Abstract:
This study investigates the effects of firms’ ownership structure, firm characteristics, and firm performance on corporate governance practices of firms listed in The Stock Exchange of Thailand (SET) during 2007-2008 by using multiple regression analysis. Firm’s ownership structure consists of ownership concentration, institutional ownership, foreign ownership, government ownership, family ownership, and political connection. Firm characteristics are firm size, growth, intangible assets, and leverage. For firm performance, this study considers both accounting performance and market performance based on return on net assets (RONA) and Tobin’s Q as the proxies, respectively. According to agency theory (Jensen and Meckling, 1976), this study hypothesizes that firms’ ownership structure has effects on corporate governance practices of the firm as well as the firm characteristics. In addition, this study also hypothesizes that firms with good performance will have strong corporate governance practices. Consistent with the above hypotheses, this study finds that firms with high institutional ownership, government ownership, or family ownership have strong corporate governance practices, as measured by corporate governance index (CGI). But firms with high concentration ownership have weak corporate governance practices. For firm characteristics, large firms have strong corporate governance practices while high levered firms have weak practices. Firms with high market performance also have strong corporate governance practices. Nevertheless, this study finds that there are five variables that are not significant associated with corporate governance practices, which are foreign ownership, political connection, firm growth, firms intangible assets, and firm accounting performance. Overall, these results imply that ownership structure, firm characteristics, and firm performances are the determinants of corporate governance practices of Thai listed firms even if not all of the variables are significant.
