Corporate governance: A New Zealand perspective

Abstract

Corporate Governance, although a well researched area of finance, still has many unresolved questions. The most significant of which is: what effects do corporate governance control mechanisms have on firm performance? Since most studies focus on US firms, little is known about which control mechanisms are more effective than others in corporate environments other than the US. This question has large implications for the implementation of effective security policy and regulatory judgements by government departments. Introductory research into New Zealand's corporate governance, the corporate environment of interest in this study, has found many of these effects to be contradictory to those observed in America'. Therefore, implementing regulatory changes in New Zealand based on US research could have a detrimental effect on corporate governance efficacy and firm value. As such, a complete corporate governance study focusing on New Zealand firms is imperative in order to understand which control mechanisms are pervasive and/or effective here. This means the future use of control mechanisms can be informed. One of the major hindrances to empirical work on corporate governance practice in New Zealand is the difficulty of data collection. This study has created a unique data set extracted from primary sources. Resultantly, this study is pioneering, allowing examination of New Zealand corporate governance policy and comparison with best practices in the USA.