The effect of corporate governance and ownership structure variables on the return on assets of selected publicly listed firms in the Philippines for the period 2005-2008

• Main Authors: Afable, Jose Angelo M., Chan, Kimberly Gayle S., De Galicia, Maria Patricia, Mirandilla, Jerissa M.
• Format: text
• Language: English
• Published: Animo Repository 2010
• Subjects: Corporate governance > Philippines; Business enterprises > Philippines; Finance and Financial Management
• Online Access: https://animorepository.dlsu.edu.ph/etd_bachelors/18460
• Institution: De La Salle University

The study determined the degree of the effect of corporate governance and ownership structure on the profitability of publicly listed firms in the Philippines for the period 2005-2008. To measure corporate governance, the researchers used board size, board composition and CEO duality. For the ownership structure variables, foreign ownership and family ownership were used. The data were collected from the annual reports of the Philippine Stock Exchange, as well as the website of the Securities and Exchange Commission. The researchers found that none of the corporate governance variables had a significant relationship with ROA. Likewise, foreign ownership had a significant and positive effect on ROA, while family ownership had a negative but insignificant relationship with ROA. This can be attributed to firms with foreign owners having more access to international standards of good business practice. For this control variables, size and debt both had a negative and significant relationship with ROA. The inverse relationship between size and ROA can be explained by the tendency of larger firms to understate their earnings for tax purposes, the higher profit rate of smaller firms, and the greater costs and difficulty in managing larger firms. Likewise, firms with higher debt-to-equity ratios are more prone to financial downfalls, since these firms are less likely to pay financial obligations on time.