THE EFFECTS OF CORPORATE GOVERNANCE MECHANISMS AND INVESTMENT OPPORTUNITY SET ON FIRM PERFORMANCE

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Ruey-Dang Chang, Yeun-Wen Chang, Ching-Ping Chang, Fiona Hu

DOI:10.22495/cocv5i4p13

Abstract

This study uses investment opportunity set (IOS) as an environmental factor, and investigates its moderating effect on the relationships between corporate governance mechanisms (including internal and external corporate governance mechanisms) and firm performance. The empirical results using regression analysis show: (1) The IOS does not have a moderating effect on audit quality and firm performance. (2) The negative relationship between institutional investor ownership and firm performance is stronger for firms with higher investment opportunities. (3) When CEO is the chairman of the board, high growth firms can lead to better firm performance. (4) The relationship between the IOS and pledged shares ratio of directors and supervisors has positive influence on firm performance.

Keywords: Corporate Governance, Taiwan, Investment Opportunities, Firm Performance

How to cite this paper: Chang, R.-D., Chang, Y.-W., Chang, C.-P., & Hu, F. (2008). The effects of corporate governance mechanisms and investment opportunity set on firm performance. Corporate Ownership & Control, 5(4), 135-148. http://doi.org/10.22495/cocv5i4p13