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The Influence of Corporate Governance Systems on a Company’s Market Value

2020; Multidisciplinary Digital Publishing Institute; Volume: 12; Issue: 8 Linguagem: Inglês

10.3390/su12083114

2071-1050

Ionica Oncioiu, Anca-Gabriela Petrescu, Florentina-Raluca Bîlcan, Marius Gabriel Petrescu, Melinda Timea Fülöp, Dan Ioan Topor,

Financial Reporting and Valuation Research

Recent world events have refocused interest on the link between the existence of corporate governance and an entity’s effectiveness. The aim of this study was to identify the influence of the corporate governance system of an entity in order to measure its effects on market value. To achieve quality corporate governance and to increase an audit committee’s degree of effectiveness, one must take into consideration four core elements: members’ qualifications, authority, the resources necessary to develop the activity, and attention during the development of the activity. Our research methodology included a combination of qualitative analyses on theoretical aspects and a quantitative approach based on multiple regression and the estimation method. The main results showed that there is a solid link between strong corporate governance systems and effective audit committees, although we cannot state that the inclusion of an audit committee represents the key to success for a business. When studying the connection between audit committees and an entity’s market value, we found that this connection can lead to alleviating the problem of allocating power (principal–agent theory). We also found that the contribution of audit committees in corporate governance is to assess both the quality of financial reports and their approval and that creating an audit committee can have beneficial effects that can eventually lead to the consolidation of a company’s corporate governance.