Affiliation:
1. Shih Hsin University, Taiwan
2. Yuan Ze University, Taiwan
3. University of St. Thomas, USA
Abstract
The main purpose of this study is to investigate the determinants of formal governance policy. Many firms have a formal governance policy. Others, however, have no such a policy. This study examines what kind of firm's characteristics that encourage companies to adopt a formal governance policy. Data were collected from Corporate Library. A sample of 3,068 firms from the database of 2010 Corporate Library was analyzed. Results show that when firms have a better financial performance and better corporate governance practice, they are more likely to have a formal governance policy. Specifically, when firms have a better board rating, compensation policy, takeover defense strategy, and accounting practice, firms are more likely to have a formal governance policy.
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