Board Of Governors Research Articles

Exploring the role of corporate governance in driving financial performance: An empirical investigation of Nepalese commercial banks

This study delves into the substantial impact of corporate governance practices on a company’s financial performance, focusing specifically on Nepalese commercial banks in the Kathmandu Valley. With 419 participants from all 27 «A» grade commercial banks, the study concentrates on employees currently working in these banks, particularly top-level staff such as managers, department heads, and officers. The primary objective is to investigate the role of corporate governance in driving financial performance, using Return on Assets (ROA) and Return on Equity (ROE) as financial performance indicators of banks. The study explores various factors influencing corporate governance’s impact, including corporate governance policies, disclosure policies, board size, income diversity, and ethnic diversity. Data collection involves primary data from participants associated with the banks, and the analysis is conducted using the Statistical Package for the Social Sciences (SPSS). Descriptive, correlation, and regression analyses are employed to understand the relationship between corporate governance and financial performance variables. Notably, regular evaluations of the board of directors are found to have a beneficial impact on financial performance. A bank’s transparency in sharing performance information exhibits a stronger positive correlation with ROE (R=0.183) compared to ROA (R=0.060), suggesting that ROE is more sensitive to disparities in information availability. Furthermore, the study identifies a negative impact of board size on financial performance, with low-income diversity positively influencing it and board ethnic diversity exerting a negative and statistically significant influence.

Did Emotional Intelligence Traits Mitigate COVID-19 Uncertainty Effects on Financial Institutions’ Board Decision-Making Process?

This study uses a qualitative research mixed methods design to explore the Coronavirus pandemic’s uncertainty effect on mature board governance practices and a board decision processes framework within 16 large Australian financial services entities. Findings provide support for two effects. Firstly, the Coronavirus pandemic had led to a hesitation effect on the board members on-going journey of developing a conscious sense of ‘self’ and awareness. Secondly, the skills and diversity of personalities of directors comprising the board has a positive impact on the effectiveness and success of strategic decisions. The ongoing ambiguity impact of the Coronavirus pandemic on effective board decision-making processes was investigated. The board members expressed confidence in the Australian financial services sector’s ability to overcome the global Coronavirus pandemic’s temporary uncertainty impact on board decision processes frameworks. Future research may extend the focus to senior executives’ or owners’ EI personality traits to investigate the relationship between such individual’s or teams’ traits and ongoing effective board decision-making processes during uncertainty in either developing or developed countries or a cross-cultural study.

The rise of sustainability oversight committees as part of modern board governance and oversight: Practical considerations

Given the constantly evolving landscape, the intersection between corporate governance and sustainability has become a key topic for board members, shareholders and regulators who are seeking to ensure that companies remain competitive as well as relevant. This paper outlines how boards can become more effective in formulating strategic responses to the sustainability agenda through the creation of a specific sustainability committee, which is distinct from the risk and audit committees. It presents arguments for the creation of such a capacity, illustrating them with specific examples (such as materiality assessments). Focus is placed on the interactions with other key governance bodies (the risk, audit and remuneration committees) when such a governance body is being created, and it is suggested that solely applying a risk or audit lens is not sufficient and may create additional gaps in oversight. Finally, the paper discusses how a sustainability committee can become a ‘learning’ governance body, accelerating a sound understanding of how sustainability considerations can affect the strategy, opportunities and risks facing the company at different levels.

Hybrid board governance: Exploring the challenges in implementing social impact measurements

This paper focuses on hybrid board governance and the challenges faced by the board of directors when implementing social impact measurements. Interviews with 36 board chairs and general secretaries in social hybrids in Sweden show that while boards support social impact measurements, they face obstacles in implementing them. Drawing on the institutional logics framework, we identify three main reasons for these implementation problems. First, amid field level regulations focusing on cost efficiency, boards find it difficult to switch to a social impact that lacks a single metric that can be measured annually. Second, board members struggle to find sufficient time when they serve on a pro bono basis, and it is difficult to hold them accountable when limited progress occurs. Finally, acknowledging board practice variation, we highlight the need to distinguish between “beneficiary-driven” and “membership-driven” social hybrids. In the former, boards face the challenge of operationalizing the long-term benefits for end beneficiaries; in the latter, interactions with members are so operationally focused that boards struggle to maintain a long-term agenda for implementing social impact measurement. Given these challenges, we propose that future research should explicitly incorporate the board level in theorizing how hybrid organizations manage institutional logics and performance measurement.

Do selected board governance mechanisms strengthen the link between institutional and macroeconomic variables and the financial flexibility of corporations? Empirical evidence from an emerging economy

PurposeThis study aims to explore the relationship between institutional and macroeconomic factors and corporate financial flexibility while also investigating the moderating impact of selected board governance mechanisms on this relationship.Design/methodology/approachThe sample of the study comprises 174 firms listed on the Colombo Stock Exchange for a period of eight years, from 2014 to 2021. Data were collected from secondary sources, and both descriptive and inferential statistical techniques were used for analyses.FindingsCorporate financial flexibility is notably affected by profitability as an institutional factor and by gross domestic product growth rate and banking sector development as macroeconomic factors. Furthermore, the relationship between a company’s profitability and corporate financial flexibility is found to be moderated by selected board governance mechanisms. However, these governance mechanisms do not influence the relationship between corporate financial flexibility and other institutional factors (i.e. other than profitability) and macroeconomic factors considered in this study.Originality/valueThis study adds a fresh perspective to the existing body of knowledge in the field of corporate finance by emphasizing the interaction effect of board governance mechanisms on the association between macroeconomic and institutional variables and financial flexibility of firms. The findings are expected to be useful for business decision-makers in managing their corporate financial flexibility effectively and maximizing the use of their financial resources.

A predictive study on the impact of board characteristics on firm performance of Chinese listed companies based on machine learning methods

Purpose This study aims to examine the impact of board characteristics on firm performance while also exploring the influential mechanisms that help Chinese listed companies establish effective boards of directors and strengthen their corporate governance mechanisms. Design/methodology/approach This paper uses machine learning methods to investigate the predictive ability of the board of directors' characteristics on firm performance based on the data from Chinese A-share listed companies on the Shanghai and Shenzhen stock exchanges in China during 2008–2021. This study further analyzes board characteristics with relatively strong predictive ability and their predictive models on firm performance. Findings The results show that nonlinear machine learning methods are more effective than traditional linear models in analyzing the impact of board characteristics on Chinese firm performance. Among the series characteristics of the board of directors, the contribution ratio in prediction from directors compensation, director shareholding ratio, the average age of directors and directors' educational level are significant, and these characteristics have a roughly nonlinear correlation to the prediction of firm performance; the improvement of the predictive ability of board characteristics on firm performance in state-owned enterprises in China performs better than that in private enterprises. Practical implications The findings of this study provide valuable suggestions for enriching the theory of board governance, strengthening board construction and optimizing the effectiveness of board governance. Furthermore, these impacts can serve as a valuable reference for board construction and selection, aiding in the rational selection of boards to establish an efficient and high-performing board of directors. Originality/value The study findings unequivocally demonstrate the superiority of nonlinear machine learning approaches over traditional linear models in examining the relationship between board characteristics and firm performance in China. Within the suite of board characteristics, director compensation, shareholding ratio, average age and educational level are particularly noteworthy, consistently demonstrating strong, nonlinear associations with firm performance. Within the suite of board characteristics, director compensation, shareholding ratio, average age and educational level are particularly noteworthy, consistently demonstrating strong, nonlinear associations with firm performance. The study reveals that the predictive performance of board attributes is generally more robust for state-owned enterprises in China in comparison to their counterparts in the private sector.

Board characteristics, institutional ownership, and investment efficiency: Evidence from an emerging market.

This study investigates the impact of board governance mechanism on investment efficiency (IE) in PSX-listed firms. The study also examines the role of institutional ownership (IO) in board-IE relationships. In addition, we extend our analysis to re-examine this relationship by splitting the sample into two groups, i.e., the introductory phase of corporate governance (CG) i.e., 2004 to 2013, and revised codes of CG (2014 to 2018) to examine the impact of these separately on IE. The sample data comprises 155 non-financial PSX-listed firms from 2004 to 2018. IE is measured using firms' growth opportunities. The random effect model is used to test the study's hypotheses. A robustness test is also performed to validate the study's findings. The paired-sample t-test results show a significant improvement in IE after revising the CG codes in 2012. According to the regression results, board size has a significant direct, whereas board diversity has a significant inverse effect on IE. Regarding moderating effect, IO was found to moderate the relationship between board independence and IE significantly. Furthermore, it was discovered that following the issuance of revised CG codes-2012, the level of board independence and diversity increased in PSX-listed firms; however, only diversity positively impacted IE, and board independence had no impact on IE from 2014 to 2018. Despite the issuance of revised CG codes-2012, the level of CG among PSX-listed firms is low, which is a source of concern for regulators such as the Securities and Exchange Commission of Pakistan.

Cash holdings, board governance characteristics, and Egyptian firms’ performance

Cash holdings, board governance characteristics, and Egyptian firms’ performance

System Identification of Enterprise Innovation Factor Combinations—A Fuzzy-Set Qualitative Comparative Analysis Method

High-tech manufacturing enterprises, as innovative entities, are a key focus of national attention. Currently, such enterprises are facing both internal governance pressure and external institutional pressure. Unlike traditional studies that mostly use regression equations, this article uses the fuzzy-set qualitative comparative analysis method to examine how high-tech manufacturing enterprises can coordinate their internal governance mechanisms and external institutional pressures to achieve optimal innovation. This improves the complex mechanism of the multiple factors jointly explaining corporate innovation, and also helps to elucidate the nonlinear relationship between internal governance factors, external institutional factors, and corporate innovation, effectively enriching research methods and results. However, there has not been any research on the issue of enterprise innovation from the perspective of coordinating the two, which urgently needs to be addressed. This article examines how high-tech manufacturing enterprises can reconcile their internal governance mechanisms with external institutional pressures to achieve optimal innovation. The results showed that (1) a single factor cannot constitute the necessary conditions for innovation in high-tech manufacturing enterprises, but executive and shareholder governance have universality in the innovation in high-tech manufacturing enterprises; (2) in the absence of political advantages, high-tech manufacturing enterprises should focus on the coordinated development of internal governance, making board, executive, and shareholder governance the core conditions for innovative development; (3) with political advantages as the main focus and market attention as a supplement, high-tech manufacturing enterprises promote innovative development by combining executive and shareholder governance. This finding indicates a significant substitution effect between government legitimacy and board governance, and confirms that the importance of obtaining government legitimacy for high-tech manufacturing innovation is higher than market legitimacy. This article enriches the research on enterprise innovation by linking internal corporate governance with external institutional pressure, expands the research on the coordination relationship between institutional pressure and corporate governance, and has enlightening significance in revealing the collaborative path for innovation in high-tech manufacturing enterprises.

Effects and mechanisms of board faultlines on decision quality

PurposeThe inconsistent results shown in previous group faultline research have created a need for investigating the underlying mechanisms of the faultline's effects. This study focuses on clarifying the competing mediating roles of information diversity and team conflict in the nonlinear relationship between board faultlines (BF) and decision quality.Design/methodology/approachThis study is empirically tested with the questionnaire data from 105 Chinese listed companies.FindingsThis study finds: (1) an inverted U-shaped curve relationship between BF and board decision quality and (2) that the joint mediating effect of team conflict and information diversity leads to the inverted U-shaped curve relationship between BF and decision quality. Specifically, BF shows a U-shaped curve relationship with team conflict and an inverted U-shaped curve relationship with information diversity. Either too weak or too strong faultlines will inhibit the positive effects of information diversity and amplify the negative effects of team conflicts, leading to low-quality decisions.Originality/valueThis study contributes to the research on: (1) board governance as it clarifies the effect of BF on the board decision-making process and its quality, which helps to open the black box of board decision-making and (2) group faultlines as it reveals how information diversity and team conflict can play a joint mediating role in the functioning of team faultlines.

Impact of dividend policy on corporate social responsibility: the role of board governance mechanism

Purpose This study aims to investigate the impact of dividend policy on a firm’s participation in corporate social responsibility (CSR)-related activities in the context of Pakistani firms. Furthermore, the role of the board governance mechanism in dividend policy-CSR is investigated. Design/methodology/approach The study’s sample consists of 115 nonfinancial Pakistan Stock Exchange-listed firms from 2010 to 2021. A multidimensional financial method is used to assess the firm’s CSR engagement, and dividend policy is assessed using the dividend payout ratio and dividend yield. The authors used the fixed effect model and the random effect model to fulfill the study’s objectives. Furthermore, the system-generalized method of moment estimation technique is used to test the robustness of the result. In addition, the authors perform reverse causality analysis and investigate the effect of financial constraints on the dividend policy–CSR relationship. Findings The authors find that dividend policy has a significant positive impact on CSR. The authors also find that dividend policy is significantly positively associated with components of CSR, i.e. donation, employee welfare and research and development. Furthermore, the authors find that the board governance mechanism strengthens this positive relationship between dividend policy and CSR. Practical implications The government and authorities must mandate or at least encourage enterprises to pay dividends as doing so not only keeps shareholders happy but also encourages firms to make CSR initiatives to balance stakeholders. Furthermore, the regulator should take steps to strengthen the board governance structure as it strengthens the positive dividend policy–CSR relationship. Originality/value Although little previous research has focused on the CSR-dividend policy link, the authors believe that this is the first study to look at the influence of dividend policy on CSR and the moderating impact of board governance mechanisms in an emerging country, namely, Pakistan.

How Much Does Nonprofit Board Governance Matter? Role of Interlocking Directorates, Executive Power, and Women on Boards in Executive Compensation

This article develops an executive compensation model focusing on board governance structure in nonprofit organizations. Drawn from a panel of nonprofits in three Upstate New York cities from 1998 to 2014, the analysis shows that chief executive officers (CEOs) compensation is positively associated with interlocking directorships of CEOs and boards of directors. The results reveal that the executives enjoy more compensation when they serve on the boards of other nonprofit organizations, hold more power in a leadership position with CEO duality and longer tenure, and when the organizations are led by busy boards where a majority of members in the boardroom sit on the boards of multiple other nonprofits. The analysis further shows that financial rewards offered to the executives are contingent upon women’s representation in the boardroom. These findings suggest board governance composition plays a critical role in executive compensation. Implications for practice and future research are discussed.

Using Bonds to Achieve Investment Goals at Provincial University

Lesley Johnson is the athletic director at Provincial University where a generous donation has recently been made to the Athletic Department to create an endowment to fund scholarships—called Athletic Financial Awards—at Provincial University. Lesley is tasked with devising the best plan to utilize these funds within the risk parameters established by Provincial University’s Board of Governors. Here, different investments are contemplated; however, with the guidance of Kelly Simpson, from Capital and Revenue Consultants, financial analyses to estimate returns, pricing, and risk factors for various fixed income options are completed.

Research on the Influence of Free Cash Flow and Board Governance on the Stickiness of Expenses in State Owned Enterprises under Mixed Reform

Research on the Influence of Free Cash Flow and Board Governance on the Stickiness of Expenses in State Owned Enterprises under Mixed Reform

Influence of Board Governance Characteristics on Sustainability Accounting and Reporting in a Developing Country: Evidence From Nigeria Large Businesses

Even though the determinants of sustainability reporting have been highly studied, the influence of Board Governance characteristics on sustainability reporting has mainly remained understudied in Africa, especially Nigeria, despite the overwhelming Business opportunities in the country. This study, therefore, investigates the influence of Board Governance on sustainability accounting and reporting, drawing insights from large businesses listed in Nigerian stock exchanges. Using a sample of 167 reports drawn from three sources—annual reports, sustainability reports, and website over the period 2015 to 2020, this study employs content analysis to quantify three layers of sustainability disclosure and fixed effects regression estimation model to predict the influence of Board governance variables on sustainability reporting quality. Our results indicate that Board governance characteristics such as Board capacity, board independence and Board Incentives are significant factors that affect sustainability reporting quality. The results further suggest that although the number of directors on the board is positively associated with the quality of sustainability reporting, CEO duality is insignificant and has a negative association with the quality of sustainability reporting. This study provides evidence that setting up long-term incentive-based compensation affects sustainability reporting positively in developing countries, such as Nigeria.

Board Governance, ESG, and Firm Value: The Mediating Effect of Short Term Financial Performance

Board Governance, ESG, and Firm Value: The Mediating Effect of Short Term Financial Performance

Compliance with Government Regulations and Board of Directors’ Responsibilities in Saudi Arabia

Compliance with Government Regulations and Board of Directors’ Responsibilities in Saudi Arabia

Disclosure and corporate governance: Evidence from Russian companies

Purpose: this article aims to provide new evidence on the role of several potential drivers of corporate disclosure that have been insufficiently studied or remain controversial in the literature on accounting and corporate governance such as one-tier vs. two-tier corporate boards, having grey directors on the board, direct vs. indirect government ownership and the ownership stake of second-largest shareholders. Methodology: the study uses rich and unique data on transparency and disclosure by Russian firms collected by the S&P agency from 2002 till 2010 and obtained by the authors under a confidentiality agreement. The analysis is based on conventional techniques of regression analysis for panel data. Findings: there is strong evidence of complementarity between corporate governance and disclosure. In particular, disclosure is enhanced by boards with a higher proportion of truly independent directors (compared to grey directors, whose role is less clear-cut), is higher in companies with a two-tier board and those with a greater stake of the second largest shareholder. It is also found that direct government ownership is associated with reduced disclosure. In contrast, no such effect is observed for indirect ownership by the state. Originality and contribution: the analysis uses detailed data from a country with a relatively poor corporate governance environment in general and low standards of mandatory disclosure, which helps observe relationships that would be hard to detect in better institutional settings. It is also one of the first studies that scrutinizes disclosure practices of publicly traded companies in Russia. The obtained findings emphasize the risks of reduced mandatory disclosure requirements, which Russian government allowed in response to the Western sanctions, on the background of a significant exodus of qualified independent/foreign directors from the corporate boards. Given the complementarity between disclosure and corporate governance, this may amplify the risks of poor corporate governance and performance of Russian firms.

Quality Dietary Intake in Adolescence: Assessment of Macronutrients, Minerals and Essential Amino Acids in School Meals Served in the FCT, North Central Nigeria.

Energy, Macronutrients, Minerals, and Essential Amino Acids (EAA) were assessed from school meals served to adolescents in government boarding Schools in the Federal Capital Territory of Nigeria. Two Hundred and EightySix (286) secondary school students within the age range of 13-19 years were selected for this study. 56.6% of the students were female and the majority (60.8%) were aged 13-16yrs with average age of respondents as (15.75±1.11) and BMI range (17.4-18.37). Stunting (4.2%) and malnutrition prevalence (28%) were low with the majority of adolescents recorded as normal HFA(95.4%). Protein and energy sources were largely plant based, however, carbohydrates made up (28.03%-31.3%) of daily value which was lower than the RNI for adolescents per day. Protein (53.9% – 83.6%) and Fats (65.6%-158.02%) exceeded the RDA for population consumption and Energy (1070±196.7 (Kcal) intake was less than required. However, individual rations for daily consumption of protein, Energy and Fibre fell short of RNI. Moisture content (54.2-58.3%), ash (3.5-5.1%), fat (9.6-15.15%), protein (5.38-8.0%), crude fiber (0.8-1.3%), and carbohydrate (18.9-21%). Meals contained calcium (57.4-65.0mg), potassium (290-460mg), sodium (1030-1500 mg), iron (10.9-12mg), zinc (6.12-7.72mg), Mg (56.5-58.7mg) vitamin A (2.56-6.5 RAE), and vitamin C (0.024-0.041mg) Vitamin D (8.14-11.63mg) per 100 g of the school meals. Calcium, Vitamin A, Vitamin C and Potassium were recorded as low for Recommended Nutrient Intake. Essential Amino acid (EAA) levels were quite higher than required per 100g of meal assessed for all nine EAA. In conclusion, dietary diversification of meals can be improved upon, to meet intricate adolescent nutrient needs.

The Moderating Effect of Board characteristics in the Relationship Between ESG Disclosure and Financial Performance: Evidence from KSA

With the increasing shift toward sustainable development and heightened societal scrutiny, companies are placing greater emphasis on environmental, social, and governance (ESG) disclosures. This study investigates the association between ESG disclosures and financial performance among companies listed on the Saudi Stock Exchange, focusing on how board characteristics influence this relationship. By analyzing a sample of Saudi-listed firms, the research assesses the impact of ESG disclosures, as well as their individual environmental, social, and governance components, on key financial performance indicators: Return on Assets (ROA), Return on Equity (ROE), and Earnings Per Share (EPS). The findings reveal a positive association between overall ESG disclosures and financial performance metrics. Environmental disclosures are particularly effective in enhancing ROA, social disclosures positively affect ROE, and governance disclosures significantly improve EPS. Additionally, the study highlights how board characteristics—such as ownership, size, and independence—moderate the relationship between ESG disclosures and financial performance. Specifically, board ownership has a positive moderating effect, while the impacts of board size and independence vary depending on the financial metric in question. These results emphasize the importance of ESG disclosures in influencing financial performance and underscore the significant role of board governance in strengthening this relationship. The study provides valuable insights from the Saudi context, offering both theoretical and practical implications for policymakers, investors, and corporate managers aiming to optimize ESG practices and enhance financial outcomes.