
    • Handle: RePEc:igg:jrcm00:v:3:y:2014:i:2:p:43-53
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