Corporate governance as a determinant of corporate values

ISSN： 1472-0701

Source： Corporate Governance: The Int J of Effective Board Performance, Vol.5, Iss.4, 2005-04, pp. : 10-27

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Abstract

Purpose - This paper aims to test the impact of corporate governance structure on corporate values. Design/methodology/approach - The paper employs factor analysis and three-stage least squares to identify and explain variance in corporate values. Findings - In accordance with the proposed theoretical framework ownership, board and stakeholder structure are found to influence corporate values. When value determinants are taken into account there is no significant relationship between values and profitability. Research limitations/implications - This is a pilot study of 71 Danish firms. Further research needs to address measurement of corporate values and to test hypotheses on larger datasets. Practical implications - One practical implication is that corporate values should be grounded in the company's ownership, board and stakeholder structure. Real changes in corporate values may require real changes in governance structure. Originality/value - The paper tests a new approach to the study of corporate values which connects values to governance. It thereby establishes empirical foundations for current discussions about corporate values. This should be important both to practical work on company missions, values and responsibilities and to academics who search for an operational approach to the study of corporate values.