Aspects Of Corporate Governance Research Articles

Reflecting on the changing landscape of shareholder activism in South Africa

Background: Investors around the globe are increasingly focusing on investing in a responsible manner by accounting for environmental, social and corporate governance aspects alongside financial performance. Shareholder activism is a prevalent responsible investment strategy that is gradually gaining traction among South African investors. Aim: The primary objective was to gauge the views of selected local institutional investors on the nature of shareholder activism endeavours in South Africa. The secondary objective was to offer suggestions on the way forward for shareholder activism considering rapid technological development and the COVID-19 pandemic. Setting: South Africa offers a well-developed framework for responsible investors. Given their substantial shareholding, institutional investors in particular have considerable power to influence the practices and policies of investee companies. Method: Semi-structured interviews were conducted with 13 representatives of local institutional investor organisations. Thematic analysis was conducted to analyse the primary data. Results: Interviewees mostly engaged in private with investee companies on corporate governance issues. They explained that more information is required to meaningfully engage on social and environmental considerations. Participants indicated that they consider and employ public activism mechanisms if private engagements are deemed unsuccessful. Conclusion: Technology will play an increasingly important role to enhance shareholder activism in future, but also offers various challenges. Although social media might be a valuable avenue to disclose information, it should be cautiously managed. Selective engagement details could be published on institutional investors’ and companies’ websites to enhance transparency regarding the nature and outcomes of engagements. Virtual and hybrid annual general meetings are likely to enable more shareholders to become active owners in future.

Value-added Internal Audit from the Perspective of Corporate Governance

In an increasingly competitive market, internal audit, an integral part of corporate governance, has become increasingly important. Traditional internal auditing no longer fully responds to the current complex scope of internal auditing and the governance objectives of adding value to companies. With the continuous strengthening of corporate governance by modern enterprises, the goal of internal audit is gradually consistent with that of corporate governance: to increase the overall value of the company. This makes internal audit function, audit content and audit scope change accordingly, and value-added internal audit emerges as the times require. With the continuous development of international economic globalization, value-added internal audit is the inevitable trend of internal audit transformation from the perspective of corporate governance. Modern internal audit plays a very important role in improving the governance structure and internal control, and can bring value added to enterprises. The functions and responsibilities of internal audit are positioned to promote the achievement of corporate governance objectives, with increasing emphasis on improving governance and adding value. This means that the functional scope of internal audit has changed from simple financial audit at the beginning to a series of activities such as review and evaluation, control and risk management that run through all aspects of corporate governance. Internal audit is not only a part of corporate governance, but also evaluates and improves the effectiveness of corporate governance procedures. The benign interaction of the two contributes to the improvement of the management procedure and the increase of the overall value of the company. Internal audit can make use of its unique independence to control the risk of the company, improve the efficiency of corporate governance and improve the process of corporate governance by performing a comprehensive evaluation function, so as to enhance the comprehensive quality and economic benefits of the company and realize the overall value of the company.

The Yin and Yang of Corporations and Democracy

These are perilous times for American democracy. Among the threats, many point to the power of corporations. This article examines that threat by considering a series of dualisms characterizing the relationship between corporations and democracy. This begins with a look at the anti- as well as the pro-democratic impacts of the earliest corporations and the paradoxes with respect to democracy created during the evolution of corporate law. The article then looks at internal corporate governance (so-called “corporate” or “shareholder democracy”) to show how, on the one hand, it contains features addressing some of the greatest current threats to American democracy, while, on the other hand, it operates as a fundamentally undemocratic vote buying system. This dualism in internal corporate governance, in turn, reflects a clash in the purpose for corporate or shareholder democracy: Is the purpose economic efficiency, or is it democratic legitimacy for those controlling the often-vast power of the corporation? Finally, this article addresses the dualism in the internal and external aspects of the relationship between corporations and democracy by situating the governance and impact of corporations within the broader democratic governance of society. Specifically, individuals in charge of corporations lack democratic consent and accountability for their decisions unless either internal corporate governance is consistent with democratic values; persons without voice through internal corporate governance can avoid the impact of such decisions by not dealing with the corporation; or democratically elected federal, state, and local governments can intervene when externalities and market failures render refusal to deal unrealistic. This, in turn, suggests the need to limit excessive political influence by those in charge of corporations or to reform the anti-democratic aspects of internal corporate governance.

ESG И ОТВЕТСТВЕННОЕ ИНСТИТУЦИОНАЛЬНОЕ ИНВЕСТИРОВАНИЕ

The growing interest in the sustainability of companies has led to green investment gaining popularity among investors as it aims to combat climate change and its impact on the planet, and therefore on human life and the environment. These changes also directly affect companies, in connection with which they are reconsidering their behavior in order to meet the new requirements of the financial market. Investors are changing their asset allocation given that more resilient issuing companies are better equipped to cope with tough times and therefore offer stable returns. In line with this emerging trend, global investment banks and asset managers have increased the supply of green funds in recent years, providing investors with many options to validate environmental, social and corporate governance (ESG) aspects when making portfolio asset allocation decisions.

Portfolio optimization for sustainable investments

Investments in firms related to environment, social responsibility and corporate governance (ESG) aspects have recently grown, attracting interest from both academic research and investment fund practice. This paper develops a simple new portfolio optimization approach to include ESG in portfolio formation. In addition to technical and practical advantages over a traditional mean--variance approach that incorporates ESG preferences, our approach allows us to follow competing explanations of the relation among risk, return and ESG. An extension of our portfolio optimization approach can even help distinguish competing explanations from the literature, i.e., between the preferences of investors for ESG firm characteristics and exposure to a common ESG risk factor. The proposed portfolio optimization approach is flexible enough to include additional risk factors and/or characteristics. We demonstrate the application of our approach to empirical data.

Corporate governance in Egypt: The landscape, the research, and future directions

Egypt is an emerging economy that has in recent years been exposed to several severe economic, political, and social shocks, all within a relatively short period of time. This has amplified the importance of the rule of law, regulatory enforcement, and corporate governance best practices, in order to restore the investing public’s confidence in the Egyptian market. Historically, the focus on corporate governance had preceded these recent events. Building on this history, today’s corporate governance landscape in Egypt is much more robust with more effective regulators, clearer streamlined governing rules, and better corporate governance literacy. This paper identifies four main areas of corporate governance research in Egypt: firm performance, reporting quality, corporate responsibility, and auditing. While extensive research has already been conducted in these areas, the paper provides some recommendations for further enhancing its quality. These pertain mainly to the development of comprehensive corporate governance databases, the increased focus on emerging and current market-relevant aspects of corporate governance, and the release of more proprietary data by regulators.

Introduction to Corporate Governance

This note provides an introduction to corporate governance from a managerial perspective, covering key aspects of board responsibilities and board composition, the regulatory environment and legal duties of directors, and changes in governance systems over time, with a focus on publicly traded firms in the United States. Excerpt UVA-S-0356 Rev. Jul. 27, 2021 Introduction to Corporate Governance Boards of directors represent the highest echelons of the business world and oversee the overall direction of firms and their strategies. Boards are often lauded for being essential advisers to corporate America's most successful and admired companies, but on the other side of the coin, following almost every major business scandal, blame is placed on the board and questions arise about lapses in governance. What is the role of boards of directors and corporate governance systems? And, more importantly, what constitutes good governance? This note will provide an introduction to corporate governance from a managerial perspective, covering key aspects of board responsibilities and board composition, the regulatory environment and legal duties of directors, and changes in governance systems over time, with a focus on publicly traded firms in the United States. This note will provide only a general overview of the legal aspects of corporate governance and the legal duties of directors. What Is Corporate Governance? . . .

Corporate governance in India from the internal stakeholder’s perspective

The underlying aim of the research paper is to evaluate the internal stakeholders’ perceptions of the current corporate governance regime in India. In order to analyze the internal stakeholder’s perception towards current corporate governance regime, regulations and issues, a structured questionnaire has been prepared covering various aspects of corporate governance like components and performance implications of corporate governance in India, major issues in corporate governance, corporate governance strategies and practices, key players etc. The majority of the respondents perceive that there is a need to make the internal and external corporate governance better, enhance the standards of accounting, audit and disclosures, prohibit or check related party transactions, improve relation between board and management, publicize corporate governance ratings of companies, strengthen stock exchanges to ensure transparency, improve access to new capital etc. The findings of the study has contributed to the future development of corporate governance regulations in India. It will aid regulators, policy makers, stock exchanges and think tanks to rethink their priorities and develop rules to incorporate best practices on corporate governance. Keywords: Corporate governance, Corporate governance practices, Regulatory framework, Listing agreement, Securities markets.

Strategic leadership and technological innovation: A comprehensive review and research agenda

AbstractResearch Question/IssueWe review the literature on the relationship between strategic leadership and technological innovation.Research Findings/InsightsWe identify the theoretical lenses that researchers apply when studying strategic leadership and innovation, most notably agency theory and upper echelons theory. We review the innovation constructs and measures that scholars employ, and we survey the links among strategic leaders' characteristics and technological innovation. Ultimately, we organize the literature into an integrative framework that provides a concise overview of the extant knowledge, and we outline an agenda for future research.Theoretical/Academic ImplicationsFirst, we offer scholars a discipline‐spanning overview of the extant knowledge on the topic. Second, by integrating important aspects of corporate governance, such as the role of the board of directors, incentives for the chief executive officer or the top management team, and firm ownership, into the context of technological innovation, we highlight the vital role it plays in the realm of technological innovation. Third, we provide a useful guide for scholars and direct their work towards fruitful avenues for future research.Practitioner/Policy ImplicationsWe offer insights for practitioners interested in better understanding the bidirectional relationship between strategic leadership and technological innovation. In particular, our framework and our detailed analysis of the impact of strategic leaders on technological innovation can guide shareholders and board members in matters related to board composition as well as top executive selection and compensation.

Practical Applications of An Integrated Approach to Quantitative ESG Investing

<h3>Practical Applications Summary</h3> In <b><i>An Integrated Approach to Quantitative ESG Investing</i></b>, from the February 2020 issue of <b><i>The Journal of Portfolio Management</i></b>, authors <b>Mike Chen</b> and <b>George Mussalli</b> (both of <b>PanAgora Asset Management</b>) propose a novel quantitative framework for optimizing both alpha and the environmental, social, and corporate governance (ESG) aspects of a portfolio. Although investors, especially those in the millennial generation, have become increasingly interested in the ESG aspects of the companies within their portfolios, there has not yet been a well-defined process for constructing portfolios that factors ESG principles into a strictly return-oriented model. Chen and Mussalli’s approach is based on three pillars: ESG factors that may also be alpha factors, a unique materiality value that links ESG considerations to alpha, and a portfolio construction framework that is informed by an investor’s ESG preferences. The key strengths of this integrated ESG modeling framework are its flexibility, relevancy, and dynamic nature. <b>TOPICS:</b>Portfolio theory, portfolio construction, ESG investing

ASPEK PENGAWASAN CORPORATE GOVERNANCE TERHADAP TINGKAT PENGUNGKAPAN LINGKUNGAN (STUDI KASUS PADA PERUSAHAAN MANUFAKTUR DI BEI PERIODE TAHUN 2014-2018)

This research aims to obtain empirical evidence about the role of corporate governance oversight on environmental disclosure. The independent variables tested in this research consisted of the corporate governance oversight aspects (proportion of BOC independent, ethnic background of president BOC, ducational background of president of BOC, frequency of meeting BOC, proportion of committee audit independent, frequency of meetings audit committee, diversity gender of BOC), while the dependent variable is environmental disclosure measured by using GRI 4.0. The sample of this research consist of 89 manufacture companies listed in stock exchange of Indonesia from 2014-2018. This research is quantitative research which the sampling method is purposive sampling. Data of corporate governance aspects were collected from annual reports and analysis of this research is multiple regression analysis. The result of this research showed that ethnic background of BOC have negative significant, proportion of committee audit independent have positive significant, frequency of meetings audit committee have positive significant on environmental disclosure. Keyword : corporate governance oversight aspects ; Environmental disclosure

Non-financial reporting of enterprises as an aspect of sustainable development management

The article considers the need for enterprises non-financial reports forming. The approaches of scientists to the directions of corporate social responsibility on the basis of sustainable development are revealed. It is established that the main directions of corporate social responsibility on the basis of sustainable development are: organizational management, human rights, labor practices, environment, good business practices, consumer protection, participation in community life and its development. The types of non-financial reporting are studied, namely: report on social and environmental projects, report on progress in the implementation of the principles of the UN Global Compact, report on the GRI standard, management report, integrated report. The components of non-financial reporting of enterprises in the context of corporate social responsibility on the basis of sustainable development are systematized. It is established that the non-financial reporting of the enterprise focuses on the highlighted results of corporate governance, social and environmental aspects and anti-corruption. A study of the components by types of non-financial reports found that they differ in the level of information disclosure. The advantages of compiling non-financial reporting by the enterprise are substantiated, which will provide an opportunity to improve its management, increase investor confidence in it and compare their achievements in the field of corporate social responsibility on the basis of sustainable development with other enterprises. It is proposed to expand the practice of compiling non-financial reports by enterprises, which will contribute to the formation of an effective management system to identify existing and predict potential internal and external threats to its activities, as well as to take measures to minimize the impact of these threats on the results of the enterprise activity on the basis of sustainable development.

Board Effectiveness and Firm Risk

This study provides empirical evidence on the impact of board effectiveness on firm risk. The author considers the Board Shareholder Confidence Index (BSCI) to proxy for board effectiveness of firms included in the S&amp;P TSX Composite. Risk measures considered in this study include total risk, idiosyncratic risk, systematic risk, and volatility-of-volatility. He reports statistically significant negative relationships between board effectiveness and alternative firm risk measures, except for systematic risk. This relationship is particularly strong during periods of market distress. Considering analyst coverage and strategic ownership as competing monitoring channels for board effectiveness, the author observes a substitution effect during normal market periods and a supplementary effect during periods of market distress when an investor’s level of uncertainty is high and “<i>every little bit helps</i>.” The findings also note the importance of corporate governance aspects in an ESG risk management framework. <b>TOPICS:</b>ESG investing, VAR and use of alternative risk measures of trading risk, risk management <b>Key Findings</b> • Board effectiveness is associated with lower levels of firm risk. • Analyst coverage acts as a substitute for board effectiveness with respect to total risk, idiosyncratic risk, and volatility-of-volatility. • Strategic ownership and ownership concentration act as a substitute for board effectiveness with respect to systematic risk. • In general, alternative monitoring mechanisms act as substitutes during normal times but are supplements during periods of distress when uncertainty is high.

Determinants, mechanisms and consequences of corporate governance reporting: a research framework

Corporate governance disclosures form a key part of a company’s non-financial reporting. Several studies consider the determinants of corporate governance reporting, including external factors such as country-specific legislation and scandals, and internal factors such as financial performance, size and culture. Others consider the consequences of corporate governance reporting, using simple proxies for corporate governance mechanisms such as board composition characteristics to analyse the impact on financial reporting quality and company valuation. Yet the determinants and consequences of corporate governance reporting may be interlinked, and many quantitative studies fail to consider these links and their multiple effects adequately. Poor financial performance, for example, can be both a determinant and a consequence of the underlying governance mechanisms that corporate governance reporting aims to capture. The framework provided in this paper considers both the determinants and consequences of corporate governance and likely links between them, and also considers internal corporate governance mechanisms and the measures that are used as their proxies. In combining these three aspects of corporate governance and showing potential links, the framework offers insights into future research opportunities. The framework can be adapted to any country or organisational setting and also offers the opportunity to consider theories other than agency theory when studying corporate governance disclosures.

Risk management and corporate governance failures in Islamic banks: a case study

Purpose The purpose of this paper is to show how the choice and ongoing evaluation of a firm’s business model, as a matter of strategic guidance, are key aspects of corporate governance (CG), with particular reference to risk management (RM) in Islamic banks. Design/methodology/approach This research uses a case study approach, with a single case, which was chosen as it fits very well the purpose of this research. The data collection was based largely on documentary evidence. Company data were collected from company annual reports, press releases and legitimate web sites. The ORBIS Bank Focus database was also used to produce a comparative financial analysis. Findings The study findings illustrate how an apparently successful business model may fail due to an inherent instability that could have been identified through the application of careful risk analysis (including stress testing) in the choice and ongoing evaluation of the business model, which robust CG and strategic guidance require. In particular, Arcapita’s problems illustrate the dangers to Islamic financial institutions (IFI) from business models that involve undue exposure to liquidity risk. Practical implications The issues raised in the paper are important in that Islamic banking and finance is an integral part of the global banking and finance industry. Investors and regulators are now requesting corporate management to provide improved service to shareholders and other stakeholders alike. IFI rely on the confidence of investors and market participants, just like conventional institutions and when this confidence erodes, it may prove difficult to regain. Social implications The global credit crisis of 2008 caused significant difficulties to firms, especially financial institutions, even with substantial government intervention in the economy, which raised some issues of CG and ethics. Originality/value This paper extends the knowledge of the potential effects of weaknesses in CG and RM, with specific reference to strategic guidance in the choice and ongoing evaluation of a firm’s business model, especially in relation to the Islamic banking sector. It also provides a telling illustration of the need for the enhancements of the Basel Committee’s prudential requirements set out in the various Basel III documents.

The link between environmental, social and corporate governance disclosure and the cost of capital in South Africa

Orientation: Ignoring environmental, social and corporate governance (ESG) aspects exposes firms to risks that diminish value, shrink returns and even lead to failure. Firms considering ESG aspects are perceived as less risky by capital providers. Such capital suppliers accept lower returns and lending rates when providing capital to firms with superior ESG practices and disclosure. Research purpose: To investigate the link between ESG disclosure and the cost of capital. Motivation for the study: Although there has been a growing interest in responsible corporate practices in emerging markets, limited research on ESG has been conducted in South Africa. Research approach/design and method: A positivistic paradigm was employed. A sample of 68 firms from six Johannesburg Stock Exchange sectors over the period 2011–2018 (478 firm-year observations) was examined using panel regression analyses. Main findings: A significant negative relationship was observed between composite ESG disclosure scores and weighted average cost of capital (WACC) for both consumer goods and consumer services sectors. In addition, a significant positive regression coefficient was obtained between composite ESG disclosure scores and WACC for firms from the industrials sector. Practical/managerial implications: A growing number of capital providers consider a firm’s ESG practices and disclosures which could offer a firm the opportunity to raise additional sources of capital. Contribution/value-add: Local firms that had improved ESG disclosure seemed to benefit from a lower overall WACC and cost of debt. Equity capital providers, however, seem to perceive increased ESG disclosure as additional risk and require a higher return from such firms in South Africa.

Gobierno corporativo y su revelación a través del Reporte Integrado: Caso MASISA

Este artículo tiene por objetivo analizar las revelaciones sobre aspectos de Gobiernos Corporativos a través del Reporte Integrado, en base de los requerimientos del Marco Internacional del Reporte Integrado. El Reporte Integrado se ha convertido en una fuerte tendencia mundial dentro del ámbito del Reporting.Para tales efectos, se realizó un estudio de caso, en el informe emitido por la empresa MASISA, dado que esta organización fue la primera empresa chilena en emitir el reporte y una de las primeras a nivel mundial. Se realizó un análisis cualitativo, análisis de contenido, para el Reporte emitido el año 2018.El análisis demostró un mediano cumplimiento de los requisitos de revelación, dado que se evidenció información de cinco de ocho aspectos revisados. También se determinó la existencia de interconexión entre las revelaciones, en línea con investigaciones previas.Llama la atención que existan tres aspectos sobre los que no se hace mención alguna. Los resultados también sugieren la utilización del Reporte como mecanismo para mostrar solo aspectos positivos de la organización. Esto abre variadas opciones de investigaciones futuras, tales como, ampliar a otras empresas o revisar el impacto interno de la emisión del Reporte.

Legal Aspects of Corporate Management in the Context of International Law Rules

This study sets the task of studying the legal aspects of corporate governance in the context of existing international law. Consideration of issues related to the legal aspects of corporate governance is of great importance for the development of common criteria for evaluating their activities from the point of view of existing legal norms. The development of ever new forms of public organizations and the need to develop legislative norms to regulate their activities only emphasizes the importance of the issue under study. The relevance of this problem is of particular importance in light of the fact that to date, the laws of most countries have not yet developed clear criteria governing the corporate activity. This fact leads to difficulties in studying this issue and the high probability of misunderstanding in matters of corporate activity and corporate governance features, not to mention giving this activity a proper assessment from the standpoint of the norms of current legislation. This study sets the task of studying the fundamental legal rules regulating the corporate governance of Ukraine and foreign countries with the identification of the similarities and differences of existing legal standards. The method of comparative analysis of works of domestic and foreign researchers in the framework of the subject under consideration was selected. The applied value of this material is to identify the main criteria for the compliance of the current aspects of corporate governance with international law with a view to the subsequent application of the results in practice. The research prospects in this direction from a legal point of view consist in comparing the current legislative acts regulating international law with regard to corporate governance issues, which opens up great opportunities for analysis of all the provisions of corporate governance and bringing them into line with the norms of existing international law.

Does corporate governance really matter for bank efficiency? Evidence from ASEAN countries

This paper examines the impacts of corporate governance on the efficiency of ASEAN banks from 2007 to 2014. The bank efficiency levels are estimated using the SFA model of Kumbhakar et al. (J Prod Anal 41:321–37, https://doi.org/10.1007/s11123-012-0303-1 , 2014). The impacts of various corporate governance aspects on bank efficiency are assessed using the Dynamic system GMM model. The results indicate that government-owned banks are more cost-efficient, but not more profit efficient than both foreign and private banks. Banks with larger boards are more cost-efficient in both the long term and short term, but only more profit efficient in the short term. In addition, foreign ownership, board independence, and CEO duality show no significant impact on bank efficiency levels.

Legal Aspects of Corporate Management in the Context of International Law Rules

This study sets the task of studying the legal aspects of corporate governance in the context of existing international law. Consideration of issues related to the legal aspects of corporate governance is of great importance for the development of common criteria for evaluating their activities from the point of view of existing legal norms. The development of ever new forms of public organizations and the need to develop legislative norms to regulate their activities only emphasizes the importance of the issue under study. The relevance of this problem is of particular importance in light of the fact that to date, the laws of most countries have not yet developed clear criteria governing the corporate activity. This fact leads to difficulties in studying this issue and the high probability of misunderstanding in matters of corporate activity and corporate governance features, not to mention giving this activity a proper assessment from the standpoint of the norms of current legislation. This study sets the task of studying the fundamental legal rules regulating the corporate governance of Ukraine and foreign countries with the identification of the similarities and differences of existing legal standards. The method of comparative analysis of works of domestic and foreign researchers in the framework of the subject under consideration was selected. The applied value of this material is to identify the main criteria for the compliance of the current aspects of corporate governance with international law with a view to the subsequent application of the results in practice. The research prospects in this direction from a legal point of view consist in comparing the current legislative acts regulating international law with regard to corporate governance issues, which opens up great opportunities for analysis of all the provisions of corporate governance and bringing them into line with the norms of existing international law.&#x0D;