Board Structure Research Articles

Corporate Governance and Financial Performance: A Longitudinal Analysis of the Impact of Board Structures

The conducted study associated with the longitudinal analysis of the impacts of corporate governance especially board of structure on the financial performances of the organisations. The aim of the study is to understand the longitudinal impact of board structures on the financial performance of companies. Here, the dynamic changes in board structure discussed where leadership style and board size play vital roles. In this study, the primary method was used where data collected by using Google Form. In that case, a total of 70 respondents from different organisations who offered their experience. In this study, a primary data analysis method was used that helped to analyse all the data which helped in data interpretation aspects. Keywords: Corporate Governance, Board Diversity, Board Structures, Financial performance, Transparency and decision-making etc.

Get advanced or retreat: well-informed board and bank risk-taking

PurposeThis paper aims to examine the relationship between board structure and risk-taking, exploring how this association is influenced by advanced technologies in the banking sector.Design/methodology/approachThis study uses a panel sample of 22 Pakistani banks from 2011 to 2018. To test the authors’ hypothesis, the authors use regression analysis with two-way cluster robust standard errors. Further, the authors also check the robustness of the authors’ findings using alternate proxies of board structure and bank risk-taking behavior. To address endogeneity concerns, the authors use the two-stage least square technique.FindingsIn the era of the Fourth Industrial Revolution, Pakistani banks’ digitalization is modeled by the presence of Temenos-T24/Oracle as their core banking system (software providing end-to-end operational integration). Its interactional effect with corporate governance is evaluated to implicate informed risk-taking by the board as a result of improved information access and analysis. The authors find that board size has a positive association with risk-taking, and the use of modern technology reshapes this association in the banking sector.Originality/valueThe contribution of this paper is twofold. First, the impact of board structure on bank risk-taking has not been extensively researched in Pakistan – a highly volatile and unpredictable economy. Second, the evaluation of the role of technology on bank risk is being researched for the very first time – a uniqueness of this paper.

Examining State Licensing Requirements for Select Master's-Level Behavioral Health Providers for Children.

The authors examined licensing requirements for select children's behavioral health care providers. Statutes and regulations as of October 2021 were reviewed for licensed clinical social workers, licensed professional counselors, and licensed marriage and family therapists for all 50 U.S. states and the District of Columbia. All jurisdictions had laws regarding postgraduate training and license portability. No jurisdiction included language about specialized postgraduate training related to serving children and families or cultural competence. Other policies that related to the structure, composition, and authority of licensing boards varied across states and licensure types. In their efforts to address barriers to licensure, expand the workforce, and ensure that children have access to high-quality and culturally responsive care, states could consider their statutes and regulations.

Relationship between the implementation of formal board processes and structures and financial performance: the role of absolute family control in Colombian family businesses

PurposeWe investigate the effect of the adoption of formal board structure and board processes on firm performance in Colombian family firms, in a context where firms can choose specific aspects of board structure and processes. We deploy insights from the behavioral governance perspective to develop arguments about how family businesses may choose board elements based on their degree of control over the firm (absolute control or less), and its effect on firm performance.Design/methodology/approachWe use an unbalanced data panel of 404 firm-year observations. The data was obtained from the annual financial and corporate governance reports of 62 Colombian stock-issuing firms for the period 2008–2014 – due to change in regulation, data could not be added beyond 2014. Panel data technique with random effects was used.FindingsThe results show that board structure is positively associated with financial performance, however, this relationship is negative in businesses where family has absolute control. We also found that there is a negative association between board processes and performance, but positive association in family-controlled businesses.Originality/valueOur research contributes to research streams on effects of family control in firm choices and on the interactive effect of governance choices and institutional context and more generally how actors interact (rather than react) with their institutional context.

Development and establishment of a patient advisory board for forensic psychiatric patients - Insights and experiences from the PART project

IntroductionParticipatory research (PF) actively involves people with lived experience (pwle), e.g. for a disease, in research. This improves the relevance, quality and impact of research and can help to raise third-party funds, increase recruitment numbers, select research methods. Pwle can support all stages of the research process, including dissemination. While PF is already standard in other countries, Germany is still lagging behind. Our participatory advisory board aims to create a sustainable structure to involve underrepresented patients.ObjectivesIn the PART advisory board, pwle and researchers should actively cooperate in projects in the field of forensic psychiatry. In preparation to establish the advisory board procedures, key documents and training material were developed. In addition experiences, opinions, ideas and concerns of stakeholders and pwle in relation to PF were collected.MethodsGuided interviews were conducted with stakeholders (clinical, research) and focus groups with in-patient pwle from forensic psychiatry. They were asked how they imagine the structure, tasks and goals of a participatory advisory board, what opportunities and obstacles they see. Anticipated framework conditions and support needs for the successful implementation were also asked. The interviews and focus groups were audio-recorded and transcribed. Data was analysed with MAXQDA using thematic analysis.ResultsIn total, 8 expert interviews and 2 focus groups with 15 pwle were conducted in the first half of the year 2023. The analysis so far shows great interest in PF, although the term is mostly unknown and experience seems to be limited. The respondents identified opportunities for participatory research, but also challenges that need to be overcome in terms of its implementation. Both groups emphasise the importance of PF, especially in the field of mental illness, and express ideas for its implementation.ConclusionsThe results will be incorporated into the structure of the advisory board, so that PF in the field of forensic psychiatry will be more successful and the exchange between researchers and pwle will be facilitated. Detailed results as well as impressions from the first meeting(s) of the advisory board will be presented at the EPA conference.Disclosure of InterestNone Declared

Cascade Public Media

This case study focuses on Cascade Public Media (CPM), a nonprofit whose mission is to inspire a smarter world through public broadcasting, which chose to deliberately change their organizational and board culture to be more equitable and inclusive. In this case, students and practitioners will learn the importance of adopting diversity, equity, and inclusion to better serve their audience and improve board and organizational performance. CPM, using careful and deliberate actions, was able to address systemic injustices and inequities within their board of directors. Over a multi-year period, the CPM board was able to build an accountability-driven strategic framework that brought an equity lens to all aspects of governance. We introduce two theoretical frameworks—Institutional Theory (Powell & DiMaggio, 1991) and Inclusive Interactions Framework (Bernstein et al., 2022)—as a means of highlighting the imperative of adopting actionable practices designed to transform board culture, power dynamics, policies, and structures to generate impactful results. The case is designed for undergraduates, graduates, and DEI and governance practitioners.

Effect of Board Structure on Board Performance in Malawi

Purpose: This study analyses the effect of board structure elements on board performance in Malawi, an Emerging economy. Design/Methodology/Approach: The research adopted the cross sectional survey design. Data were obtained from 174 directors drawn from board members of Malawi stock exchange listed entities, state owned enterprises, private companies and non governmental organisations. Multiple regression analysis was employed to test the impact of board structure on board performance. Findings: Results demonstrated that board structure plays a significant role on board performance. Specifically, the study found positive and significant association between board size, board diversity and board performance, but failed to find significant evidence to link board composition, CEO duality, audit committee and board performance. Implications/Originality/Value: The research outcome suggest that to improve board performance in Malawi, owners/shareholders must constitute the right board size that is also well diversified.

Analyzing the impact of environmental strategies on corporate governance and long-term performance

This study delves into the complex relationships between corporate governance, environmental strategies, and the enduring success of publicly traded companies. Through empirical analysis, the study explores how adopting diverse sustainability measures influences stakeholder involvement, board structure, and shareholder value creation. This study combines an extensive dataset of financial information from listed companies with a quantitative examination of corporate governance practices. It also incorporates detailed case studies of leading firms implementing noteworthy environmental strategies. The study uses correlation analysis to assess environmental strategies' influence on corporate governance dynamics and long-term performance within this sector. The study highlights a positive correlation between robust environmental strategies and enhanced corporate governance practices. These include heightened board diversity, increased stakeholder engagement, and strengthened risk management frameworks. Notably, the study establishes a strong link between proactive sustainability efforts and outstanding long-term financial performance, as evidenced by key performance indicators such as return on equity and total shareholder return.

An artificial intelligence-based approach for identifying the in-plane orthotropic mechanical properties of electronic circuit boards

The finite element modeling of electronic boards is a challenging task due to the complexity of the multi-component board structure. Hence, it is acceptable to attain equivalent orthotropic in-plane mechanical properties and use them throughout the finite element analysis (FEA) simulations. This paper aims to present an artificial intelligence-based methodology, using the artificial neural networks (ANNs), to estimate the in-plane mechanical properties of the printed circuit boards (PCB). In this methodology, the ANN technique used FEA data to find the relationship between the first 10 natural frequencies and the mechanical properties, that is, modulus of elasticity, Poisson’s ratio and the shear modulus, of the test board. Subsequently, the experimentally derived natural frequency data is then imported to the ANN model to identify the equivalent orthotropic properties. The ANN-predicted properties are plugged back into FEA and provided natural frequencies and mode shapes that are in great match with experimental results.

The Effect of Corporate Governance on the Degree of Agency Cost in the Korean Market

This study examines the relationship between corporate governance (CG) and agency costs using Korean market data, particularly for chaebol firms. The final sample includes 660 firm-year observations between 2016 and 2020 for Korean non-financial firms listed on the Korean Composite Stock Price Index (KOSPI). This study employs an ordinary least-squares panel data regression model using two proxies for agency costs, namely, asset utilization ratio and operating expense ratio, and six CG individual metrics as independent variables (CG score, protection of shareholder rights, board structure, disclosure, audit organization, and managerial discretion and error management). We find that firms with high CG experience lower agency costs than those with low CG. Moreover, our evidence suggests that firms can decrease agency costs by improving the quality of CG. The results of our regression model also support the idea that CG is effective in reducing agency costs for chaebol firms but not for non-chaebol firms. Finally, our findings suggest that the implementation of effective CG mechanisms in firms might improve managerial behavior through better decision-making to maximize the value of firms.

Board governance model, institutions, financial performance, and environmental performance: Stakeholder supremacy or coordination problems?

AbstractThis study aims to determine the mediating effect of environmental performance (EP) on the relationship among the board governance model (BGM, i.e., one‐ or two‐tier board), institutions (regulatory quality, rule of law, and control of corruption), and financial performance (FP). Motivated by the theoretical disputes surrounding the effectiveness of BGM, this study draws upon the supremacy of shareholders versus stakeholder's perspective and the coercive pressure from institutional theory to explain corporate legitimacy practices. Thus far, only a few studies have explored the role of BGM and institutions in a firm's EP and FP. By analyzing 1112 listed firms in emerging markets from 2013 to 2020, this study shows that institutions positively affect EP and FP through a regulatory quality indicator. Specifically, the two‐tier board indicator improves EP at the expense of FP. Despite the increasing pressure to embrace sustainable practices in countries that adopt the one‐tier board model, the formalization of stakeholder supremacy within the two‐tier board structure is considered beneficial. EP does not act as a mediator in the relationship between BGM and FP.

Two-tier board characteristics and expanded audit reporting: Evidence from China

This paper investigates the relationship between the characteristics of the two-tier board structure (board of directors and supervisory board) and the disclosure of key audit matters (KAMs) in the expanded audit report. Using a sample of 10,857 firm-year observations of Chinese listed firms spanning the 2017–2020 period, we offer two main results. First, with regard to the board of directors, we find that the auditor discloses a greater number and lengthier content of KAMs when there is a CEO duality and the board meetings are more frequent. Second, conversely, we find that the size and independence of the supervisory board are related to a lower number and length of KAMs disclosure. When we distinguish between account-level KAMs and entity-level KAMs, our further analysis shows that our results are principally associated with account-level KAMs rather than entity-level KAMs. Specifically, we find that CEO duality and the frequency of board of directors meetings are positively related to account-level KAMs. We also find that the size and independence of the supervisory board are negatively related to account-level KAMs. Our further analysis also shows evidence that these two-tier board structure characteristics are associated with the tone of KAMs disclosure in a consistent fashion. Our findings are robust and address endogeneity problems. Overall, our results suggest that the characteristics of the two-tier board structure drive KAMs disclosure, which should be of interest to regulatory bodies, policymakers, auditors, multinational firms, and users of financial reports.

Alternative finance in bank-firm relationship: how does board structure affect the cost of debt?

AbstractIn this paper, we examine the relationship between alternative finance and board structure on the cost of debt for firms, focusing on the unique effects of differing board characteristics. Using a dataset of 176 European listed companies observed annually from 2013 to 2022, we dissect this relationship through several hypotheses considering factors such as the supply of alternative finance, board gender composition, age, expertise, and board turnover. Our findings reveal that increased alternative finance credit supply escalates the cost of debt, especially for firms with lower ESG scores. Firms with young boards, boards specialized in economics or low, and board turnover also experience a rise in borrowing costs with increasing of alternative finance. Through a pooling 2SLS model, we provide robust evidence about the interplay of alternative finance and varying board structures on the cost of debt. This research clarifies the intricacies of bank-firm relationships in alternative finance and holds significant implications for supervisory authorities, banks, and policymakers. It underscores the necessity of good corporate governance in managing the cost implications of alternative finance. It calls for tailored risk assessment strategies, conducive regulatory frameworks, and vigilant supervisory approaches to create a resilient financial ecosystem where alternative finance can thrive without inordinately inflating the cost of debt.

Radiated emission from DC bus loop of AC induction motor inverter FEM based and experimental evaluation

The paper describes practical method how to analyze locally radiated magnetic field to improve the geometry of printed circuit board (PCB) or busbar structure, select better control method and design electromagnetic interference (EMI) filter. Experimental prototype of three-phase induction motor variable frequency drive has been created and controlled by microcontroller with sinusoidal, namely pulse with modulation (PWM) method. Three-dimensional finite element model simulation of DC bus structure has been created and results has been obtained. Electromagnetic field was measured, practically and results compared with simulation-based ones. Simulation based and experimental results matches thus allowing to conclude method usefulness for cost effective way to test different geometries of DC bus, different modulation methods, EMI filters for variable frequency drive, and other power electronics converters.

From the Editor: Keeping it Going

Continuity is a goal for all organizations. Successful organizations are built in such a way that their excellence is maintained over the long term, from generation to generation. ECS is a great example; its divisional and editorial board structures have provided robust mechanisms for continuity for over 120 years. A succession plan (or lack thereof) is so key that TV series have been made about it (one with the ingenious title Succession). Organizations that are successful over multiple generations are those that can handle such planning well, whether by luck or by science. Organizations that do not handle this aspect well may be spectacular while their founder/star is involved, but the Grim Reaper remains undefeated. At that point, the organization drifts and eventually fades away.

Board structure and risk-taking behavior: evidence from the financial sector of Pakistan

PurposeThe board structure (BS) is pivotal in modern corporate governance (CG). This study aims to investigate BS variables (BSIZE, BIND and chief executive officer [CEO] duality) and their correlation with risk-taking behavior indicators, enriching the understanding of how CG shapes financial institutions’ (FIs) decision-making in Pakistan.Design/methodology/approachBy scrutinizing data from 67 financial entities listed on the Stock Exchange of Pakistan spanning from 2011 to 2022 through panel data regression techniques, the research emphasizes that BS holds a substantial influence over the risk tendencies exhibited by these firms.FindingsKey findings suggest that board size has a positive influence, aligned with previous CG research. Smaller boards perform better and avoid excessive risk-taking, contrasting some negative relationship claims. More independent directors are recommended to curtail risk and financial disruption. Holding both CEO and chair roles reduces risk exposure, resonating with reputational and employment risk theory. It is essential to recognize that BS’s impact on risk-taking is nuanced and context-dependent.Practical implicationsPolicymakers, scholars, practitioners and investors working in the market for financial companies might greatly benefit from the empirical findings of this study. Imposing mandates on FIs to uphold adequate capital reserves functions as a safeguard against unforeseen losses, thereby diminishing the probability of unwarranted risk-taking.Originality/valuePrior studies in this domain predominantly focus on nonfinancial sectors. In addition, existing research often explores the relationship between BS and firm risk-taking solely within the banking sector, overlooking other FIs. This study contributes by using a comprehensive data set encompassing all types of FIs, thus extending the existing literature.

Elective corporate governance: Does board choice matter?

Recent literature discusses how “menu laws” allow corporations to opt into one of multiple competing statutory regimes. This paper contributes to this literature by presenting original empirical research on the choice between corporate board models. Today, many countries not only allow modifications of a particular board structure, but they provide separate legal templates, giving firms a choice between a one-tier and a two-tier board model (and sometimes a third hybrid model). However, how companies actually use these rules is largely underexplored. Based on data from 14 European countries that permit a choice between two models, this paper examines the use of this form of “elective corporate governance” at the firm level: what types of firms make use of which model and whether this choice can be associated with specific financial measures such as operating revenue, cash ratio and leverage. The descriptive statistics show that introducing board choice has led to a gradual decline of the two-tier model. Yet, despite this decline, we did not find that the regression results unambiguously speak against the two-tier model, nor did we find that companies that have changed their board model with the introduction of choice performed better than companies that have retained the original model.

Sustainable Development Goals and Board Structure: Connecting the Dots in The Energy Sector

Purpose: Framed on the Resource-Based View, the objective of this research was to investigate the effect of the structure of the board of directors on the engagement of firms with the sustainable development goals (SDG). Theoretical framework: Resource-Based View (RBV) and Sustainable development goals. Method: 100 firms in the energy sector based in the main emerging economies of the world were analyzed. To test the proposed hypotheses, an analysis of panel data and logistic regression model was performed. Result and Conclusion: The board structure in emerging countries plays a key role for firms to achieve greater engagement with the SDGs. The board size has a negative effect on SDGs, while the presence of social responsibility and audit committees has a positive effect on firms’ engagement with the SDGs. Research implications: It is necessary to consider committees as key configurations of the board structure, even if these are not mandatory in terms of regulation. Establishing, strengthening and encouraging the maintenance of committees focused on sustainability practices is to contribute to promising organizational results and to the reduction of negative externalities. Originality: In addition to confirming the Resource-Based View approach, our study examines the energy sector, which is one of the main agendas for discussions on climate change at a global level. We address the understanding of SDG in business, a field of research still in an embryonic stage. Although several studies have analyzed a variety of contexts together, we focused on emerging economies, bringing specific evidence to the sample countries.

Corporate commitments to biodiversity disclosure and sustainable board. Do NGO directors on board matter? Recent evidence from S&P 500 companies

AbstractThis study analyzes the impact of the characteristics of sustainable boards and NGO directors on biodiversity disclosures. This research uses data from 481 US companies that are taken from Standard & Poor's 500 (S&P), ASSET4, for the period 2009–2020 (5616 company‐year observations). Data on NGO directors is provided by MSCI's GMI Rankings database. A panel data analysis with fixed effects models is used to estimate the results. The results also indicate that a sustainable board structure (proxied by Chief Sustainability Officers (CSOs) and Sustainability‐related executive compensation) is positively correlated with biodiversity disclosure. Our empirical results also show that the moderating role of NGO directors has a greater interaction effect with the characteristics of sustainable boards and biodiversity information disclosure initiatives. The results are also consistent for exploitative and nonexploitative industries, as well as for the pre‐ and post SDG (14–15) of the agenda 2030. In addition, the framework of SDG (14‐15) and the strategic plan of partnership with the Agenda of 2030 show a positive relationship with biodiversity disclosure. We then develop a causal relationship through the positive impact of NGO directors serving on the board of directors on a strategy of partnerships, onboarding, and increase/decrease of NGO directors—possible mechanisms by which NGO directors can influence biodiversity disclosure. Overall, our findings suggest that while NGO directors can potentially be appointed to a company's board of directors for legitimization reasons, these directors are associated with better biodiversity disclosure. The study has valuable implications for enduring board members, practitioners, and scholars. The results are supported by theories of legitimacy, stakeholders and resource dependence. However, evidence on this research question is still unknown and critical, especially in the context of stakeholder‐emphasized governance systems (continental Europe, Japan) and developing countries where there is a lack of knowledge application of regulations related to the disclosure of biodiversity.

ESG disclosure in G7 countries: Do board cultural diversity and structure policy matter?

AbstractThe aim of this paper is to investigate the impact of board cultural diversity (BCDIV) and board structure policy (BSP) on environmental, social, and governance (ESG) disclosure. The sample of this study includes 2988 companies from G7 countries during the 2015–2022 period. Our empirical results reveal that boards with heterogeneous cultural directors and the existence of BSP improve overall ESG scores. Further analysis shows that BSP is a crucial determinant of the governance dimension, one of the pillars of ESG disclosures, whereas BCDIV affects the social dimension more. The findings of this paper offer policy insights, highlighting the importance of BCDIV and BSP for better ESG disclosure. Policymakers should therefore establish regulations that encourage BCDIV and BSP and promote ESG disclosure. Corporate governance reforms that aim to improve the effectiveness and efficiency of boards are critical in order for companies to attain both financial and sustainable development.