THE RELATIONSHIP BETWEEN THE DEGREE OF COMPLIANCE WITH THE CORPORATE GOVERNANCE CODE AND ORGANIZATIONAL PERFORMANCE: A STUDY ON ROMANIAN FIRMS

The companies listed on the Bucharest Stock Exchange (BSE) are required to adopt the BSE Corporate Governance Code on comply or explain basis. Previous studies of the relationship between the compliance and organizational performance have found a weak ling. In this study we constructed a Corporate Governance Index based on the “Apply or Explain” reports of the listed companies on the BSE. We showed that the Index is significant and negatively correlated with firm performance measured using ROA and ROE as dependent variables. Also the index proved to be significantly correlated with the size of the board of directors.