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Corporate Governance, Managers' Independence, Exporting, and Performance of Firms in Transition Economies

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  • Igor Filatotchev
  • Natalia Isachenkova
  • Tomasz Mickiewicz

Abstract

Using data on 157 large companies in Poland and Hungary, this paper employs Bayesian structural equation modeling to examine the relations among corporate governance, managers' independence from owners in terms of strategic decision making, exporting, and performance. Managers' independence is positively associated with firms' financial performance and exporting. In turn, the extent of managers' independence is negatively associated with ownership concentration, but positively associated with the percentage of foreign directors on the firm's board. We interpret these results as indicating that concentrated owners tend to constrain managerial autonomy at the cost of the firm's internationalization and performance, but board participation of foreign stakeholders enhances the firm's export orientation and performance by encouraging executives' decision-making autonomy.

Suggested Citation

  • Igor Filatotchev & Natalia Isachenkova & Tomasz Mickiewicz, 2007. "Corporate Governance, Managers' Independence, Exporting, and Performance of Firms in Transition Economies," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 43(5), pages 62-77, October.
    • Handle: RePEc:mes:emfitr:v:43:y:2007:i:5:p:62-77
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    Cited by:

    1. Tomasz Mickiewicz, 2009. "Hierarchy of governance institutions and the pecking order of privatisation: Central-Eastern Europe and Central Asia reconsidered," Post-Communist Economies, Taylor & Francis Journals, vol. 21(4), pages 399-423.
    2. Nisan Selekler-Gökþen & Özlem Yýldýrým-Öktem, 2008. "The Impact Of Board Characteristics On The Internationalization Of Business Group Affiliates," Bogazici Journal, Review of Social, Economic and Administrative Studies, Bogazici University, Department of Economics, vol. 22(1+2), pages 53-71.
    3. Hans Lööf & Ingrid Viklund‐Ros, 2020. "Board of directors and export spillovers: What is the impact on extensive margins of trade?," The World Economy, Wiley Blackwell, vol. 43(5), pages 1188-1215, May.
    4. Mohammad-Hossein Setayesh & Gholamreza Rezaei & Mostafa Kazemnezhad, 2016. "Corporate Governance, Investment in Research and Development and Company Performance: A Data Envelopment Analysis Approach Based on Data from a Developing Country," International Journal of Economics and Financial Issues, Econjournals, vol. 6(3), pages 1114-1122.
    5. Son Le & Mark Kroll & Bruce Walters, 2010. "The impact of institutional changes on corporate governance mechanisms in transition economies," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 14(2), pages 91-114, May.
    6. Ipsmiller, Edith & Dikova, Desislava, 2021. "Internationalization from Central and Eastern Europe: A systematic literature review," Journal of International Management, Elsevier, vol. 27(4).
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    8. Marina Tkalec & Maruska Vizek, 2014. "Real estate boom and export performance bust in Croatia," Zbornik radova Ekonomskog fakulteta u Rijeci/Proceedings of Rijeka Faculty of Economics, University of Rijeka, Faculty of Economics and Business, vol. 32(1), pages 11-34.
    9. Alvaro, Cuervo-Cazurra, 2011. "Selecting the country in which to start internationalization: The non-sequential internationalization model," Journal of World Business, Elsevier, vol. 46(4), pages 426-437, October.
    10. Sumon Kumar Bhaumik & Saul Estrin & Tomasz Mickiewicz, 2017. "Ownership identity, strategy and performance: Business group affiliates versus independent firms in India," Asia Pacific Journal of Management, Springer, vol. 34(2), pages 281-311, June.
    11. Bersant Hobdari & Aleksandra Gregoric & Evis Sinani, 2011. "The role of firm ownership on internationalization: evidence from two transition economies," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 15(3), pages 393-413, August.
    12. Bhatnagar, Ankur, 2021. "What drives Indian Non-SOE FDI into Africa?," African Journal of Economic Review, African Journal of Economic Review, vol. 9(4), September.
    13. Massini, Silvia & Piscitello, Lucia & Shevtsova, Yevgeniya, 2023. "The complementarity effect of exporting, importing and R&D on the productivity of Ukrainian MNEs," International Business Review, Elsevier, vol. 32(3).
    14. Chen Chun-Yuan, 2016. "D&O Insurance, Corporate Governance and Mandatory Disclosure: An Empirical Legal Study of Taiwan," Asian Journal of Law and Economics, De Gruyter, vol. 7(1), pages 19-62, April.
    15. Mariasole Banno' & Elisa Pozza & Sandro Trento, 2015. "La famiglia fa male all'internazionalizzazione dell'impresa?," DEM Discussion Papers 2015/03, Department of Economics and Management.
    16. Shehata, Nermeen, 2022. "Board National Diversity and Dividend Policy: Evidence from Egyptian listed companies," Finance Research Letters, Elsevier, vol. 45(C).
    17. Hopkins, Lucas & Ferguson, Keith E., 2014. "Looking forward: The role of multiple regression in family business research," Journal of Family Business Strategy, Elsevier, vol. 5(1), pages 52-62.
    18. Dorota Dobija, 2015. "Exploring audit committee practices: oversight of financial reporting and external auditors in Poland," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 19(1), pages 113-143, February.
    19. Hania Rehman & Muhammad Ramzan & Muhammad Zia Ul Haq & Jinsoo Hwang & Kyoung-Bae Kim, 2021. "Risk Management in Corporate Governance Framework," Sustainability, MDPI, vol. 13(9), pages 1-17, April.
    20. Haroon ur Rashid Khan & Waqas Bin Khidmat & Osama Al Hares & Naeem Muhammad & Kashif Saleem, 2020. "Corporate Governance Quality, Ownership Structure, Agency Costs and Firm Performance. Evidence from an Emerging Economy," JRFM, MDPI, vol. 13(7), pages 1-35, July.
    21. Calabrò, Andrea & Torchia, Mariateresa & Pukall, Thilo & Mussolino, Donata, 2013. "The influence of ownership structure and board strategic involvement on international sales: The moderating effect of family involvement," International Business Review, Elsevier, vol. 22(3), pages 509-523.

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    More about this item

    Keywords

    corporate governance; exporting; performance; strategic independence;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • L21 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Business Objectives of the Firm
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • P31 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - Socialist Enterprises and Their Transitions

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