Factors Influencing Corporate Governance And Investment Efficiency: A Comprehensive Analysis

Abstract

This study investigates the relationship between corporate governance mechanisms and investment efficiency in publicly listed companies. Using a panel dataset of 1,247 firms from major global exchanges over the period 2020-2025, we examine how governance structures influence capital allocation decisions and investment outcomes. Our findings reveal that board independence, institutional ownership, and aligned executive compensation significantly enhance investment efficiency, while CEO duality and weak audit oversight lead to suboptimal capital deployment. The results suggest that firms with stronger governance frameworks exhibit 15-20% higher investment efficiency compared to poorly governed counterparts. These findings have important implications for policymakers, regulators, and corporate leaders seeking to optimize capital allocation and enhance firm performance through improved governance practices.