An Integrated Corporate Governance Framework and Financial Performance in South African-Listed Corporations

This paper investigates the relationship between an integrated corporate governance (CG) index and financial performance using a sample of 169 South African (SA)-listed corporations between 2002 and 2007. We find a statistically significant and positive association between a broad set of good CG practices and financial performance. In a series of sensitivity analyses, we find that our results are robust to endogeneity, different financial performance proxies, alternative CG weighting scheme and firm-level fixed effects. We further distinctively examine the link between complying with SA context-specific stakeholder CG provisions and financial performance. In line with political cost and resource dependence theories, our results reveal a statistically significant and positive nexus between compliance with stakeholder CG provisions and financial performance.