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Corporate governance in publicly traded small firms: study of Canadian venture exchange companies Case Solution & Answer

Most data on the determinants of corporate governance practices and large companies based effects. Here we explore these issues in the context of small companies listed on Canadian stock exchange. We took advantage of the fact that these companies are not subject to directives by 2005 the government of the company and therefore to analyze the determinants of the choice of voluntary governance practices, and the effects of these practices on business performance . Using a unique dataset, an index of corporate governance of each company is built. We measure performance by two variables: the quality of accounting and financial results. The results indicate that corporate governance is important for small Canadian companies listed. We found that accounting and financial performance are positively related to corporate governance, but its underlying mechanisms may differ slightly. Given this result, it would be natural to expect that all the companies to choose the highest levels of government. However, our results also suggest that small companies face resource constraints that limit their options. We conclude that good governance is an important factor in the performance of the small business that can not be neglected by the owners and managers of these companies factor.
by
Irene Gordon,
Karel Hrazdil,
Daniel Shapiro
Source: Business Horizons
9 pages.
Date Posted: November 15, 2012. Prod #: BH502-PDF-ENG
Corporate governance in smaller listed companies: a case study of the risk of such solutions to Canadian companies

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