|Title:||The impact of corporate governance on firm performance during crises : an empirical study for the global ship-owning industry|
|Advisors:||Yu, Wayne (MM)|
Wei, Steven (AF)
|Subject:||Hong Kong Polytechnic University -- Dissertations|
Shipping -- Management
Corporations -- Valuation
|Department:||Faculty of Business|
|Abstract:||In this thesis, I investigate the impact of corporate governance on the performance of global ship-owning firms. Most of the previous studies on this subject fail to examine this relationship in a comparable setting, either because their sample firms are from a single country or region, or because their sample firms are from multiple industries in any number of countries. In this thesis, I exploit the richness of different institutions among different countries, while controlling for the impact of industry differences on firm performance. My cross-country sample first accommodates different levels of investor protection offered by different legal systems around the world (e.g., common versus code laws). Yet, because my sample firms are from the same industry, I am able to avoid problems arising from using multiple industries in a cross-country setting—problems often seen in the extant literature. In my sample of shipping firms across the world, all the companies face the same market competition and are subject to the same global regulations and business models. My empirical analyses are conducted using data over a period of downturn in the shipping industry, as this might call for different governance arrangements than in a normal period. I use a sample of 142 listed shipping firms from 28 countries for the period from 2010 to 2013. I measure firm performance by three proxies: return on assets (ROA), return on equity (ROE), and the ratio of the market value of a company's assets over the book value of assets (Tobin's Q). A firm's internal corporate governance is measured by its ownership structure, board composition, executive compensation schemes, and the choice of its auditors. I also use country-level governance variables to measure the level of legal protection offered to shareholders. Specifically, I use a country's legal origin, the level of protection for shareholders against potential expropriation by managers (the anti-director rights index developed by La Porta et al., 1998), and the level of protection for minority shareholders against potential expropriation by controlling shareholders (the anti-self- dealing index developed by Djankov et al., 2008). The overall evidence is rather mixed, highlighting the importance of considering general economic or industry conditions when assessing the effectiveness of corporate governance arrangements. Specifically, there is some evidence that firm performance is, in general, related 1) negatively with state ownership and ownership concentration; 2) positively with board size but negatively with board independence; 3) negatively with the use of stock options in executive compensation; 4) positively with a selection of the Big Four as auditors; and 5) positively with the level of legal protection for minority shareholders against potential expropriation by controlling shareholders but negatively with the level of shareholder protection against managerial expropriation.|
|Rights:||All rights reserved|
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