Key Corporate Governance Indicators and their Relation to the Decision to Profit Maximize

The paper identifies a number of key indicators that have been suggested in recent reports to encourage good governance within firms. These variables (the separation of CEO and Chairperson, committee structures and board structures) are used in a binary probit model to test for a link between good governance and a firm aiming for a maximum level of profit. The findings from this study suggest that there is a statistically significant relationship between a firm being classified as a profit maximzer and that firm having a majority of independent directors on the main board.