Li, Yongqiang (2014) Governance, Regulation and Performance of Non-listed Small Corporations in Australia: a Structural Equation Modelling Approach. PhD thesis, Victoria University.

Abstract

Small corporations are the backbone of the Australian economy. Various studies have explored corporate governance as it applies to larger organisations. Few studies, however, have examined how corporate governance relates to small corporations. The “one size fits all model” adopted by most of the corporations’ law frameworks and the “comply or explain” mentality places a significant amount of unnecessary and disproportionate compliance burden on small businesses. Worse still, non-listed small corporations are losers of the “corporate governance reform competition”, given their resource constraints. There is a dearth of evidence on the relationship between governance, regulation and performance of non-listed small corporations. Only in recent years have researchers in the field started to explore the governance issues facing small corporations in North America and Europe. Existing empirical studies have mainly focused on isolated governance mechanisms, while the interaction between different governance mechanisms has been ignored. This project intends to address these gaps by applying systematic review, meta-analysis, Path Analysis (PA) and Structural Equation Modelling (SEM). The systematic review identifies relevant theories on the governance and regulation of small corporations. Grounded in these theories, meta-analyses have been applied to synthesize existing empirical evidence in view to developing a conceptual framework. A structured online questionnaire was employed to collect data, yielding 387 responses. Multiple indicators were adopted to measure five latent constructs such as governance, regulation, financial performance, social performance and sustainable performance. PA estimated the direct and indirect effects of governance mechanism on performance. SEM was introduced to confirm the hypothesized relationships, controlling variables such as firm age, size, and development stage. The results revealed (1) the measurement models for four latent constructs including corporate governance, government regulation, financial performance and CSR; (2) the impact of individual governance mechanisms on performance; (3) governance as a bundle has negative impacts on both financial performance and CSR; (4) regulation has a positive impact on financial performance and CSR. Policy recommendations were developed based on the empirical evidence established from this study.

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