The Impact of Corporate Governance on Financial Performance: Study for Portuguese Hotel Companies

The present work intends to analyze the relationship between the economic and financial performances of companies and the characteristics of their corporate governance. Based on Portuguese hotel companies, this study analyzes the importance on the performance of factors such as the size of the board of directors, women on the board, managing shareholder and the largest shareholder. Based on a sample of 3199 observations relating to companies in the hotel sector, a Tobit regression is used to highlight the impact of characteristics of the company's governance in its performance. As far as is known, this is the first study to link economic and financial performances with the characteristics of Portuguese hotel companies. The results obtained allow us to conclude that the percentage of the largest shareholder is negatively related to the financial performance of hotel companies. In this way, the companies with the largest shareholders are the companies that show a worse financial performance. It should be noted that both the size and gender of the members on the board of directors and the fact that the shareholder is simultaneously a director are not relevant to determine the financial performance of companies in the hotel sector. The results of this study contribute to a greater understanding of how companies are governed and how it affects their performance in a specific sector with a great impact on the national economy and corporate governance which affects companies in the hotel sector in Portugal.