The Correlation between Corporate Governance and Operating Performance-Apply LISREL Model

• Main Authors: Min-I Chung, 鍾旻宜
• Other Authors: 楊朝成
• Format: Others
• Language: en_US
• Published: 2007
• Online Access: http://ndltd.ncl.edu.tw/handle/98493139207130681795

碩士 === 國立臺灣大學 === 財務金融學研究所 === 95 === Corporate governance is still an important issue nowadays. This study aims at exploring the relationship between the variables of corporate governance and operating performance of a firm using LISREL model. This study chooses six factors affecting the quality of corporate governance, including board size, board leadership, board composition, ownership structure, entrenchment effect, and the transparency of information disclosure, as the exogenous variables of latent variables in LISREL. Through this structural equation model, we intend to observe the effect of six factors on operating performance, which is the endogenous variable of latent variables, of all listed companies of the Taiwan Stock Exchange Corporation (TSEC) and the Over-the-Counter market (OTC). Empirical results indicate that there is a negative relation between board size and operating performance. Furthermore, there is also an inverse association between board leadership and operating performance. Board composition, ownership structure, and the transparency of information disclosure affect operating performance positively. However, based on our data, we couldn’t find significant evidence to support that entrenchment effect impacts operating performance negatively.