Corporate governance, firm performance, and economic growth – theoretical analysis

Abstract

Corporate governance in today's modern economies is growing in importance within the growth accounting equation. Although we look at corporate governance as final product of 20/21^st century economies, old economic growth theories were aware of its importance for growth and development. Roots of corporate governance go back to the ancient economies of India and Greece also. This paper offers a consistent literature review assessing the nexus between corporate performance and economic growth. Individual and cross-country studies show corporate governance in majority of the cases positively affects firms performance and in turn nations' economic growth. Empirical and theoretical research show corporate governance is an important growth determinant to be reviewed in the field of growth models. This article summarizes main findings providing future research directions on the corporate governance – economic growth nexus.

Keywords:

• corporate governance
• economic growth
• sustainability
• firm performance
• Gov-score
• efficiency
• capital
• stakeholders
• shareholders

JEL Classification:

• G30
• G38
• M14
• O16

Additional information

Notes on contributors

Marinko Škare

Marinko ŠKARE. Professor of Economics, Economic Research Journal Editor in Chief, Member of Editorial Board of several international journals, Department Economics and Tourism “Dr. Mijo Mirković” in Pula, Juraj Dobrila University of Pula. He served as Assistant Dean for Education, Faculty of Economics &Tourism, Pula, Assistant Dean for International Cooperation, Faculty of Eco- nomics & Tourism, Pula, Main and Team Researcher on several scientific projects, Former Dean of the Faculty of Economics & Tourism, Pula and Former Vice President for International Cooperation, Juraj Dobrila University of Pula. He has published several books and a large number of scientific pa- pers on the subject of economic growth, welfare economics and poverty, human capital, economics in transition, economic philosophy and monetary economics. He is a member of the American Economic Association, Royal Economic Society, Economic History Association, Economic History Society, and Association for Comparative Economic Studies.

Tea Hasić

Tea HASIĆ. She received a Magistra Iuris degree at University of Rijeka, School of Law and currently is postgraduate student and PhD candidate at University of Zagreb, School of Law – postgraduate doctoral study: commercial and company law. She is a Research Assistant at Juraj Dobrila University of Pula, Faculty of Economics and Tourism (Pula). She is a member of research team on Megasfora (Modelling Economic Growth – Advanced Sequenc- ing Algorithm) project. Her scientific and research interests are: Company Law, EU Company Law, Corporate Governance – especially the rule of shareholders in corporate governance.