Corporate governance and capital markets: a conceptual framework

Faizul Haque, Thankom Arun, Colin Kirkpatrick

    Research output: Contribution to journalArticle

    3 Citations (Scopus)
    1414 Downloads (Pure)

    Abstract

    This paper outlines a conceptual framework of the relationship between corporate governance and two
    important determinants of capital market development namely, a firm’s access to finance, and its
    financial performance. The framework assumes that a firm’s corporate governance is simultaneously
    determined by a group of related governance components and other firm characteristics. Whilst the
    capital markets play a crucial role in enhancing corporate governance standards, the effectiveness and
    credibility of such effort might be constrained by poor firm-level corporate governance. Moreover, the
    cause and effect relationship can work in the opposite direction e.g. firm-level corporate governance
    quality can enhance both the firm’s ability to gain access to finance and its financial performance,
    which eventually lead to capital market development. The framework is primarily based on the
    economic approaches to corporate governance, although it recognises part of the assumptions of the
    stakeholder theory and the political economy aspects of corporate governance.
    Original languageEnglish
    Article number3
    Pages (from-to)264-276
    Number of pages13
    JournalCorporate Ownership and Control
    Volume5
    Issue number2
    Publication statusPublished - 2008

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