Li, Yongqiang, Armstrong, Anona ORCID: 0000-0002-2158-088X and Clarke, Andrew ORCID: 0000-0003-2917-6870 (2014) The relationship between corporate governance and financial performance of small corporations in Australia. Journal of Business Systems Governance and Ethics, 9. 25 - 39. ISSN 1833-4318

Abstract

This paper examines a widely explored but yet to be co nfirmed relationship between two latent constructs - corporate governance and financial performance of small corporations in Australia. Prior studies have either focused on larger organisations or isolated corporate governance mechanisms in small firms. However, few have examined how corporate governance mechanisms, as a bundle, relate to small corporations. This study fills this gap by empirically analysing the aforementioned relationship using Structural Equation Modelling (SEM). Based on 387 responses from small corporations, the results show that corporate governance bundles measured by the extant literature, has a negative impact on the financial performance of small corporations. The result calls for a stakeholder approach to the governance needs of small corporations..

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