The Impact of Corporate Governance on Firm Performance in Mauritius

Introduction Corporate governance is a field in economics that investigates how to secure/ do efficient management of corporations by the use of incentive mechanisms, such as contracts, organizational designs and legislation. This is often express to the question of improving financial functioning, for example, how the corporate owners can secure/motivate that the corporate managers leave flip a competitive rate of return. (Mathiesen, 2002). Anformer(a) definition is Corporate Governance is concerned with holding the correspondence between economic and social goals and between individual and communal goals.The corporate governance framework is at that place to encourage the efficient use of resources and equally to require accountability for the stewardship of those resources. The aim is to align as more or less as possible the interests of individuals, corporations and society (Sir Adrian Cadbury in Global Corporate Governance Forum, World Bank, 2000). According to La Porta e t al. (2000) corporate governance is to a certain extent a set of mechanisms through which external investors protect themselves against expropriation by the insiders.The problem is to search whether the corporate governance standards adopted by firms in Mauritius be despoticly, negatively or more affecting the firms execution. Research will be made on a sample of firms operating in Mauritius. Literature Review Related searches in other countries It has been argued that as self-command concentration increases, the incentives and the abilities of shargonholders to properly monitor managers increase too. This creates beneficial effect for firms in the sense that performance or profitability purifys (Morck et al. 1989)). There argon studies which find that higher ownership concentration lead to detrimental set up for corporations in the sense that large blockholders and managers can collude to extract rents from small shareholders (Lehman and Weigand (2000)). The study by Dems etz and Villalonga (2001) provides turn out that there is no significant relation between ownership structure and firm performance. Chhaochharia and Grinstein (2007) looked at the touch of the 2002 governance rules established by the Sarbanes-Oxley Act on firm honor.They found that less compliant firms net positive abnormal returns compared to more compliant firms. They also found that less compliant large firms obtain positive abnormal returns but less compliant small firms earn negative abnormal returns. Bhagat and Bolton (2008) examined the affinity between corporate governance and performance, and found that better corporate governance, board members stock ownership, and CEO-Chair separation are positively link up to operating performance.They also found that the probability of management turnover is positively related to board members stock ownership and board independence when firms perform poorly. Patibandla (2006) examined the ownership structure and firm performance on Indian firms by separating large investors into private foreignin stitutional investors and government-owned local financial institutions. Patibandla found a positive kind between private foreign institutional investors and firm profitability and a negative relationship between government-owned local financial institutions and firm profitability.Aims & Objectives of Research The aim of this investigation is to make a seek on the impact of corporate governance on the performance of firms in Mauritius. The research is going to see the contribution that corporate governance has made on the firms financial performance. The research seeks to evaluate the performance of firms in terms of Firms financial performance Firms market value The research aim at looking standards which are contributing to high mprovement in firms performance and to look also those standards that are contributing to poor performance. The objectives are Identify the causes that contribute to high or poor fir ms performance Measures that can be used to improve the poor performance of firms by comparing their corporate standards adopted by firms experiencing high performance. Research methodology Sample A sample size of 10 firms is to be selected operating in the private arena of Mauritius. Data The info will be obtained from annual reports for the year 2007 and 2008.Questionnaire A questionnaire will be displace to those firms via letters. The questionnaire will contained defined questions that are relevant to the related research. The questionnaire should be filled by the executives of the respective firms. methodology Some data will be obtained by looking at secondary data and the other data will be received by letters (Questionnaire). These primary and secondary data will be input in the SPSS software which will analyse and give the result of the analysis of the tranquil data.Tentative Grant Chat Activities 9-Sep 9-Oct 9-Nov 9-Dec 10-Jan 10-Feb 10-Mar Introduction Lite rature review Research Methodology Analysis of data Conclusion References Bhagat Sanjai, and Brian Bolton, 2008, Corporate governance and firm performance, Journal of Corporate Finance, Vol. 14, pp. 257-273. Chhaochharia Vidhi, and Yaniv Grinstein, 2007, Corporate governance and firm value The impact of the 2002 governance rules, Journal of Finance, Vol. LXII, No. 4, pp. 1789-1825 Demsetz, H. and B. Villalonga, 2001, Ownership structure and corporate performance, Journal of Corporate Finance, vol. 7, 209-233. La Porta, Lopez-de-Silannes, Shleifer, Vishny. Investor perfomance and corporate governance. Journal of Financial Economics. 58 (2000). 3-27. Lehman, E. and J. Weigand, 2000, Does the governed corporation perform better?Governance structures and corporate performance in Germany, European Finance Review,vol. 4, 157-195. Mathiesen (2002) http//corpgov. net/library/definitions. html Morck, R. , A. Shleifer and R. Vishny, 1989, Alternative mec hanisms of corporate control,American Economic Review, vol. 79, 842-852. Patibandla Murali, 2006, equity pattern, corporate governance and performance A study of Indias corporate sector, Journal of Economic way & Organization, Vol. 59, pp. 29-44. Sir Adrian Cadbury in Global Corporate Governance Forum, World Bank, 2000