Firm value effects of leverage, CEO duality, audit committee establishment and percentage of independent directors : a study on selected companies listed in the Philippine stock exchange

• Main Authors: Maliksi, Kristine H., Piczon, Ma. Louella Vicenta Y., See Dee, Hazel Anne D.
• Format: text
• Language: English
• Published: Animo Repository 2008
• Subjects: Chief executive officers > Philippines; Leadership; Success in business > Philippines; Accounting
• Online Access: https://animorepository.dlsu.edu.ph/etd_bachelors/5818
• Institution: De La Salle University

Corporate governance plays a critical role in monitoring and controlling the operations of a firm yet its application has been an issue in developing markets such as the Philippines. This paper studies the firm value effects of leverage, CEO duality, audit committee establishment and percentage of independent directors of 134 listed companies in the Philippine Stock Exchange, finding that with the use of OLS, only leverage and percentage of independent directors significantly impact a firm's value out of the four corporate governance aspects aforementioned. Furthermore, the research paper also examines the overall impact of corporate governance score on firm valuation while controlling for any simultaneous relationship that exists between the two. Through the use 2 stage least squares (2SLS), it was found out that corporate governance has no significant impact on firm valuation. Possible underlying reasons for the insignificant impact of corporate governance on firm valuation and suggestion for future research are also discussed.