Most of the evidence on the determinants and effects of corporate governance on the basis of large firms. Here we consider these issues in the context of small public Canadian companies. We use the fact that these firms are not subject to corporate governance guidelines by 2005, and thus to analyze the determinants of voluntary choice of management practices and the impact of these practices on firm performance. Using a unique data set, we construct a corporate governance index for each firm. We measure the performance of the two variables: the quality of accounting earnings and financial results. The results show that corporate governance is important for smaller traded Canadian companies. We find that both accounting and financial activities are positively related to corporate governance, but the underlying mechanisms may differ. Given this result, it would be natural to expect that all firms choose the higher levels of management. However, our results also show small firms face a lack of resources, limiting their choices. We came to the conclusion that good governance is an important factor in a small firm performance, which can not be neglected the owners and managers of these firms. "Hide
by Irene Gordon, Charles Hrazdil, Daniel Shapiro Source: Business Horizons 9 pages. Publication Date: November 15, 2012. Prod. #: BH502-PDF-ENG
