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Corporate Governance and Business Performance: Evidence for the Romanian Economy

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  • Monica-Violeta Achim
  • Sorin-Nicolae Borlea
  • Codruţa Mare

Abstract

Our finding contributes towards the understanding of movements regarding the adoption of corporate governance practice in emerging countries such as Romania and its impact on business performances of a company.We have developed two econometric models to assess the business performances of the companies listed on Bucharest Stock Exchange, in order to point out the impact of corporate governance on business performances. Our results are inconsistent for the period 2001--2011, but if we consider only 2011, the results document a positive correlation between corporate governance quality and market value of companies, such it is reflected by Tobin’s Q. Therefore, our results contribute to the studies relating corporate governance and business performances, as it confirms a positive relationship between the two variables which appears once the Romanian emerging economy has began to adopt the best corporate governance practices.Firstly, our research has important implications for managers in order to know that the adoption of the best corporate governance practices could contribute to the financial success of the firm. Secondly, the results are useful for any investor who needs to consider the quality of corporate governance as a good predictor for the best rate of return of theirs investments. Moreover, our findings have also implications on policy-makers and regulatory authorities in European developing countries and offer them a barometer of adopting the best corporate governance practices in European space.

Suggested Citation

  • Monica-Violeta Achim & Sorin-Nicolae Borlea & Codruţa Mare, 2016. "Corporate Governance and Business Performance: Evidence for the Romanian Economy," Journal of Business Economics and Management, Taylor & Francis Journals, vol. 17(3), pages 458-474, June.
    • Handle: RePEc:taf:jbemgt:v:17:y:2016:i:3:p:458-474
    DOI: 10.3846/16111699.2013.834841
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    1. ., 2001. "Corporate Governance in Islamic Banking," Chapters, in: Islamic Banking, chapter 7, Edward Elgar Publishing.
    2. Monda, Barbara & Giorgino, Mrco, 2013. "Corporate Governance and Shareholder Value in Listed Firms: An Empirical Analysis in Five Countries (France, Italy, Japan, UK, USA)," MPRA Paper 45422, University Library of Munich, Germany.
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    Cited by:

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    2. Ala Hussein Albawwat & Ammar Almansour & Mo¡¯taz Kamel Al Zobi & Nahed Habis Alrawashedh, 2020. "The Effect of Board of Directors and Audit Committee Characteristics on Company Performance in Jordan," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 11(6), pages 10-24, December.
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    9. Pompei Mititean, 2022. "The Impact Of Corporate Governance Characteristics On Companies’ Financial Performance: Evidence From Romania," Economic Annals, Faculty of Economics and Business, University of Belgrade, vol. 67(233), pages 113-134, April – J.
    10. Eric Fosu Oteng-Abayie & Anthony Affram & Henry Kofi Mensah, 2018. "Corporate Governance and Efficiency of Rural and Community Banks (RCBs) in Ghana," Econometric Research in Finance, SGH Warsaw School of Economics, Collegium of Economic Analysis, vol. 3(2), pages 93-118, December.
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    14. Marian Siminica & Mirela Cristea & Mirela Sichigea & Gratiela Georgiana Noja & Ion Anghel, 2019. "Well-Governed Sustainability and Financial Performance: A New Integrative Approach," Sustainability, MDPI, vol. 11(17), pages 1-21, August.
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    16. Daniela Corina Oprea (Bîrlă) & Cristina-Elena Voicu & Komalpreet Kaur, 2023. "Improving public sector performance: the power of implementing corporate governance," Journal of Financial Studies, Institute of Financial Studies, vol. 14(8), pages 98-109, May.
    17. Mohammad Abdullah Fayad Altawalbeh, 2020. "Corporate Governance Mechanisms and Firm’s Performance: Evidence from Jordan," Accounting and Finance Research, Sciedu Press, vol. 9(2), pages 1-11, May.
    18. Bogdan Aurelian Mihail & Dalina Dumitrescu & Daniela Serban & Carmen Daniela Micu & Adriana Lobda, 2021. "The Role of Investor Relations and Good Corporate Governance on Firm Performance in the Case of the Companies Listed on the Bucharest Stock Exchange," JRFM, MDPI, vol. 14(12), pages 1-12, November.
    19. SABĂU (POPA) Andrada Ioana & SAFTA (PLEȘA) Ioana Lavinia & BORLEA Nicolae Sorin, 2023. "Analysis Of The Quality Of Corporate Governance. Case For Romanian Companies," Revista Economica, Lucian Blaga University of Sibiu, Faculty of Economic Sciences, vol. 75(1), pages 66-79, April.
    20. Cosmina Adela Stănilă, 2019. "The Corporate Governance Code of the Bucharest Stock Exchange: Comply or Explain," Ovidius University Annals, Economic Sciences Series, Ovidius University of Constantza, Faculty of Economic Sciences, vol. 0(2), pages 895-902, December.
    21. Marius Eugen ROGOZ & Dragoș Andrei STOICA, 2024. "How Do Listed Romanian Companies Comply with or Explain Good Corporate Governance Guidelines?," CECCAR Business Review, Body of Expert and Licensed Accountants of Romania (CECCAR), vol. 5(7), pages 51-61, July.
    22. 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.
    23. Iván Arribas & María Dolores Espinós-Vañó & Fernando García & Javier Oliver, 2019. "Defining socially responsible companies according to retail investors’ preferences," Entrepreneurship and Sustainability Issues, VsI Entrepreneurship and Sustainability Center, vol. 7(2), pages 1641-1653, December.

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