Corporate Governance Scorecard Effectiveness and Firm Sustainability: An Empirical Evidence from Thai Listed Firms

Abstract

This research investigates the dimensions of corporate governance scorecard in the context of ASEAN. The primary objective of this research is to examine the influence of corporate governance scorecard effectiveness (CGSE) on firm sustainability. Moreover, the effects of each dimension of the corporate governance scorecard effectiveness on financial reporting quality, firm competitiveness and firm sustainability are investigated. Finally, this research test the influences of MIS competency, top management support, competitive pressure and regulation force on each dimension of corporate governance scorecard effectiveness.

The agency theory and contingency theory are used to explain the relation of the variables in this research. The Thai listed firms, except financial sector, are selected as the population and sample for investigation. The questionaire is used as an instrument for data collection and the executive director who supervises the corporate governance practices of Thai listed firm is the key informant. Data is collected from the sample of 143 Thai listed firms. The effective response rate is 22.52%. The Ordinary Least Squares (OLS) regression analyses are processed to test all the hypotheses.

The results reveal that strength of shareholder rights, respecting role of stakeholders and effective responsibility of the board are positively significant influence on financial reporting quality, firm competitiveness and firm sustainability. While equitable treatment of shareholders and disclosure and transparency enhancement are positively significant influence on only financial reporting quality, but not significant on both firm competitiveness and firm sustainability. However, financial reporting quality and firm competitiveness are positively significant influence on firm sustainability. For antecedent variables, MIS competency is positively significant influence on both strength of shareholder rights and effective responsibility of the board. Additionally, top management support is positively significant influence on strength of shareholder rights, equity treatement of shareholder, respecting role of stakeholder and disclosure and transparency enhancement. Furthermore, competitive pressure is positively significant influence on only effective responsibility of the board. Eventually, regulation force is positively significant influence on equitable treatment of shareholders, respecting role of stakeholder and effective responsibility of the board.

This research generates the significant study of the literature on CGSE. First, this research expands the theoretical contributions to previous literature of CGSE. Second, the two theories, the agency theory and the contingency theory is explained to back up the relationships of a conceptual model in this research. Finally, the antecedents and consequences of CGSE are offered by this research in different ways. The results are beneficial contributing to managerial practice concentrating on CGSE implementation and the usefulness of CGSE to solve these current problems in firms and enhance its success on financial reporing quality, firm competitiveness and firm sustainability. Moreover, future research is needed to collect data from more firms, different groups of samples, and/or a comparative population in order to verify the generalizability of the study and increase reliability.

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