Abstract

This article includes exploring arguments and counterarguments in the context of conducting a scientific discussion on the impact of corporate governance on a company’s financial and economic performance. The main purpose of this paper is to determine the nature of the impact of corporate governance policy on the activities of economic entities. The systematization of literary sources and approaches to problem solving has shown that there are two opposing points of view: firm value, efficiency), on the other hand, a number of scientists are convinced that there is a positive influence of the functioning of the corporate governance system on the valuation of listed companies. The work emphasizes the decisive role of the board of directors of the company in the development and adoption of the strategic direction of development of the organization. The author points out in the study the need for coordinated interaction of the board of directors with the financial management of the company and the business owners in order to increase the efficiency and profitability of the business entity. It is stated that the key economic tools for achieving and implementing the strategic plans of the company can be the key performance indicators and accordingly developed measures to achieve such success. As a result, it is justified that corporate governance should not be a set of rules and mechanisms aimed at managing and controlling companies, but rather as a process by which companies become sensitive to stakeholder rights. The spread of corporate culture, according to the author of a work aimed at protecting the common interest, is facilitated by the existence of good rules and effective authorities that control their observance.

Keywords: corporate governance, financial and economic activity, board of directors, key performance indicators.

JEL Classification: G18, G0.

Cite as: Tommaso, F. D., Gulinelli, A. (2019). Corporate Governance and Economic Performance: The Limit of Short Termism. Financial Markets, Institutions and Risks, 3(4), 49-61. http://doi.org/10.21272/fmir.3(4).49-61.2019.

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