Journal of Economics and Management  
  In Press, Corrected Proof  
  Available online 25 January 2019  

Does Corporate Governance Enhance Firm Performance and Reduce Firm Risk? Evidence from Taiwanese Listed Companies

  Jo-Yu Wang  
  Department of Finance, National Formosa University, Taiwan  
  Juo-Lien Wang  
  Department of Accounting, Chaoyang University of Technology, Taiwan  
  Hui-Yu Liao  
  Nexia International Sun Rise CPAs and Company, Taiwan  



Corporate governance practices are perceived as ways to improve firm performance. This paper examines whether better corporate governance does indeed enhance firm performance in addition to reducing their risks. Based on Taiwanese listed firms from 2002 to 2016, Tobin's Q, ROE, and EPS were used to measure company performance, and Value at risk (VaR) was the proxy for firm risk. The empirical results show that blockholders, managerial ownership, board ownership, and independent directors have a significant impact on company performance, but also that more shares held by institutional investors and the presence of CEO duality aggravate firm risk. This implies that better corporate governance can simultaneously improve firm performance and reduce firm risk, especially in a crisis period. However, the contribution of corporate governance in risk reduction is not as significant as it is during a crisis.




Keywords: corporate governance, firm performance, firm risk    



JEL classification: G30, G39