Objectives
  1. Construct a Corporate Governance (CG) 
   Index for firms listed on the Trinidad & 
   Tobago Stock Exchange (TTSE)
  2. Examine relationship between CG and 
   performance of TTSE firms
  3. Policy implications & Conclusions
         CG defined
  • Many definitions…
  • Sir Adrian Cadbury (1992): “Corporate 
   Governance is the system by which companies 
   are directed and controlled.”
  • Cornelius (2005): “corporate governance can be 
   defined as the stewardship responsibility of 
   corporate directors to provide oversight for the 
   goals and strategies of a company and foster 
   their implementation.”
       CG defined cont’d
  • OECD (2010): corporate governance refers to 
   “procedures and processes according to which an 
   organisation is directed and controlled. The 
   corporate governance structure specifies the 
   distribution of rights and responsibilities among 
   the different participants in the organisation – such 
   as the board, managers, shareholders and other 
   stakeholders – and lays down the rules and 
   procedures for decision-making.”
      CG defined cont’d
  • Fahy et al (2006): “Put in its simplest form, 
   corporate governance is the systems and 
   processes put in place to direct and control an 
   organisation in order to increase performance 
   and achieve sustainable shareholder value.” 
  • Kaen (2003): “Corporate Governance is about 
   who controls corporations and why”
         Assessment of CG
   • CG is relevant in the marketplace but one of the major 
    concerns of researchers - the measurement of CG
   • The literature has proposed the use of CG Indices 
    (Ananchotikul 2008, Black et al 2003, Cornelius 2005, 
    Garay and Gonzalez 2008, Klapper and Love 2002, 
    Leal and Carvalhal-da-Silva 2005, Mallin 2006.)
   • However, most of these indices have two shortcomings 
    – (i) they have been produced for developed 
    countries only and (ii) they rely on questionnaires 
    issued to the firm being assessed.