DOI: 10.5176/2251-2012_QQE14.14

Authors: Nawaruek Meesiri


After the Asian economic crisis in 1997, corporate governance (CG) has become an important issue among stakeholders, since they believe that CG might help enhancing a firm’s value. Nonetheless, having fabulous CG accompanies inevitably with a higher cost. Such high costs lead to a significant question whether this big amount of money is worthily sacrificed to recognize and implement CG. The main purpose of this research is to study the effect of recognizing and implementing CG in Thai equity markets. Specifically, which and how the costs of recognizing and implementing CG for all Thai listed companies analyzed through financial ratios affects the CG recognition level during 2011 and 2012 by utilizing the Ordered Probit Model. The result shows that the cost of sustaining employees’ welfare is the most effective to promote better CG recognition classification. Another important cost is a transaction cost for benefit of shareholders reservation that reflects the agency cost reduction. Both are significantly to affect the CG recognition level in a positive way. Furthermore, there are many related factors that help Thai listed companies to gain higher CG recognition.

Keywords: corporate governance; listed company; Thai equity market; recognition


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