Board Structure Research Articles

The relationship between structure, composition and processes of boards and the performance of Brazilian federal public institutions of higher education

The relationship between structure, composition and processes of boards and the performance of Brazilian federal public institutions of higher education

Blockchain Technology and Corporate Governance: An Analysis of Board Structure, Shareholder Rights and Compensation Policies

The blockchain technology (BT)_offers a new means to trade and monitor the ownership of financial assets which is similar to the advent of double-entry bookkeeping centuries ago. This represents a significant development in financial record-keeping. Stock exchanges are investigating BT worldwide to enable businesses to list, to trade and to vote on shares. This adoption has the potential to benefit stockholders through reduced trading costs, faster ownership transfers, improved record accuracy and increased process transparency. This study examines the effect of BT on corporate governance. Using feasible generalised least squares analysis, our study analyses data from 297 European businesses included in the STOXX Europe 600 index between 2016 and 2021. The results show that the adoption of BT improves the quality of board decision-making and streamlines board activities. In addition, the study indicates that BT facilitates greater direct shareholder rights and encourages effective worldwide administration of director and board member compensation. The research contributes to the current body of literature by confirming the positive impact of implementing (BT) on enhancing corporate governance measures. This, in turn, assists managers in formulating appropriate strategies.

Estrutura do conselho de administração como mecanismo para atingir a Agenda 2030 na América Latina

Abstract This study aims to investigate the effect of board structure on companies’ engagement with the Sustainable Development Goals (SDGs). The characteristics of the board of directors related to the size of the board, independence, and diversity were analyzed, as well as the disclosure of the 17 SDGs of 371 companies headquartered in Latin America from 2016 to 2020. The data were analyzed using data regression in a panel with fixed effects and regression of panel data using the logit method. Research findings showed that board size and board independence have a positive effect on SDG disclosure. The results are in line with the Upper Echelons Theory, as it advocates that the company’s strategic choices and positioning are made by senior management - the members of the board of directors. The research expands the explanation of this theory, confirming that top management is crucial for strategic positioning in environmental and social issues. Managers and shareholders must understand that certain features, such as the social responsibility committee and the preparation of a sustainability report, can also contribute to the 2030 Agenda. At the government level, the results are useful for public policy makers, as they can encourage the creation of norms for the voluntary disclosure of environmental and social information.

Corporate governance and board conflict solution: The case of Lebanese family healthcare businesses

This study examines the intricate relationship between corporate governance mechanisms and the performance of family-owned hospitals in Lebanon. Specifically, it examined the impact of various governance factors, including board size, independence, duality, meeting frequency, and ownership structure, on the financial performance of these hospitals. By employing agency theory as the conceptual framework and qualitative methodology, which involves interviews with managers from three distinct hospitals in Lebanon, this study sheds light on the dynamics of conflicts between shareholders and managers within the context of family-owned hospitals. This study also explores how corporate governance mechanisms can effectively mitigate these conflicts and enhance shareholder value. The significance of this study lies in its contribution to the understanding of corporate governance practices within the Lebanese healthcare sector, offering valuable insights that extend to developing countries across the Middle East and North Africa (MENA) region. These findings suggest that fostering a more autonomous board structure can play a pivotal role in controlling top management and aligning the interests of shareholders and managers within the Lebanese healthcare landscape. Through a nuanced exploration of governance dynamics and their implications for financial performance, this study underscores the importance of robust governance frameworks for ensuring the sustainable success of family-owned hospitals. Ultimately, by elucidating the mechanisms by which governance practices influence organizational outcomes, this study offers practical implications for healthcare practitioners, policymakers, and stakeholders seeking to enhance governance effectiveness and performance in similar contexts.

Gender diversity on the board and investment effectiveness in the emerging market

The implementation of new gender diversity requirements has sparked significant research interest in assessing how such a commitment influences value-creation indicators (Chebri & Bahoussa, 2020). This study aims to examine the impact of gender diversity in the board of directors on the investment efficiency of listed firms in Morocco, using panel data from a sample of 36 non-financial firms listed on the Casablanca Stock Exchange for the period 2014 to 2019. To accurately identify the board dimensions that determine firms’ investment efficiency, we conduct a fixed-effects regression analysis, in which a firm’s investment efficiency variables are regressed, directly and indirectly (i.e., the moderating effect of board diversity), on board attributes. This study draws on the complementary propositions of agency theory and social feminist theory. The empirical results of this study indicate that diversity not only has a positive and significant direct impact on the level of investment effectiveness but also moderates the relationship between board characteristics and investment effectiveness. This study provides empirical evidence of the moderating role of gender diversity on the effect of board structure and investment effectiveness.

Examining the Corporate Governance Strategies of Indian Family-Run Companies: Insights from Selected Enterprises

ABSTRACT Purpose: In light of this, the current study aims to evaluate the management practices of major family business operations in India. Theoretical references: Cadbury (1992) defines business governance as the operational and managerial framework of an organization guided by its purpose and principles. Methods: The research scrutinizes governance practices of major family firms on the Bombay Stock Exchange, concentrating on the top 30 contributing to the SENSEX. Governance factors include board structure, meeting frequency, market capitalization, and social responsibility initiatives. Results: The findings provide insights into the corporate governance strategies of Indian family-run enterprises, contributing to a comprehensive understanding of their governance practices. The study underscores the need for enhanced gender diversity and sustained adherence to governance norms. Limitations of Research: The limitations of this study include a potential lack of generalizability due to the focus on specific family-run companies in the Indian context. Originality: This study unveils the corporate governance dynamics within Indian family businesses, showcasing their adherence to ethical practices, compliance with regulatory frameworks, and distinctive governance patterns.

Determinants of board membership in Publicly-Owned Enterprises

Board structure is considered one of the most important determinants of board effectiveness. This study examines the personal motives of individuals seeking board membership in Publicly-Owned Enterprises (POEs). Using the sequential mixed methods approach, thirteen in-depth interviews were conducted with current and former board members, and one hundred and thirty-seven (137) questionnaires were administered to key representatives and beneficiaries of POEs. The results indicate several factors that motivate board membership. We find that intrinsic motives, which we refer to as ‘personal benefits,’ and extrinsic motives, which we refer to as ‘social recognition,’ are the most important factors for joining POE board membership. The findings could be helpful in redesigning strategies and policies for appointing professional board members whose primary incentives for board membership are related to POE development rather than personal benefits and self-recognition.

DOES BOARD STRUCTURE AND OWNERSHIP STRUCTURE INFLUENCE THE PERFORMANCE OF LISTED COMPANIES: EVIDENCE FROM PHARMACEUTICALS AND CHEMICAL INDUSTRY OF BANGLADESH?

This study examines the influence of board structure and ownership structure on a firm’s financial performance in the pharmaceutical and chemical industry of Bangladesh. The data of this study is based on all listed companies in the pharmaceuticals and chemical industry on Dhaka Stock Exchange. Data was collected from the annual reports of the concerned industry from 2015 to 2020. To examine the data, the study has applied descriptive analysis, correlation analysis, VIF test, and the twostage least squares (2SLS) estimator using Eviews software. Based on existing empirical studies, seven major attributes (board size, board independence, board gender, managerial ownership, institutional ownership, audit committee size, and frequency of audit committee meetings) have been selected to identify their influence on a firm’s performance. Findings from the study show that there is an insignificant negative relationship among board size, board gender, frequency of meetings, and the firm’s financial performance but a significant relationship with board independence, institutional ownership, and frequency of meetings. The study has proposed that board size can be smaller but should be representative. This study will contribute to the literature on CG and profitability in an emerging economy like Bangladesh.

Effect of board structure on stakeholders’ centric perspective of sustainable corporate world

PurposeCorporate leadership and environmental, social and governance (ESG) performance are closely intertwined, as effective corporate leadership can facilitate the achievement of strong ESG performance. Thus, the purpose of the study is to investigate the impact of corporate board leadership on the ESG performance of listed firms.Design/methodology/approachThe sample has been taken from the listed firms of the Nifty 500 index spanning the period of 10 years from 2012 to 2022. Dynamic panel data estimations are applied through a fixed effect model.FindingsThe findings of this study revealed that board size, board independence and board qualification have a significant positive influence on ESG performance. It is evident that good corporate governance practices can positively influence ESG performance by fostering accountability, transparency and ethical behavior, as well as better integrating ESG considerations into their decision-making processes and ensuring that ESG issues are prioritized at the highest levels of management. Further findings also revealed that chief executive officer (CEO) duality has a significant negative relationship with ESG performance, which goes against the belief of stakeholder theory.Social implicationsIt has practical implications for policymakers, as they can enact new regulations pertaining to the CEO’s position in the organizations to make corporate governance responsible for improved sustainability and ESG performance.Originality/valueThere are very few studies analyzing the impact of corporate board structure on ESG performance related to emerging markets. Thus, this study contributes to that literature by using the methodology GMM panel data for the first time as per our knowledge

Impact of Characteristics of Board of Directors Towards Risk-Taking Level with Chinese Commercial Banks

Based on the situation that the overall economy is facing a huge shock due to COVID-19, China's banking sector plays an extremely important role as a provider of funds in the social economy and risk management is even more important. Therefore, this paper uses the Chinese commercial banks as a research sample of 730 from 2017 to 2021 and explores the moderating role of three board structure characteristics, namely, the board size, the combination of chairman and president, and the proportion of independent directors, on the relationship between banks' operation risk include market risk, credit risk and liquidity risk and risk-taking level in empirical approach method. The research findings revealed that: 1. liquidity ratio and cost-to-income ratio have a significant negative effect on the risk-taking level of commercial banks. 2. Board size has a negative moderating effect on the relationship between liquidity ratio and risk-taking level, which means that a larger board size can help reduce the effect of liquidity ratio on the risk-taking level of commercial banks. 3. Board size has a negative moderating effect on the risk-taking level of commercial banks. 4. The separation of chairman and president has a positive moderating effect on the relationship between liquidity ratio and risk-taking level, which means that having a different chairman and president may increase the impact of poor liquidity ratio on the risk-taking level of commercial banks. However, the cross-section of the cost-of-income ratio and independent director ratio has no significant effect on the risk-taking level. This paper also makes recommendations based on the findings of the study.

Talk or walk? The board of directors and firm environmental strategies

AbstractDrawing on legitimacy theory, we study the nexus between green communication and the implementation of green practices, and in particular, we focus on the determinants of their discrepancy. Based on a large sample of firms in 58 countries over a 19‐year period, we employ an index to measure the discrepancy between green operations and the communicated practices, mapped to each firm's board structure. The results provide the first empirical evidence that larger, more gender‐diverse, and more independent boards are associated with a preponderance of green communication over implementation. We interpret this imbalance as a strategy to participate in the public discourse to gain moral legitimacy. Conversely, CEO duality is associated with a discrepancy in the opposite direction, with firms focusing more on implementing green practices than talking about them, suggesting that these firms aim mainly at gaining pragmatic legitimacy from their stakeholders.

The mediating role of firm risk: The case of the insurance sector in Saudi Arabia

This study aims to examine the mediating effect of firm risk on the relationships between board structure and firm performance. The multivariate panel data regression technique is employed to analyse the mediating impact of firm risk on 27 listed insurance companies on the Saudi Stock Exchange (Tadawul) from 2016 to 2021. The findings of this study indicate that firm risk partially mediates the relationship between audit independence and Tobin's Q. In contrast to the existing literature, the study reveals that boards composed of independent members may lack effectiveness in their monitoring role, leading to higher risk-taking behaviour. This paper contributes to the literature on corporate governance and firm performance by examining the association through the lens of firm risk.

Patient advisory board for dementia research (Part‐Beirat): survey on knowledge on participatory research

AbstractBackgroundParticipatory research refer to the process of actively involving people with lived experience of a condition into the research process to improve its relevance, quality, and impact. Evidence indicates that engaging patients in research increases recruitment rates and supports researchers in obtaining funding, developing study protocols, and selecting appropriate outcome measures. The challenge is to establish a sustainable structure to include patient groups which are underrepresented yet, such as patients with neurodegenerative diseases.ObjectiveTo develop, implement, and evaluate a patient advisory board (the “PART‐Beirat”) facilitating involvement in research at the Rostock University Medical Center. As part of the project, we examine the prior knowledge and attitudes toward participatory research.MethodThe project consists of three phases over three years and is supported by the Robert Bosch Stiftung. The first phase involves establishing the PART‐project’s organizational structure, developing key documents and procedures, collecting knowledge (e. g. systematic reviews, survey) and raising awareness. In the second phase, we will connect people with lived experience with researchers to establish topic‐specific (neurodegenerative diseases) PART‐advisory boards. In the third phase, we will increase the number of projects within the PART‐Beirat, monitor their progress and share best practices across the research landscape. In phase one, we conduct a standardized survey on the current knowledge on participatory research among older adults. The questionnaire is based on a previous study conducted at the University of Zurich in 2020.ResultThe survey covers participants’ prior knowledge and attitude towards participatory research, willingness to engage as well as time they would want to invest into participatory research. Data collection of the survey will begin in January 2023. Descriptive results of the survey will be presented.ConclusionAt present, we are underway to develop the organizational structure of the patient advisory board to involve hard‐to‐reach patients and caregivers (PART project). The results of the survey will help us to identify the current level of knowledge on participatory research as well as attitudes towards and willingness to contribute to participatory research. This will provide us with a baseline which we hope to improve in the next three years with the establishment of the PART‐Beirat.

Which governance mechanisms matter for firm pollution?

Using U.S. EPA pollution data, we analyze which governance provisions are related to firm pollution. We find that classified boards, poison pills, limits to amend bylaws, and fair price amendments are associated with significantly greater pollution. In contrast, cumulative voting, because it allows a greater voice for minority shareholders, is associated with lower pollution. We create a pollution-based index (the P-index) based on the sum of those governance provisions positively related to pollution plus an indicator for lack of cumulative voting. The P-index has approximately twice as large an association with firm-level pollution as the E-index. Most measures of board structure or compensation have no significant relation with pollution after controlling for the P-index. An instrumental variable analysis suggests a causal relation between the P-index and pollution.

Board structure, ownership structure, and capital structure: Empirical evidence on Shariah and non-Shariah compliant firms in Indonesia

The main purpose of this study is to investigate the impact of board structure and ownership structure on capital structure of Shariah-compliant firms and Non-Shariah-compliant firms in Indonesia. The study used the Generalized Method of Moments to analyze the relationship by applying 2,739 data observations of non-financial companies registered on the Indonesia Stock Exchange. This study uses commissionaire size, director size, female director, female commissionaire, independent director, and independent commissionaire as proxies for board structure, and ownership concentration and government ownership for ownership structure. The results showed that for Sharia-compliant firms, the relevant determinants are all variables of board structure and ownership structure except independent director. For Sharia non-compliant firms, the only non-relevant determinants are female director and commissionaire size. Interestingly, most of the board structure variables in Shariah compliant firms indicate a strong negative relationship with capital structure of firms (except total commissionaire). This may indicate that board structure of Shariah compliant firms strives to lower the leverage level of the firm. This may also indicate that most managers of Shariah compliant firms are risk averse.

Does CEO narcissism matter? An examination of the relationship between board structure and earnings management in Kenya

PurposeThis paper examines how board structure influences real earnings management and the interaction effect of CEO narcissism on board structure-real earnings management relationship.Design/methodology/approachThe authors used panel data derived from secondary sources from publicly listed firms in Kenya during 2002–2017. Hierarchical regression analysis was used to test the hypotheses.FindingsThe results indicate that board independence, board tenure and size have significant negative effect on real earnings management, while CEO duality positively affects real earnings management. Further, the interaction results show that CEO narcissism moderates the relationship between CEO duality and real earnings management.Research limitations/implicationsThe results suggest that real earnings management reduces when boards are independent, large and comprising of long-tenured members. However, when the CEO plays dual role of a chairman, real earnings management increases. The authors also find that when CEOs are narcissists, the monitoring role of the board is compromised.Originality/valueThe study adds value to the understanding of how board structure and CEO narcissism influence the monitoring role of the board among firms listed at Nairobi Securities Exchange.

FORMATION OF SUPERVISORY BOARDS AS A BASIS FOR ASSURING THE CORPORATE MANAGEMENT QUALITY

The quality of corporate governance depends on the effectiveness of the supervisory board's performance. For this, the supervisory board must have the appropriate composition and structure, and its members must be independent from the executive body and have the necessary knowledge and experience to effectively perform their duties.The analysis of existing theoretical provisions and practical experience of ensuring the quality of corporate governance in terms of creating a supervisory board and staffing corporate management showed that insufficient attention has been paid to this issue. The procedure for selecting and appointing members of the supervisory board needs to be improved.The article substantiates the theoretical and methodological approach to ensuring the quality of corporate governance through the system of selecting members of supervisory boards and forming the system of corporate management: the procedure of forming the supervisory board and methodical support for its implementation has been developed.A feature of the proposed procedure is the step-by-step assessment of the supervisory board members: the professional competence of candidates for board members; comparative evaluation as part of the selection process of the supervisory board; establishing the level of business activity of the supervisory board members.Business activity is a comprehensive characteristic of a the supervisory board member, which reflects their efforts aimed at ensuring dynamic development, achievement of set goals, development and effectiveness of corporate governance. To evaluate business activity, it is proposed to use the characteristics of the three "Rs": basic resource; performance results; reputation of the subject. Thus, the criteria for evaluating business activity have been developed.Implementation of the proposed provisions will allow companies to form effective supervisory boards that will contribute to ensuring the quality of corporate governance. The directions of further scientific research are the development of a policy for the supervisory boards formation, scientific and methodological recommendations for regular audits of the composition and structure of the supervisory board, substantiation of approaches to training and development of supervisory board members.

Struktur Dewan, Struktur Kepemilikan dan Kinerja Korporat: Kasus pada Indek Kompas 100

This study aims to examine the effect of board structure and ownership structure on corporate performance. Corporate performance is measured by return on assets (ROA), the board structure consists of the size of the board of directors, the size of the board of commissioners and the frequency of board meetings. While the ownership structure is proxied by managerial ownership and institutional ownership. The population in this study were all companies listed in the Kompas 100 index, with a sample of 23 companies. The observation period is five years (2017-2021). To test the hypothesis used multiple regression analysis with a significance level of 5%.. The results of the study show that the size of the board of directors has a positive and significant effect on corporate performance, while the size of the board of commissioners has a significant but negative effect on corporate performance, while the frequency of board meetings has no effect on corporate performance. Other results, managerial ownership has a significant and negative effect on company performance, while institutional ownership has no effect on corporate performance.

Board Ancestral Diversity and Voluntary Greenhouse Gas Emission Disclosure

AbstractThis paper examines the relationship between board diversity and firms’ decisions to voluntarily disclose information about their greenhouse gas (GHG) emissions. We focus on board ancestral diversity as a relatively new dimension of (deep‐level) board structure and document that it has a positive and statistically significant effect on a firm's scope and quality of voluntary GHG emission disclosure. The effect goes beyond the impact of more common (surface‐level) dimensions of board diversity and remains robust after addressing endogeneity concerns. In line with the theoretical conjecture that diversity enhances a board's advising and monitoring capacity, we find that the impact of diverse boards is stronger in more complex firms and in firms with low levels of institutional ownership. Overall, our findings provide evidence for board diversity being a relevant governance factor in corporate environmental decision making.

The role and importance of supervisory in joint-stock companies based on international corporate governance standarts

This article highlights the critical importance of the supervisory board in modern corporate governance mechanisms. Such mechanisms have become prevalent in many European countries, where they define the role of the supervisory board as an independent overseer, focused on monitoring the activities of the executive body.
 The wide range of duties and competencies of the supervisory board is discussed, including strategic planning, oversight of executive directors, consideration of corporate decisions, and ensuring adherence to corporate standards. It's crucial to note that the primary mission of the supervisory board is to protect shareholders interests, guarantee their rights, and ensure transparency in the actions of the joint-stock company.
 One of the key challenges the author examines is the dilemma of how executive managers perceive the supervisory board. Do they see this body as an ally that enhances work efficiency or as an obstacle in the way of making operational decisions? This aspect is vital for understanding internal corporate relations and the dynamics of interaction between management structures.
 The article also focuses on the OECD principles regarding corporate governance, emphasizing the importance of an effective structure of the supervisory board. Particular attention is given to the role of independent non-executive members of the board, who can act as a «braking mechanism», ensuring objectivity, independence, and a critical perspective on corporate decisions.
 In conclusion, in the corporate governance of joint-stock companies, the supervisory board emerges as a key element playing a strategic role in protecting shareholders' interests, ensuring transparency, objectivity, and accountability in company operations. The OECD principles underline the significance of including independent members in the supervisory board. This stance affirms the necessity to amplify the role and authority of the supervisory board in contemporary conditions, making the exploration of this issue particularly relevant and significant.