Substitution or Symbolic Effects? A Reexamination of Corporate Governance and Firm Performance

• Main Authors: GENG, Xuesong, Hennessy, Dean, Bates, Kimberly
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2006
• Subjects: Business Law, Public Responsibility, and Ethics; Strategic Management Policy
• Online Access: https://ink.library.smu.edu.sg/lkcsb_research/1753; https://ink.library.smu.edu.sg/context/lkcsb_research/article/2752/viewcontent/GengX2006SUBSTITUTIONorSYMBOLICASAC.pdf
• Institution: Singapore Management University

In this paper, we use a sample of large Canadian corporations to test the substitution hypothesis and the symbolic hypothesis. We find that the positive effect of board independence on firm performance declines as managerial ownership increases. This effect becomes non-positive when highly concentra...