The Corporate Governance–Performance Relationship: A Review of Theory and Empirical Evidence

Wanli Liu; Manuelita Valencia

doi:10.54097/xxcccf70

Authors

Wanli Liu
Manuelita Valencia

DOI:

https://doi.org/10.54097/xxcccf70

Keywords:

Corporate governance, Corporate performance, Financial performance, Market performance, Operational performance

Abstract

Corporate governance has emerged as a critical mechanism for enhancing corporate performance, accountability, and long-term sustainability in an increasingly complex and competitive global business environment. This study provides a comprehensive review of theoretical and empirical literature examining the relationship between corporate governance structures and multidimensional corporate performance. Drawing upon agency theory, stakeholder theory, stewardship theory, and resource dependence theory, the review synthesizes evidence across five key dimensions: corporate governance structure, equity structure, board governance, supervisory board governance, and corporate performance outcomes, including financial, market, operational, innovation, and sustainable development performance. The findings indicate that well-designed governance mechanisms—particularly board independence, diversity, ownership concentration, supervisory effectiveness, and leadership structure—significantly enhance organizational efficiency, strategic decision-making, transparency, and innovation capacity. Moreover, governance quality is shown to play a vital role in mitigating agency conflicts, strengthening accountability, improving information disclosure, and fostering sustainable competitive advantage. By integrating diverse theoretical perspectives and empirical findings, this review establishes a robust conceptual foundation for future empirical investigation and offers practical implications for policymakers, regulators, and corporate leaders seeking to optimize governance systems and enhance firm performance. The study contributes to the growing literature by providing a holistic framework that links governance structures with multidimensional corporate performance and sustainable value creation.

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