The literature on corporate governance identifies three prominent corporate governance mechanismsboard, disclosures and ownership structure. However, there is no unanimity among the researchers about the effect of these mechanisms on corporate performance. The attempt is to survey the literature on the relationship between corporate governance mechanisms and firm performance. One finds that while literature agrees on the positive relationship between disclosure and firm performance, it is inconclusive on the relationship between board characteristics and firm performance. Similar is the case of the relationship between ownership structure and firm performance. One also finds that most of the work in this regard was done in the context of developed countries.

Berle and Means (1932) predicted the evolution of corporations with diffused ownership and control concentrated in the hands of the professional managers. The prediction came true but the separation of ownership and control brought certain problems along with it. The problem and the associated costs are well explained by Jensen and Meckling (1976), according to whom, the owners also called as principals, enter into a contract with the agents (i.e., managers) in order to engage them to run the organization on the behalf of the owners. As both, the agents and the principals are utility maximizers therefore, there are possibilities that the managers may not function in tune with the interests of the owners or shareholders. This problem with this contract is termed agency problem and the costs associated with this problem, agency costs. The agency problem has also been highlighted by Shleifer and Vishney (1997), according to whom, a manager borrows money from the financiers or from the shareholders to put them for productive use. The financiers, in order to ensure that their money is properly utilized, enter into a contract with the managers, because the contract cannot be a complete contract as the residual rights lie with the managers. These residual rights give them the discretion to act the way, they want to. It is therefore possible that they can act against the interests of the financiers. Therefore, it is essential to reduce the managerial opportunism to the maximum extent possible. Hart (1995), Shleifer and Vishney (1997) presented a few mechanisms, called as corporate governance mechanisms to curb or deal with agency problems and managerial opportunism. Research has suggested that corporate governance mechanism deals with the ways in which capital providers guarantee to firms of getting a return on their venture, (Shleifer and Vishney, 1997). They also propose that the corporate governance came into picture basically, for supporting and protecting the investors from the agents, that is, to reduce agency costs.

Cadbury committee (1992) defines corporate governance as a system by which companies are directed and controlled. OECD (2004) defines it as a set of relations among a firm's management, its board, shareholders and stakeholders, which is one of the key elements that improves a firm's performance, and the fluctuation of capital markets, stimulating the innovative activity and development of enterprises.

Corporate Governance Mechanisms and Firm Performance, ownership structure, professional managers, agency problem, agency costs, residual rights, discretion to act, managerial opportunism, shareholders and stakeholders,innovative activity, hiring, evaluating, compensating.