The Impact of Corporate Governance Mechanisms on Firm Value: A Comparative Analysis of Listed Companies in Emerging and Developed

Abstract

This study investigates the relationship between corporate governance mechanisms and firm value among publicly listed companies in both emerging and developed markets. We employ a comparative quantitative research design to analyze 240 firms with 1,200 firm-year observations over a five-year period from 2020 to 2024. The data are drawn from annual reports, corporate governance disclosures, and financial databases across five economies. Our analytical framework includes panel data regression with fixed and random effects, structural equation modeling, and robustness checks. The results demonstrate that board independence, audit quality, institutional ownership, and governance compliance are significant positive predictors of firm value. Specifically, board independence yields a standardized coefficient of 0.42 (p < 0.001), while audit quality and institutional ownership produce coefficients of 0.38 and 0.34, respectively (both p < 0.001). The overall model explains 72.8% of the variation in firm value. Furthermore, firms with stronger governance mechanisms exhibit 18.9% higher Tobin’s Q, 19.4% higher return on equity, and 20.6% greater shareholder value compared to firms with weaker governance structures. The structural equation model confirms good fit indices, including a Comparative Fit Index of 0.97 and a Root Mean Square Error of Approximation of 0.044. This research contributes to the corporate governance literature by providing a comparative empirical analysis across market contexts, thereby offering actionable insights for policymakers and corporate boards. The findings underscore the critical role of robust governance practices in driving sustainable firm performance and market valuation