Relations among corporate governance, codes of conduct and the profitability of public utilities

This research examines the relationship between corporate governance and corporate performance through the findings of an empirical longitudinal investigation of public utilities listed on the Italian Stock Exchange (2000 -2008). The data for the measurement of the corporate governance variables are taken from the latest edition of the Italian Preda Code of Best Governance Practices (2006). Standard ratios (Return on Assets, Return on Equity, Return on Sales, Tobin’s Q and Book to Market Ratio) were used to assess the performance variables. The results are not conclusive. Specifically, whereas most relationships with the performance variables were statistically significant, different relationships were found between the same corporate governance variables and different indicators of performance. These conflicting findings suggest that further research is needed for the impact of corporate governance practices on the performance of firms to be fully understood.