Board CEO Research Articles

Aligning CEO compensation with sustainability performance: the role of CEO duality, board size, and compensation committees

This study uses agency theory to examine how board size, compensation committee, and CEO duality align the pay-performance relationship with long-term sustainability performance. We examined companies from nine Asian emerging economies with a sustainability score greater than 0.50 between 2010 and 2019. The findings support the pay-performance relationship proposed by agency theory in the presence of a robust governance structure. The relationship is more significant in firms with high ESG scores. Our study claimed that the compensation committee has a significant role in aligning sustainability objectives with CEO compensation, which improves the firm's market and financial performance. However, board size has no discernible impact on the CEO pay-performance relationship. CEO duality negatively affects this alignment since the CEO misuses their power to influence the compensation committee's role in tying sustainability agendas with the CEO's pay performance framework. Furthermore, CEO compensation is significantly impacted by firm size, which is justified by the complexity and increased responsibilities associated with managing larger firms. Conclusively, this investigation suggests that the inconclusive evidence on CEO compensation around the world should be studied with governance mechanisms. This study advances knowledge of agency theory and the connection between sustainability performance and compensation. The findings of the study highlight the role of governance structure in aligning executive compensation with sustainability to improve long-term performance. These findings suggest policymakers promote strong governance mechanisms that reduce the CEO's power to influence the board and enhance the independence of the compensation committee to independently design the executive compensation package essential for aligning executive pay with sustainability performance.

Corporate Governance Characteristics And Its Effect On The Performance Of Microfinance Institutions In Ghana

Background: The study aimed at assessing the effect of some selected corporate governance characteristics on the performance of microfinance companies in Ghana. The corporate governance characteristics were CEO duality, board size, and board composition. Tobin’s Q and Return on Assets were used as proxy for firm performance. To assess whether there are other factors apart from the above that affect profitability, firm characteristics such as firm size, fixed asset over total assets and debt structure were also used as control variables. Materials and Methods: The descriptive and the GLS panel regression analysis were used to analyse the data of 25 microfinance companies spanning from 2005 to 2016 in Ghana. Results: We realized that, board size had a positive impact on ROA but it had a negative impact on Tobin’s Q. The study found a negative impact of CEO duality on Tobin’s Q and a positive impact on ROA. For board composition, the study found that there was a negative and significant impact of board composition on ROA and a positive impact on Tobin’s Q. Furthermore, firm size had a negative and significant impact on ROA. It had the same negative impact on Tobin’s Q though not significant. Asset structure had a significant positive impact on ROA but impacting Tobin’s Q negatively. On the other hand, there was also a positive impact of debt structure on ROA while impacting Tobin’s Q negatively. Conclusion: It was recommended that MFIs should be encouraged to improve all corporate governance directives in order to improve and sustain the industry

The Impact of Board Gender Diversity Commitment on Firm Performance Moderated by Board Characteristics: Evidence From Sustainable European Firms and Financial Orientation

ABSTRACTThe main goal of this study is to explore the moderating role of board gender diversity on the relationship between CEO duality, board size, board meetings, and firm performance in sustainable companies. This study examines the 120 most sustainable European firms listed in the EuroNext Vigeo Europe 120 Index from 2012 to 2021, with the findings showing that board gender diversity negatively moderates the relationship between CEO duality and firm performance, while positively moderating board meetings' impact. Furthermore, in banking‐oriented countries, board gender diversity positively moderates the relationship between board meetings and firm performance, while these effects are not significant in market‐oriented countries. The paper highlights that despite progress in increasing representation, mechanisms to ensure effective female participation in board decision‐making are required. This study is the first to examine how board gender diversity moderates the impact of board characteristics and CEO duality on sustainable firm performance in different financial orientations.

Pyramidal structure, vertical interlock, and corporate innovation

We examine how pyramidal group structure and vertical interlock, i.e. the CEO's or board chair's engagement in an upper-level firm within the group, affect firm innovation. Using a sample of listed firms in Chinese stock markets, we find that firms at lower levels of the group pyramid, i.e., further away from the ultimate parent, are less innovative in terms of research and development (R&D) expense and patent applications than ones closer to the top. Moreover, a firm's innovation activity is influenced by the vertical interlock, whose impact is heterogeneous across the group pyramid. In general, a vertical interlock enhances innovation when the firm is located at a lower level in the group, but it deters innovation when the firm is close to the ultimate parent.

Corporate governance and SME performance: Is technological capability a missing link?

Purpose This paper aims to examine the role of technological capability in the relationship between corporate governance and small and medium-sized enterprise (SME) performance. Design/methodology/approach Using panel data comprising 1,357 European SMEs from 2014 to 2020, this paper examines how technological capability acts as a mediator and moderator within the governance-performance nexus. Findings The results show a positive and significant link between corporate governance mechanisms and SME performance, as well as between technological capability and SME performance. In addition, this paper show that technological capability plays a crucial role in moderating and mediating the governance-performance relationship. Specifically, technological capability accentuates the positive effects of board size, the presence of outside directors and concentrated ownership on SME performance. Conversely, it attenuates the positive impacts of CEO duality and board gender diversity on SME performance. These results highlight corporate governance mechanisms and technological capability’s crucial role in significantly influencing SME performance. Practical implications The results suggest that SMEs should prioritize not only the implementation of effective corporate governance mechanisms but also the strategic utilization of technological innovations to boost performance. European policymakers are encouraged to enact supportive policies on technological innovation to strengthen the governance-performance dynamic. Originality/value This study contributes to the governance-performance literature by offering new insights into the critical role of technological capability, which has been previously explored in partial and fragmented ways.

Does shared tenure between board of directors and CEO affect R&D investment?

Psychology literature suggests that shared tenure between individuals affects how they communicate and share information. Given that the relationship between board of directors and CEO involves extensive interactions and information-sharing to maintain shareholders' interests, this study seeks an answer as to whether that shared tenure between directors and CEO affects R&D investments. Using a sample of firms listed in the UK FTSE350 index between 2010 and 2019, we find that directors–CEO shared tenure positively affects R&D intensity. The study has implications for corporate governance and strategic management literature by highlighting Board–CEO shared tenure as a new factor affecting R&D investments. This study has implications for practice and policy-makers. In particular, companies that are eager to strengthen corporate governance and maintain sustained innovation might consider the shared tenure between directors and CEO.

Nonprofit Chief Executive Compensation: Implications of Board Governance Activities

Using secondary data collected as part of a national survey of nonprofit organizations, this research examines compensation outcomes of 704 nonprofit Chief Executives (CEO), integrating and social and performative aspects of governing/governance to explain compensation (in)equity. Theorizing governance as a socially complex and functionally consequential arena, we examine the impact of social categorization and identity fit between CEO Ethno-Racial Demography and Board Ethno-Racial Variety prior to overlaying the influence of three forms of governance activity: Fiduciary Oversight, Internal Awareness, and External Engagement. We employ serial multiple mediation regression analysis to test direct and indirect effects of demographic diversity and governance activity for nonprofit CEO compensation outcomes. We found compensation of ethno-racialized CEOs is higher when their organizations have diverse boards. Therefore, boards of directors must be cognizant of board composition, the potential for subjectivity and bias, and the impact these factors can have on CEO compensation and compensation equity.

Does board–CEO age similarity affect earnings management? An empirical analysis from M&A contexts

Does board–CEO age similarity affect earnings management? An empirical analysis from M&A contexts

CEO–Board Co-Optation: An Integrated Bourdieusian—Managerial Power Perspective

CEO–Board Co-Optation: An Integrated Bourdieusian—Managerial Power Perspective

A Meta-analysis of Corporate Governance and Financial Performance of Financial Institutions in Uganda

Purpose: The objectives of this meta-analysis are to look at how corporate governance practices affect firm value, how financial performance indicators and firm value relate to each other, how corporate governance affects economic performance, and how financial performance functions as a mediator in the relationship between corporate governance and firm value. Methodology: A desk methodology was used in this investigation. Secondary data collection is a common term used to describe a desk study research design. Because it is less expensive than field research, gathering data from already existing resources is preferred. Because the data was readily available through online journals and libraries, our current study examined previously published studies and reports. Findings: Research on the relationship between corporate governance mechanisms and firm performance is complicated, with conflicting results pointing to both beneficial and detrimental consequences. Robust corporate governance practices, such as CEO duality, ownership structure, board independence, and audit quality, are generally linked to increased firm performance. These systems improve the organization's strategic decision-making, accountability, and transparency, which improves financial results and lowers agency costs and shareholder value. However, a variety of contextual factors, including industry dynamics, legal frameworks, and cultural norms, can affect how effective these mechanisms are. While some research emphasizes the beneficial relationship between corporate governance practices and firm performance, other research raises concerns about possible drawbacks and emphasizes the necessity of ongoing adjustment to shifting market conditions. Implications to Theory, Practice, and Policy: Potential theoretical frameworks for future research evaluating the effects of corporate governance mechanisms on firm performance in Uganda include agency theory, stewardship theory, and resource dependence theory. To increase governance effectiveness, practitioners should give priority to increasing board independence and diversity. Legislators ought to impose legal frameworks that encourage accountability, openness, and moral conduct in corporate governance procedures.

Capitalised development costs and future cash flows: The effect of CEO overconfidence and board gender diversity

Capitalisation of development costs mandated under IAS 38 is an important accounting issue conveying a signal to users of accounting information regarding future economic benefits. Using a longitudinal sample of UK firms, firstly, we examine the adverse effect of CEO overconfidence levels on the association between capitalised development costs and future economic benefits, proxied by cash flows. Secondly, we examine the moderating influence of board gender diversity on this association. We find that the association between capitalised development costs and future cash flows, while positive, is significantly weaker for firms with higher levels of CEO overconfidence, implying that the signalling effect of capitalisation is diluted. Moreover, our results show that board gender diversity significantly moderates the managerial bias associated with high overconfidence levels, helping to restore the neutrality of accounting and the strength of signalling with regards to future economic benefits.

Who affects CEO compensation? Firm performance, ownership structure, and board diversity

This paper examines the relation among firm performance, ownership structure, and board gender diversity on the firm board and CEO compensation, i.e., total compensation, salary-based compensation, and bonus-based compensation. The paper employs a unique dataset from S&P 1500 firms from 2007 to 2018. The empirical results suggest that large and diversified boards are the main determinants of CEO compensation, in line with the theory. Moreover, longer-tenured CEOs who also hold the board chairperson position receive greater compensation and bonuses than their peers. In addition, a firm financial performance affects CEO compensation, with the influence being more pronounced in the CEO's total compensation. This paper adds to the existing literature on CEO compensation, corporate governance, and board attributes, especially when revealing empirical support for the link between board diversity and CEO compensation against a strong demand for sound corporate governance practices.

ANALYZING THE IMPACT OF FIRM-SPECIFIC FACTORS ON SUSTAINABILITY PRACTICES: UNRAVELING THE MODERATING EFFECT OF LIQUIDITY

This study aims to investigate the relationships between characteristics of firm-specific & the implementation of sustainable corporate practices, and exploring the moderating effect of liquidity to acknowledge the essential role of financial flow in shaping the sustainable approach of businesses in United States. In the proposed study secondary data of 10 listed chemical industries in US stock market has been gathered over a ten-year period of time from 2013-2022. Data is collected from annual reports, sustainability reports and CSR report of chemical industries. Firm specifics are measured with firm age and return on asset (ROA), corporate governance with CEO duality and board size whereas, sustainable practice have been examined by social and community expenses. The results provides the significant and valuable information in reaching the conclusion and making the suitable decisions. The study’s finding indicates that there is significant impact of ROA, CEO duality and board size upon the sustainable business practices. However, firm age has negative significant effect on both firm specifics and sustainability. Similarly, the results offered certain valuable clues for future researchers.

Examining the Influence of Corporate Governance on Working Capital Management: Insights from Malaysian Public Listed Companies in Selangor

Corporate governance and working capital management (WCM) are treated as essential subjects in financial management. Many researchers have studied the influence of corporate governance, but only a few of them have connected it with WCM efficiency. Particularly in Malaysia, there has been little concentration given to the relationship between corporate governance attributes and the WCM of the companies. Therefore, the present study intends to analyse the impact of corporate governance represented by CEO tenure, CEO Duality, Board size and Audit Committee on WCM represented by the current ratio of 35 Selangor-based companies which are listed under the FTSE Bursa Malaysia Top 100 Index.The results from this study show that CEO tenure has a significant negative impact on the current ratio, while CEO duality has a positive impact on the current ratio. Moreover, board size has no significant impact on the current ratio, and the audit committee has a significant positive impact on the current ratio. These findings imply that effective corporate governance mechanisms can significantly affect WCM. The result is expected to enable the owners of the firms to improve their corporate governance practices to enhance WCM efficiency and, furthermore, contribute to the enhancement of the profitability of the firms and maximise shareholders' wealth indirectly. Additionally, the findings from this study can also be a guide for good corporate governance' criteria that significantly affect the efficiency of WCM to be practised by other companies, including SMEs and other organisations.

Military directors and stock price informativeness: What's all the fuss about?

AbstractExploiting a unique hand-built dataset, belonging to non-financial firms, operating in an emerging economy, this study, first of its kind, reports that stock prices of firms with military-experienced board of directors reflect more firm specific information after controlling for board attributes, agent heterogeneity and firm level variation. The results robust to alternative specifications of informativeness and military director proxy support the notion that military-trained directors may enhance transparency in public listed companies and encourage the incorporation of more firm-specific information into stock prices. Further analysis suggests that military directors may enfeeble CEO–board nexus and settle the directional variations at the corporate board level: military directors bring discipline in the board room that translates into rigorous CEO monitoring and improved corporate governance quality.

CEO compensation, firm performance, board structure and financial constraints: evidence from an emerging economy

CEO compensation, firm performance, board structure and financial constraints: evidence from an emerging economy

The impact of the board of directors on companies’ performance: The moderating role of ownership concentration

The impact of the board of directors (BOD) on the performance of companies, particularly considering the moderating role of ownership concentration (OC), is a topic of significant importance in the realm of corporate governance (Habtoor, 2020). The study employs structural equation modelling (SEM), a more advanced method, to address causality and endogeneity issues in governance-performance relationships (Hamid & Purbawangsa, 2022). The hypotheses are constructed based on resource dependence and agency theories, enhancing the theoretical framework. The research focuses on Jordanian service and industrial firms listed on the Amman Stock Exchange (ASE) from 2014 to 2018, encompassing 92 firms and 460 observations. Based on the estimated results, the study confirms that the size of the board, CEO duality, and board independence, including OC, all have a positive effect on firm performance. The results also show that the BOD has a statistically significant impact on firm performance when considering the moderating impact of OC. However, the study finds that CEO duality and board independence have an insignificant impact on return on assets (ROA). This study contributes to the literature on BOD and firm performance and provides insights for practitioners and policymakers.

Capital Structure, Board Characteristics and Firm Performance of Listed Non-Financial Companies

This exploratory research investigates the complex dynamics among capital structure, board characteristics, and financial performance in listed non-financial companies in Nigeria. Utilizing purposive sampling, the study focuses on 67 companies, primarily non-financial, renowned for consistently providing accessible data. Annual reports from 2012 to 2022 serve as the data source, covering metrics related to capital structure (Debt to Assets Ratio and Leverage Ratio), board characteristics (CEO Duality, Board Size, and Board Gender Diversity), and financial performance (Return on Assets, Dividend per Share, and Earnings per Share). Employing panel data econometrics techniques, including fixed and random effects pooled regression models, the study analyzes these relationships. The findings reveal a statistically insignificant negative impact of capital structure on financial performance, indicated by Debt to Assets Ratio and Leverage. CEO duality shows a negative effect on Earnings per Share without statistical significance. In contrast, Board Size and Board Gender Diversity significantly positively influence Earnings per Share, underscoring their importance in enhancing firm performance. Regarding Dividend per Share, higher Debt to Assets Ratio and Leverage are associated with lower firm performance, while CEO duality’s impact lacks statistical significance. Larger board sizes and greater board gender diversity, however, positively affect Dividend per Share, emphasizing their positive contributions to financial performance. The study concludes with recommendations, including the importance of companies striving for an optimal capital structure, enhancing board diversity, evaluating CEO and Chair role separation, and carefully assessing risk factors when considering higher leverage. Nonetheless, limitations, such as the statistical insignificance of some relationships, the limited data period, and the omission of external factors, highlight avenues for future research.

Board–CEO Trust and Concealing Adverse News

Board–CEO Trust and Concealing Adverse News

The Role of Corporate Governance in Moderating the Influence of Corporate Social Responsibility Disclosure, Investment Risk and Firm performance in Manufacturing Companies Listed on the Indonesian Stock Exchange 2018-2022

Purpose: This study aims to analyze the impact of Corporate Social Responsibility Disclosure (CSRD) and investment risk on firm performance with CEO integrity, ownership concentration, and independent board as moderating variables. CEO integrity, concentrated ownership, and an independent board of directors are hallmarks of Good Corporate Governance (GCG). Methodology: This study uses manufacturing companies listed on the Indonesia Stock Exchange during the period 2018-2022. The total sample for this study included 107 dates. Purposive sampling technique was used for the sampling method and SPSS 24 software was used for data processing in this study. Results: The results of in this research show that CSR disclosure does not have a significant impact on firm performance. Investment risk has a positive and significant impact on a company's performance. CEO integrity does not moderate the effect of his CSR disclosure on firm performance, but ownership concentration and independent board of directors moderate the effect of her CSR disclosure on firm performance. Although CEO and independent board integrity do not moderate the effect of investment risk on firm performance, ownership concentration does moderate the effect of investment risk on firm performance. Applications/Originality/Value: Even if an organization makes CSR disclosures, it does not directly impact its financial performance. Companies must understand and carefully manage investment risk to maintain and improve performance. Additionally, this study shows how ownership concentration and independent boards moderate the impact of CSR disclosure, it shows that highlighting the importance of corporate structure in optimizing corporate sustainability impact.