The impact of internal governance mechanisms on financial and stock market performance of listed companies: Evidence from an emerging market

Download This Article

This work is licensed under a Creative Commons Attribution 4.0 International License.

Abstract

The aim of this paper is to empirically test the impact of internal governance mechanisms on the financial and stock market performance of Moroccan listed companies. Board of directors’ characteristics such as independence and transparency, concentration, and presence of employees in the ownership structure, as well as some cognitive aspects of governance, represent the basis for discussion. Secondary data of a sample of 44 listed companies in the Casablanca Stock Exchange was analyzed using multiple linear regression. The results of this empirical study revealed that the financial and stock market performance of the companies that are captured by the return on equity (ROE) and the market to book ratio (M to B) significantly correlate with the adoption of the hybrid corporate governance approach. The relevance of this study is to enrich researches that deal with corporate governance and its impact on business performance in the context of Moroccan listed companies.

Keywords: Cognitive Governance, Disciplinary Governance, Company’s Performance, Stock Market, Morocco

Authors’ individual contribution: Conceptualization – H.B. and O.S.; Methodology – O.S.; Formal Analysis – O.S.; Writing – Original Draft – O.S.; Writing – Review & Editing – H.B.; Supervision – H.B.

Declaration of conflicting interests: The Authors declare that there is no conflict of interest.

JEL Classification: G30, G38, G41

Received: 15.10.2020
Accepted: 28.12.2020
Published online: 29.12.2020

How to cite this paper: Berbou, H., & Sadqi, O. (2020). The impact of internal governance mechanisms on financial and stock market performance of listed companies: Evidence from an emerging market. Journal of Governance & Regulation, 9(4), 126-138. https://doi.org/10.22495/jgrv9i4art11