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The Relationship between Corporate Governance and Firm Productivity: evidence from Taiwan's manufacturing firms


*National Cheng Kung University, Institute of International Business, 1 Ta-Hsued Road, Tainan, Taiwan, Republic of China 70101. E-mail:


This study analyses the relationship between ownership structure and board of director composition and their influences on the total factor productivity (TFP) of Taiwan's firms. The empirical results show that the curvilinear specification is better to capture the relationship between inside ownership and firm productivity. Meanwhile, the ownership structure in a firm indeed affects differences in TFP between conglomerate firms and non-conglomerate firms, high-tech firms and non-high-tech firms, and family-owned firms and non-family-owned firms. Additionally, a smaller board may be less encumbered by bureaucratic problems and more functional and CEO duality may be able to improve productivity. Furthermore, productivity deteriorates with increasing proportion of collateralised shares. More institutional holdings, however, are an effective way to alleviate the negative impact of collateralised shares on TFP.