- Bocean and Barbu (2005) conducted a study entitled: "Corporate Governance and Firm Performance".
The purpose of this paper was to develop the understanding of corporate governance and its effects on corporate
performance and economic performance. In doing so, it addressed some of the underlying factors that promote
efficient corporate governance, and examined some of the economic implications associated with various
corporate governance systems. The study provides a framework for understanding how corporate governance can
affect corporate performance. It was found that corporate governance matters for economic performance, insider
ownership matters the most, outside ownership concentration destroys market value, direct ownership being
superior to indirect. Three main approaches to firm level performance were found in social science research:
research based on market prices, accounting ratios and total factor profitability. Finally, Measuring performance
by Tobin’s Q and operationalizing it as market to book is consistent with agency theory and the study found that
Large outside owners destroy market value, while inside owners create it unless the stakes are unusually big, and
that direct ownership is more beneficial than indirect.