Corporate governance and firm performance : evidence from Thailand

Abstract

To investigate the relationship between level of governance standard and firms’ performance based on agency theory. Sample used in this study is listed firms in the Stock Exchange of Thailand (SET) during 2000-2007. Regarding corporate governance measurement, I apply corporate governance index (CGI), which is constructed base on publicly available data. The index can be sub-divided into five categories; board structure, conflict of interest, board responsibilities, shareholder rights, and disclosure and transparency, that cover all major aspects related to corporate governance in the case of Thailand. The evidences indicate that better governance practice is associated with higher ROA, Tobin’s Q and dividend yield. However there is no evidence that investors earned abnormal return during the sample period by using the investment strategy that bought high-governed firms and shorted low-governed firms.