Company Boards Research Articles

Women director interlocks and firm performance: Evidence from India

This paper empirically examines the ties of women directors on company boards and provides a gendered perspective of the performance effects of interlocking directorates on which empirical evidence is scant. Relatedly, it sheds light on the unaddressed issue of whether such ties can be one of the mediating factors through which women on board impact firm performance. Using a panel of listed firms in India for the years 2010–2020 covering periods of pre and post institution of gender quota in India, our study finds that women director connectedness, as captured in select network centrality measures, has a positive and robust effect on firm value. We further find evidence that the positive relationship with firm value is driven by information transmitted to the firm via women director networks and the influence on governance that such networked women directors have on company boards. Finally, based on a director level analysis we find that more connected women directors contribute to corporate governance through higher meeting attendance and memberships in important committees. The findings of our paper highlight the unique role of women director interlocks in firm governance and performance.

The effects of board gender quotas: A meta-analysis

We use a meta-analysis to summarize the recent literature evaluating effects of the introduction of gender quotas on company boards. We collect data from 51 studies on policies implemented in 11 countries from which we extract 496 estimates. The literature considers the effects of quota policies on a wide range of outcome variables which we group in four categories. The findings of the meta-analysis contribute to the discussion of boardroom quota policies by mitigating some concerns of negative impacts and pointing out areas where more policy action is needed.

Features of legal regulation of supervisory boards activities in state joint-stock companies

The article examines the legal status of supervisory boards in joint-stock companies with 50 percent or more of their shares owned directly or indirectly by the State. The author analyzes the main tasks and highlights the peculiarities of corporate governance in state-owned companies, and identifies the specifics of the supervisory board’s independence in the public sector, which consists in the interaction of the supervisory board not only with the executive body, but also with the shareholder represented by the relevant management body. The author analyzes the legislative norms governing the activities of supervisory boards in public joint-stock companies and the OECD Guidelines on Corporate Governance in State-Owned Enterprises. The author highlights the specifics of legal regulation of the supervisory board of a joint-stock company with 50 percent or more of its shares owned directly or indirectly by the State, namely, special requirements for the minimum number of independent directors, impossibility of establishing additional grounds for early termination of powers of the supervisory board members, mandatory formation of committees, impossibility of delegating the functions of the supervisory board to the general meeting, etc. The author analyzes the question of the authority of the meetings of the supervisory board of state-owned companies in the event that the majority of independent directors are absent in the supervisory board. Researched the legal consequences of non-compliance with the legal requirement for a majority of independent directors on the supervisory board and concludes that there are no legal consequences, and the supervisory board will be competent in this case and will be able to perform its duties in full within its competence. It is determined that the absence of legal consequences in such a situation constitutes a shortcoming in the legal regulation of the status of the supervisory board. At the same time, the author concludes that the lack of responsibility of the management body for violation of the terms of competitive selection of independent members of the supervisory board and the provision of the management body with the opportunity to perform the functions of the supervisory board for the period of martial law also constitute shortcomings in legal regulation.

Impact of Corporate Governance on Firms’ Sustainability Performance: Case Study of BIST 50 Index Companies

Purpose: the purpose of this study is to investigate whether corporate governance mechanisms and attributes influence the sustainability performance of companies included in the BIST 50 Index. Results and contributions: Regression analysis showed that there was a significant positive influence of board tenure on sustainability performance and all its types; board size on environmental performance; and a dummy variable for board evaluation externally facilitated and company size on sustainability, environmental, and social performance. A significant negative impact of director attendance at board meetings on social performance was also revealed. This study contributes to the literature on the role of corporate governance in achieving the SDGs for BIST 50 Index companies, highlighting the significant impact of its individual indicators on the achievement of sustainability performance. Methodology: The authors reviewed 45 sustainability reports of BIST 50 Index companies for 2023. Four indices—Sustainability Performance, Environmental Performance, Social Performance, and Corporate Governance Performance Indexes—were developed to characterize sustainability performance and its types based on a content analysis of sustainability disclosures. To analyze the influence of mechanisms and characteristics of the corporate governance system on sustainability performance, eight independent variables were used: board size, number of board meetings, director attendance at board meetings, board independence, board tenure, a dummy variable for board evaluation externally facilitated, a dummy variable for internal auditors present, and a dummy variable for CEO and Chair functions combined. Two control variables, company size and leverage, were used as well. Gap: Today, the scientific literature has no universal approach and understanding of how the corporate governance system should be developed to improve sustainability performance or its individual components. Relevance: Development of a corporate governance system is one of the ways to increase the level of sustainability performance of companies. Impact: The results of the study made it possible to produce several recommendations (expand the number of board members, develop an effective procedure for regular changes of general directors in company boards, introduce independent external control tools in the corporate governance systems of companies) that will lead to the achievement of SDGs 5, 8, 16.

Personal Bankruptcy Prediction Using Logistic Regression Model

According to the Insolvency Department of Malaysia, as of December 2023, 233,483 Malaysians are currently involved in bankruptcy cases due to their defaults on hire purchase loans, credit card loans, personal loans, housing loans, and business loans. This is indeed a critical issue because the growing number of personal bankruptcy cases will hurt the Malaysian economy as well as society. From an individual's economic perspective, bankruptcy minimizes their chances of getting a job. Apart from that, their accounts will be frozen, they will lose control of their properties and assets, and they will not be allowed to start any business or be a part of any company's Board of Directors. Bankrupts also will be rejected from any loan application. This paper examines this problem by developing a personal bankruptcy prediction model using the logistic regression technique. This paper defines "bankrupt" as terminated members who failed to settle their loans. The sample comprised 24,546 cases with 17% settled cases and 83% terminated cases. The data included a dependent variable, i.e., bankruptcy status (Y=1(bankrupt), Y=0(non-bankrupt)), and 12 predictors. Upon completion, this paper succeeds in coming out with a reliable personal bankruptcy prediction model and significant variables of personal bankruptcy. The findings of this paper are very beneficial and significant to creditors, banks, the Malaysia Department of Insolvency, potential borrowers, members of AKPK, and society in general in raising awareness of personal bankruptcy risks and such information may help them to take preventive measures in minimizing the number of personal bankruptcy cases.

Exploring the Impact of Board Structure and Governance Practices on Integrated Reporting Quality: CSR as A Moderating Variable

Presentation report integrated (IR) in Indonesia is still naturally voluntary and partly big studies previously conducted in developed country capital markets, and studies conducted in emerging country markets Still seldom as well as companies that voluntarily choose to adopt IR possible to own Lots of flexibility in matter disclosure information. Purpose study this is to influence a positive board of directors and Governance Company to quality reporting moderated integratedcorporate social responsibility (CSR). Study this uses agency and stakeholder theory which emphasizes that governancecompanies can increase quality reporting integrated that can strengthen connection with the existence of CSR and companies obliged to give report as information to stakeholders. Retrieval technique sample uses method purposive sampling. Sample in study this is the incoming companythe LQ-45 index is listed on the Indonesia Stock Exchange (IDX) with as many his observations as many as 175 observations. For the test, the hypothesis used analysis regression multiple and MRA using application stata. The results of the research show the board of directors and governance companies are influential in the quality of reporting integrated and corporate social responsibility (CSR) strengthens the connection between the board of directors and governance companies in the quality of reporting integrated.

Impact of Corporate Governance on Market Price of Share and Stock Return in Nepalese Commercial Banks

This study examines the effect of corporate governance attributes on market price of share and stock return in Nepalese commercial banks. The dependent variables are market price of share and stock return. Similarly, the independent variables are company size, board size, board diversity, audit committee, non-performing loans, profitability and leverage. The study is based on secondary data of 15 commercial banks with 105 observations for the period from 2015/16 to 2021/22. The data were collected from Banking and Financial Statistics published by Nepal Rastra Bank, publications and websites of Nepal Rastra Bank (NRB) and annual reports of the selected commercial banks. The correlation coefficients and regression models are estimated to test the significance and importance of corporate governance on the market price of share and stock return of Nepalese commercial banks. The study showed that audit committee size has a positive effect on stock return. It means that increase in audit committee size leads to increase in stock return. However, leverage ratio has a negative effect on stock return. It means that increase in leverage ratio leads to decrease in stock return. Similarly, profitability has a positive effect on market price of share and stock return. It means increase in bank profit leads to increase in market price of share and stock return. Similarly, board diversity has a positive effect on market price of share and stock return. It implies that increase in female board directors leads to increase in market price of share and stock return. However, nonperforming loans has a negative effect on market price of share. It implies that increase in nonperforming loans leads to decrease in market price of share. Similarly, board size has a positive effect on market price of share and stock return. It means increase in board size leads to increase in market price of share and stock return.

The Role of Company Board Diversity in Corporate Adoption of Digital Inclusion Policies in the US

Objective The digital divide is increasingly becoming a source of social and economic inequality, as access to digital technologies remains limited for many populations. In response, digital inclusion initiatives have emerged to bridge this gap and provide more equal access to digital resources. These initiatives have gained significant traction in the corporate world, as companies recognise the importance of digital inclusion in expanding their customer base and fulfilling their corporate social responsibilities. However, there is limited research on the company-specific factors that influence the adoption of digital inclusion policies in companies. Methodology Using data from the ISS ESG dataset, we apply panel data methods to analyse more than a hundred technology and media companies between 2016 and 2021. Results Our findings reveal that minority CEOs and Presidents and higher representation of women on the board of directors are positively associated with increased adoption of digital inclusion policies. The results of our study extend previous research on digital inclusion/divide and determinants of ESG scored. We provide valuable insights on the role of board diversity in the adoption of digital inclusion policies and underscores the importance of diversity and inclusion in shaping equitable technology access. Limitations and Implications While this is the first study to address the determinants of corporate digital inclusion policies, its limitations are the use of a single dataset (ISS) measuring the ESG scores and the relatively low number of observations. Originality / Contribution This paper addresses this gap by exploring the impact of corporate board diversity (in particular, gender and racial/ethnic diversity) on the adoption of digital inclusion policies by US companies. To the best of our knowledge, we are the first to investigate this relationship.

Do independent directors enhance better corporate governance in companies in India?

PurposeThe effectiveness of independent directors in making autonomous decisions for better corporate governance in organizations has often been questioned. This paper aims to investigate their role in company’s decision making in India and the reasons behind their ineffectiveness.Design/methodology/approachThis paper examines the regulatory environment and ongoing reforms in which independent directors operate. It identifies crucial factors such as ownership patterns, the appointment and selection process that affect their autonomy. The analysis draws from newspaper articles, blogs, India’s regulatory requirements, The Companies Act and relevant related literature.FindingsThe findings reveal that the independence of directors remains largely in form but not in function. This paper recommends a fair and more robust selection through an independent authority, and disclosure of the resignations of independent directors. Independent directors should be given more powers and their risk-reward scheme should be analyzed.Originality/valueThe paper emphasizes the need for independent directors to be truly independent from the senior management, promoters, and other existing directors. It calls for tighter and more transparent appointment procedures to ensure that independent directors are not influenced by senior management and can bring objectivity to the company board.

Corporate Social Responsibility and Firm Performance: A Literature Review

Research Aims: This study explores the complex relationship between Corporate Social Responsibility (CSR) and company performance, focusing on how board composition, leadership, and cultural influences affect the efficacy of CSR initiatives.Design/methodology/approach: Using a literature review method.Research Findings: Independent directors on company boards positively influence CSR activities, which in turn enhance company value. These effects receive moderation from the resources available to the company and mediation through the CSR activities themselves. The research also highlights that leadership qualities such as integrity and stakeholder engagement significantly boost organizational performance by promoting responsible corporate culture. It further reveals that market-oriented cultures strengthen the positive impacts of CSR on performance, while adhocracy cultures have the opposite effect. Geographical variations emerge in the effectiveness of CSR, with significant impacts observed in regions like Argentina and Bolivia, unlike in Chile where CSR shows negligible effects. The study notes that while CSR typically improves operational performance, its impact on market valuation proves complex and hinges on strategic emphasis on value utilization over creation. Moreover, a company’s initial CSR reputation crucially impacts its financial performance, where positive reputations enhance and negative ones detract from company success.Theoretical Contribution/Originality: The findings advocate for aligning CSR with corporate strategy and culture to maximize its benefits on company performance.

THE EFFECT OF BOARD DIVERSITY ON CORPORATE SOCIAL RESPONSIBILITY DISCLOSURE IN INDONESIAN MANUFACTURING COMPANIES

This study aims to examine the disclosure of corporate social responsibility in manufacturing companies in Indonesia as influenced by the diversity of the company's board of directors and board of commissioners. A total of 142 manufacturing companies listed on the IDX from 2017- 2021 became the population of this study. Purposive sampling was used in sample selection, resulting in a research sample of 42 companies. During the 5 (five) years of observation, 210 observations were obtained. The results showed that gender diversity characterized by the presence of women on the company's board had a negative effect on corporate social responsibility disclosure, age diversity characterized by the presence of a young board on the company's board had no effect on corporate social responsibility disclosure, and the diversity of the company's board education background with management and business education had a positive effect on corporate social responsibility disclosure.

Study of the Relationship between the Audit Committee and the Supervisory Board in the New Companies Act

Proposed Amendments to the Company Law was considered and passed on December 29, 2023, marking an important update to the foundational law of China's modern enterprise system. The revision has made in-depth adjustments to issues that are not compatible and harmonized with the development, and seeks to provide a solid legal guarantee for the sustainable development of the market economy through the innovation of the corporate governance system. One of the highlights of this revision is the internal supervision and check and balance mechanism of the company, which introduces a brand-new internal supervision organization in Privately Owned Limited Liability Companies and Publicly Listed Joint-Stock Corporations, Including Wholly State-Owned Enterprises and the Audit Committee under corporate board is responsible for the internal supervision of the company. This major revision, the legislator breaks the traditional supervision two-tier system model, the introduction of a single-tier system supervision model, not only is the legislator of the traditional supervisory board and supervisors exercise of the company's internal supervision rights can not be fully and effectively perform their duties of the disappointment, but also released by the shareholders of the centralism to the director-centered signal.

Effect of Managerial Competency and Corporate Governance on the Performance of Indonesian Life Insurance

The success of insurance companies in general and in Indonesia depends on the performance of the company's executives and board of directors. The aim of this research is to analyze the influence of managerial competence and independent commissioners on the performance of insurance companies in Indonesia. The number of life insurance companies in this research sample was 22 companies from 2018 to 2022, so the total research data was 110. After removing 10 outlier data, the final data analyzed was 100. This research models the relationship between managerial competence, the proportion of independent board of directors and the performance of life insurance companies. The results of this research show that managerial competence and the proportion of independent directors, which are proxies for governance, have a significant and positive relationship to the performance of insurance companies in Indonesia, both partially and simultaneously. Manager competency and corporate governance mechanisms have improved company performance.

THE IMPACT OF BOARD GENDER DIVERSITY ON ENVIRONMENTAL SUSTAINABILITY

Purpose- The Board of Diversity helps companies make more democratic and correct management decisions. The contributions of gender diversity to the financial and non-financial activities of companies are significant. This research was conducted to show the positive contribution of women executives to the environment. Methodology- The study sample includes 108 American companies in the S&P500 index. The study was organized with panel data of USA companies between 2008 and 2021. OLS regression method was used to analyse the results. Findings- According to the results of the analyses, the environmental impact of women on the company board is positive and significant. Conclusion- This study figures out that women executives have higher sensitivity and responsibility towards the environment than men. According to these results, it is essential both in terms of dealing with global warming and in terms of achieving the UN's 2030 targets

Board characteristics and tax planning of quoted companies in Nigeria

This study investigated board characteristics and tax planning among listed companies in Nigeria. It was an ex post facto type of research with a quantitative design covering a longitudinal time frame of five years (2017-2021). The data were analysed using panel regression (random and fixed effects). The outcomes of the study showed that board size and board gender diversity have no significant influence and exert a negative relationship with tax planning among firms while board independence and board political connection have significant influence and a positive relationship with the tax planning practices of the firms listed in Nigeria. It suggested that the government should ensure that boards of companies in Nigeria are well constituted with male and female members and those with politically connected members should be well monitored to prevent tax manipulations to the detriment of government tax revenue for expenditures. This study's potential to identify how board political relationships may promote tax aggression among firms. Thus, it will enable tax authorities to watch out for politically connected firms with regards tax reduction. Similarly, it will be a source of referencing material for researchers undertaking topics of this nature.

Pengaruh Siklus Hidup Perusahaan, Board Size, Sales Growth, Dividend Payment dan Research and Development Expenditure terhadap Cash Holding

This research aims to analyze the influence of the company's life cycle, board size, sales growth, dividend payment, and research and development expenditure on cash holding. The data used in this study are secondary data sourced from the annual reports of manufacturing companies listed on the Indonesia Stock Exchange for the period 2018-2022. The research sample was selected using purposive sampling, resulting in 25 companies as samples. The data analysis method used for hypothesis testing is multiple linear regression using SPSS software. The research results indicate that the Company's Life Cycle has a positive influence on Cash Holding, while Board Size, Sales Growth, Dividend Payment, and Research and Development Expenditure have a negative influence on Cash Holding. This research is expected to be considered by management and investors to pay attention to the company's life cycle, board size, sales growth, dividend payment, and research and development in order to maintain cash holding stability and minimize losses. Keywords: Board Size, Cash Holding, Company Life Cycle, Dividend Payment, Research And Development Expenditure, Sales Growth.

PENGARUH FEE AUDIT, FINANCIAL DISTRESS, KOMISARIS INDEPENDEN, DAN KOMITE AUDIT TERHADAP INTEGRITAS LAPORAN KEUANGAN

This research aims to examine the influence of audit fees, financial distress, independent commissioners and audit committees on the integrity of financial reports. Audit fees are measured using the natural logarithm of professional fees, financial distress is measured using the debt to equity ratio, independent commissioners are measured using the ratio of the number of members of the company's independent commissioners to the number of members of the company's board of commissioners, audit committees are measured using the comparison of the number of audit committees that come from from the independent committee with the number of audit committee members and the integrity of the financial reports as measured using the market to book ratio. This type of research is quantitative. Based on purposive sampling, the number of sample companies was 29 companies with an observation period of 5 years, so the total sample was 145 data on the property and real estate sectors listed on the Indonesia Stock Exchange (BEI) during the 2018-2022 period. The data analysis used in this research is a panel data regression model using E-Views 12. The results of this research show that partially audit fees and audit committees have no effect on the integrity of financial reports. Financial distress and independent commissioners have a significant effect on the integrity of financial reports. Meanwhile, simultaneously audit fees, financial distress, independent commissioners and audit committees influence the integrity of financial reports. Keywords: Financial Statement Integrity, Audit Fees, Financial Distress, Independent Commissioner, Audit Committee.

Board Interlocks and Company Outcomes: A Managerial Accounting Case

Board interlocks are formed between two company boards when these companies share at least one common director, resulting in a reciprocal relationship from which both partners expect to benefit. Such conditions imply that directors in these interlocks will be less likely to provide strict monitoring oversight (Beckman, Haunschild, Phillips, 2004). This case examines the ethical and governance issues arising from board interlocks. The analysis examines further how board interlocks are less likely to provide strict monitoring functions on firm operations and financial reporting. Participants noted that since board interlocks imply that companies co-share members on their boards in a reciprocal relationship from which both partners expect to benefit, such conditions lead to less rigorous monitoring oversight. Participants also noted that board interlocks may create openings for operational practices with adverse firm outcomes, such as ineffective internal controls over financial reporting.

Gender quotas for corporate boards: do they lead to more women in senior executive management?

PurposeThe European Union (EU) has recently adopted gender quotas for corporate boards (CBQ), anticipating ripple effects on women’s careers in the companies concerned, as well as throughout the economy. The purpose of this paper is to investigate whether CBQ has spurred ripple effects and discuss mechanisms hindering or facilitating women’s occupancy of top executive positions.Design/methodology/approachNorway was the first country in the world to introduce CBQ in 2003, with full effect from 2008. The policy requires company boards to be composed of 40% of each gender. Drawing on original data mapping boards and executive committees in Norway’s 200 largest companies, the authors analyze the association between CBQ and the gender composition of executive management almost 15 years after the full implementation. The data include both companies covered by the CBQ and large companies not covered.FindingsThe investigation does not find a positive association between CBQ and more women in executive positions. Thus, the ripple effect hypothesis of CBQ is not supported. CBQ may have contributed to an increased awareness of gender imbalances, yet these findings indicate that to achieve more gender balance in executive positions, scholars and practitioners may need to focus more on gendered conditions and processes in organizations and society throughout executive careers than on the gender composition of boards.Originality/valueThis paper provides empirical analyses of original data 15 years after the implementation of CBQ. The authors further contribute to scholarly debate by identifying and discussing possible mechanisms that explain how requiring more women on corporate boards may – or may not – have ripple effects on executive management.

The Liability of Company Board Members: A Comparative Study on Civil, Criminal, and Disciplinary Aspects

This study emphasizes the importance of corporate governance practices in providing strategic guidance for the direction and management of a company. It highlights the need for effective oversight of executive management by the board of directors and underscores the significance of holding the board of directors accountable to both the company and its shareholders. According to general principles, board members can be held responsible if they violate the law or the company's bylaws, whether their actions result in harm to the company and its shareholders or third parties. Board members may face various forms of responsibility, including civil, criminal, and disciplinary liability, depending on the circumstances. Any clause that attempts to exempt board members from liability for their actions is considered invalid, and they can only be absolved from responsibility in cases of force majeure, the fault of the aggrieved party, or actions by third parties. Therefore, this study discusses the multifaceted responsibilities of board members, encompassing civil, criminal, and disciplinary aspects.