A Study on the Effect of Corporate Governance on Corporate Performance and Market Evaluation

This is a study on whatever effect corporate governance has on corporate performance and market evaluation. We take Korea corporate governance index as key explanatory variable. We document that better governance is strongly likely lead to better corporate performance, good governance is positively and significantly related to both market evaluation and corporate performance. Foreign share is also positively and significantly related to both market evaluation and corporate performance. Ownership concentration is negatively and significantly related to market evaluation, but is positively and significantly related to corporate performance. Institutional share is positively and significantly related to both market evaluation and corporate performance. Chaebol affiliation is positively and significantly related to both market evaluation, but is negatively and significantly related to corporate performance. This paper adds empirical evidence on Jensen and Meckling’s theory (1976) and subsequent researches.