SUBSTITUTE GOVERNANCE STRUCTURE AND THE EFFECT OF MONITORING: EVIDENCE FROM BANGLADESH

Download This Article

Abstract

This paper investigates the role of monitoring mechanisms in a corporate governance structure, focusing on listed companies in a developing country, Bangladesh. Specifically, it examines whether different interrelated monitoring mechanisms - board of directors and committee, management and external auditors - affect firm performance. This research found the possibility of having a substitution or complementary links in monitoring mechanisms that explain why there is no consistent empirical evidence between individual monitoring mechanisms and firm performance. This study has policy implications for the Bangladeshi corporate environment. Progress of implementation of the guidelines appears to be reasonable. However, credibility of the reported figures and quality of implementation remain open to discussion. To what extent these status reports reflect improved governance or are largely a form of paper compliance is a debatable issue. This research also suggests that when considering any change in corporate monitoring, the Bangladeshi government should take into account the nation‟s business, social structure, culture and legal practices.

Keywords: Bangladesh, Monitoring, Performance, Structural Equation Modelling, Corporate Governance Guideline

How to cite this paper: Azim, M. (2010). Substitute governance structure and the effect of monitoring: Evidence from Bangladesh. Corporate Ownership & Control, 8(1), 9-23. https://doi.org/10.22495/cocv8i1p1