Corporate Governance and Firms’ Performance of Mauritian Listed Companies

Abstract

As the world is becoming a global village, companies need to constantly assess their corporate governance structures to remain competitive. This calls for better management and, eventually, better governance in the stewardship of shareholders’ funds. Companies must understand that good governance is about balancing conformance with performance so as to create value. This study aims at examining the relationship between the level of corporate governance and corporate competitiveness of listed companies on the Stock Exchange of Mauritius. Relationship between corporate governance practices and financial performance focusing on the maximization of shareholders wealth and share prices movements of listed companies is another focus of the study. The corporate governance degree is expressed in terms of value through the corporate governance index. The present study examines how listed companies are conforming to good governance practices, using survey data and whether strong level of conformance to good corporate governance practices influences corporate competitiveness. The results of this study indicate that most listed companies view corporate governance as essential for the good management of the enterprise. It is also found that there is a positive correlation between the corporate governance index value and financial performance of firm. It is also deduced that there exists a strong correlation between corporate governance and corporate competiveness. One important implication of the study is that corporate governance is not just an emancipation of company law. In turn, shareholder primacy is a misleading conception in the institution of corporate governance even if it is a valid argument in the specific coverage of company law.