Corporate Governance Challenges Research Articles

National Stock Exchange: Failure of Corporate Governance

The case explores the corporate governance challenges that arose at the National Stock Exchange (NSE), India’s leading stock exchange. Chitra Ramkrishna served as the Managing Director and Chief Executive Officer (MD and CEO) of NSE from 2013 to 2016. In 2013, she was recognized by Fortune magazine as one of the most powerful women in business. In 2015, following a whistleblower’s complaint about preferential access given to certain brokers, Indian regulators launched investigations. Further allegations in September 2016 claimed that the appointment of Anand Subramanian, a close associate of Chitra Ramkrishna, violated the code of conduct. Anticipating potential dismissal over these alleged lapses, Ramkrishna resigned from the board in November 2016. Subsequent investigations revealed ongoing preferential access for select brokers during Ravi Narain’s tenure as NSE’s MD and CEO from 2010 to 2014. Narain had been a key mentor to Ramkrishna and strongly supported her appointment as CEO. It was also discovered that Ramkrishna continued to share confidential NSE information with Subramanian even after his termination. Despite these serious irregularities, the NSE board remained notably inactive. This case is significant as it highlights the NSE board’s failure to uphold its core responsibilities, allowing misconduct and irregularities to persist. It concludes by presenting the dilemma NSE’s new CEO and board of directors faced: how to address investor concerns while enhancing the organization’s leadership and governance structure.

MOŽE LI KORPORATIVNO UPRAVLJANJE RIJEŠITI FINANCIJSKE POTEŠKOĆE? ANALIZA STUDIJE SLUČAJA PODUZEĆA S POTEŠKOĆAMA

The paper examined the concepts of corporate governance and financial distress. This was achieved by a review of case studies. The review of literature showed that few studies have actually attempted to address the question of whether corporate governance can cure a financially distressed firm. In an attempt to fill this gap, the study this paper examined corporate governance cases of firms that were financially distressed or eventually collapsed. The idea is to be able to take a position as to whether corporate governance can be used as an antidote to financial distress. To achieve this objective, the paper conducted a case study analysis of financial distress cases from different jurisdictions (Multinational, African and Nigerian firms). Documentary evidences on financial distress and challenges of corporate governance were also reviewed. The result of the case study analyses showed that corporate governance can be a cure for financially distressed firms with a condition that key stakeholders in the firm implement the corporate governance provisions.

Unveiling the driving forces behind high non-performing loans in zombie enterprises: an executive-centric study

PurposeExcessive borrowing significantly contributes to pushing businesses towards default and their transition into zombie enterprises. Despite government efforts to implement deleveraging policies and guide bank credit flows, it’s essential to delve into the internal dynamics that steer the borrowing behavior of these zombie enterprises at a micro level. To gain a comprehensive understanding of the issue, this study focuses on examining the incentives that drive corporate executives of zombie enterprises to consistently engage in large-scale borrowing from banks.Design/methodology/approachIn this study, panel data analysis is utilized, incorporating firm-, industry- and year-fixed effects. Drawing from data pertaining to listed companies in China spanning from 2007 to 2020, we employ a one-by-one identification method to pinpoint zombie enterprises. Ultimately, a total of 2,533 samples of zombie enterprises were obtained.FindingsThe results indicate that as bank loans to zombie enterprises increase, executive monetary compensation decreases, while on-the-job consumption by executives increases, and they are less likely to be forced into rotation. Mechanism testing reveals that corporate performance partially mediates the relationship between bank loans and executive monetary compensation, but this mediation is ineffective for on-the-job consumption and job rotation. Further investigation suggests that the property rights nature of central enterprises and modified audit opinions can exacerbate the adverse impact of bank loans on the monetary compensation of zombie corporate executives, without significantly affecting on-the-job consumption or job rotation. Conversely, executive power does not enhance the positive effects of bank loans on monetary compensation or on-the-job consumption, but it diminishes the negative impact of bank loans on the forced rotation of zombie executives.Research limitations/implicationsThese results indicate that while bank loans may have a negative impact on corporate value, they function as safeguards for the positions and interests of executives. As a result, bank loans serve as incentives for executives of zombie enterprises.Originality/valueThis study holds theoretical significance as it explores the motivations behind non-performing loans in high-borrowing enterprises, sheds light on corporate governance challenges encountered by zombie enterprises and provides policy insights aimed at addressing the underlying causes of persistent non-performing loans in high-borrowing enterprises, including zombie enterprises.

Introduction to the special issue: “Current challenges of corporate governance: Reputation, risk and sustainability”

AbstractIn the modern business landscape, the challenges of corporate governance have become increasingly important. In particular, those related to reputation, risk, and sustainability are today crucial to the well‐being of both individual organizations and the global economy and society at large. For these reasons, corporate governance today plays a more important role than ever before in shaping the strategies and operations of companies.

The Impact of Corporate Governance on Financial Performance in Professional Sports Clubs: The Case of Italian Serie A

This paper explores professional football clubs' corporate governance challenges, recognizing them as symptoms of a deeper management crisis. The need for more effective managerial practices within these organizations is evident in the prevailing issues. This study aims to assess how corporate governance quality impacts the profitability and sustainability of Italian Serie A football clubs. Through the analysis of governance variables and financial indicators from the 2018/2019 season, the research identifies crucial factors. These factors encompass the business model, board composition, board age, control bodies, and internal procedure transparency. The results highlight the significant influence of corporate governance variables on club performance and insolvency risk. Enhanced governance quality is associated with higher profitability and viability, even among clubs facing financial difficulties. These findings hold significance for academics, practitioners, and regulators interested in understanding corporate governance practices within the competitive soccer market and their impact on financial performance. Future research should expand the sample and incorporate a comparative analysis of major European football leagues, accounting for varying legal frameworks. Moreover, the repercussions of the COVID-19 pandemic on the football industry must be considered in forthcoming investigations. The pandemic's financial consequences will likely differ based on each club's business model, international reputation, financial structure, and governance approach.

An Investigation on Klarna Financial Technology Fintech

Studying the organisational structure is always essential in understanding how businesses operate both externally and internally. In that sense, by researching on the structure of business oragnisations, it is predicted for the researcher to obtain some valuable results. This approach can be seen as using a case study method in which detailed investigations are conducted into the organisation structure, which yield fruitful observations. The current study delves into Klarna, a prominent Swedish Fintech company, focusing on its history, corporate governance evolution, impact on the financial and business sectors, technological aspects, and the challenges it faces. Klarna has revolutionized the financial industry with its Buy-Now-Pay-Later (BNPL) services, but it also confronts corporate governance, technological, regulatory, and financial challenges. This analysis underscores the significance of Klarna's transformation in the financial and business sectors while acknowledging the hurdles it must overcome to ensure its sustained growth. Klarna needs to embraces these chanllenges to move forward to future prospects.

Shared funding of R&D in small and medium-sized innovative enterprises: the case of Chinese biomedical industry

This study delves into the corporate governance challenges confronted by small and mediumsized innovative biomedical enterprises in the context of equity financing. Its objective is to provide valuable recommendations for the successful implementation of such financing. In order to address issues such as imperfect equity structure, inadequate financial audit systems, and low stability of the core team during equity financing, a range of improvement measures are proposed. These measures comprise optimizing internal management mechanisms, establishing an efficient R&D organizational structure, implementing practical incentive mechanisms for R&D enterprises focused on benefits, and enabling technical experts to actively engage in company ownership structures. Equity financing plays a vital role in resolving the difficulties faced by small and medium-sized innovative biomedical enterprises, particularly in fostering the development of innovative pharmaceutical products within the biomedical R&D field. Thus, it has a positive impact on effectively advancing China’s biomedical industry.”

Corporate governance and family business: a perspective article

PurposeThe governance of family businesses has attracted considerable scrutiny among scholars and practitioners. This paper explores influences that have defined corporate governance practices in family firms in the last century and reflects on the possible direction of research and practice in the next century.Design/methodology/approachThis manuscript undertakes a literature review of past and recent literature investigating corporate governance practices within family businesses.FindingsThe evolution of corporate governance in the family business literature is underpinned by centralised decision-making structures, the need to overcome fundamental corporate governance challenges, the increasing relevance of family governance models and the recognition and adoption of contemporary trends in the corporate governance space. The review also suggests that corporate governance and family business research in the next century will be dominated by technology-based governance, sustainable governance, globalisation and the validation for multi-board structures, greater attention to succession planning and diversity, and channelling significant resources to innovation.Originality/valueThe paper synthesises developments in the corporate governance–family business literature and proposes a future perspective.

Challenges and Prescriptions to Corporate Governance Issues Facing State-Owned Enterprises (SOEs): A Zimbabwean Perspective

The main objective of the study was to determine the corporate governance challenges facing State-Owned Enterprises in Zimbabwe. In so doing the study sought to proffer solutions and prescriptions to the challenges. In this view, the study adopted a quantitative research approach in which the positivist philosophy was applied. A cross-sectional survey design was used in which data was gathered using a structured questionnaire. The target population consisted of top and middle management, board members, board chairpersons, and CEOs of SOEs found in Zimbabwe. Using the sampling procedure developed by Krejcie and Morgan (1970), a sample size of 351 individuals was determined. The research employed stratified random sampling for sampling respondents. SPSS version 23 was used to analyze quantitative data. The research established that Corporate governance challenges faced by SOEs in Zimbabwe include the bureaucratic nature of SOEs which causes inflexibility, political history of SOEs, poorly composed boards, inefficient and lack of transparency in the appointment of boards, limited board independence, and unstable economic conditions. The research recommends that authorities in the Office of the President and Cabinet from the Corporate Governance Unit or State Enterprises Restructuring Agency should organize more corporate governance training for Boards and other custodians of corporate governance in State Owned Enterprises.

Corporate Governance Challenges in State Owned Enterprises in Zimbabwe

Corporate Governance Challenges in State Owned Enterprises in Zimbabwe

A Futuristic View of the Secretarial Profession from an Artificial Intelligence Perspective

The first revolution in the 18th century saw the harnessing of water and steam power, exploitation of electricity took place in the second revolution and the exploitation of computer science technology in the third revolution. The fourth and fascinating revolution has started with the advent of new technologies like Artificial Intelligence (AI), Machine Learning and Robot Process Automation (RPA). The above disruptive technologies significantly disrupt the role of a company secretary. A day is not far when Artificial Intelligence is also sitting in the boardroom along with other human Directors. New technology will increasingly change the way the companies work and also the work as a company secretary and governance professional. Technological innovation leads to new corporate governance challenges in terms of ethics, fairness and transparency. The changes need to be embraced with boards and stakeholders suitably advised.

Distinctive Corporate Governance Challenges in Asian Family Businesses

Distinctive Corporate Governance Challenges in Asian Family Businesses

Exploration of Corporate Governance Challenges in Public Sector Information Systems- An Auditor General Perspective

The aim of this article is to explore the obstacles that are within the South African public sector, preventing information systems from operating as efficiently as they could. The significance of the research lies in the fact that the accomplishment of the objectives outlined in the South African national development plan 2030 and the medium-term strategy framework is dependent on the performance of the public sector. In the course of the research, annual and general reports from the website maintained by the Auditor General of South Africa from 2017 through 2021 were used. This study made use of the qualitative analysis software, Atlas.ti 7 which was employed to analyse textual data in annual reports. The investigation of the difficulties posed by corporate governance in the South African public sector were unveiled from themes emerging form the use of thematic analysis. The research uncovered issues with both the macro and the micro levels of corporate governance in the South African public sector. The macro concerns that were brought to light were difficulties in the structure of information systems, an economic downturn, changes in the leadership of the government, and a lack of credible information offered to people. Poor leadership accountability, inadequate information technology capabilities, poor project management, poor information management, inadequate and ineffective disaster recovery, regression in information technology governance, and delay in filling information technology vacancies were some of the micro-obstacles of corporate governance that affected information systems. According to the findings of the research, a transformational approach should be used to solve the issues by first gaining an awareness of how users view the role that information technologies play in the running of public bodies. In addition, instruments of corporate governance that relate to information systems in the public sector should be assessed to gauge their effectiveness in the South African environment.

Sustainability as added value in the Brazil-China relationship

China's goal of peaking carbon emissions before 2030 and reaching neutrality by 2060 shows the effort to face the tension between environmental pressure and economic growth, which became more evident with the Covid-19 pandemic. Fighting climate change means seeking a new stage of economic and technological development, with sustainability becoming a main issue for the international trade, especially in the relationship between Brazil and China. Brazilian production faces social, environmental and corporate governance challenges to meet the Chinese demands. But Brazil has the natural and technological capacity to become a reference in the sustainable production of bioinputs, including of the agricultural commodities. China, for its part, has growing concern about the sustainability and the resilience of its supply chains. As China is Brazil's main trading partner, orchestrating these interests can be a win-win situation for both countries. However, several political and institutional challenges need to be overcome. This article makes use of a literature review to identify these points of congruence and challenges in order to contribute to a better understanding the context and thus inform decisions and policies on the subject.

An Analysis of Corporate Governance and the Performance of Rural Banks in the Upper West Region, Ghana

The study used the mixed research design in examining corporate governance and rural bank performance in Ghana's Upper West Region. Purposive and simple random sampling techniques were used in the study. A sample size of 48 participants, composed of Bank CEOs/Managers, Board Members, Human Resource Managers, Heads of Administration and Senior Staff of four Banks was used. Questionnaires and interview guides were used for data collection. Data was analyzed both quantitatively and qualitatively. The study found that ownership concentration, audit quality, and board independence are important factors in good corporate governance and are influenced by business size, leverage, and board size, with a P-value of 0.073<0.1. It was also found that good corporate governance proxy by CEO duality, board independence, ownership concentration and audit quality have a substantial impact on rural bank performance. However, with a P-value>0.1, it was discovered that CEO duality has a detrimental impact on excellent corporate governance. Corporate governance challenges the banks face include clients’ default in repaying loans, inappropriate corporate governance practices, high operational costs of the banks and board members’ incompetence and perpetuation in office. The study concluded that corporate governance significantly affects the functioning of rural banks in the Upper West Region. The study recommended a reduction in the tenure of office of directors, putting in place appropriate rules and guidelines for the operations of the boards and ensuring effective checks and balances on the activities of the boards by way of ensuring effective corporate governance practices. Keywords: Corporate, Governance, Performance, Rural Banks, Upper West Region DOI: 10.7176/RHSS/12-16-01 Publication date: August 31 st 2022

Corporate Governance Challenges for Small and Medium Enterprises in the Constrained Zimbabwean Economy

Although corporate governance has become a topical issue around the world in recent years, it is surprising to note that SMEs were much neglected in this corporate governance wave. Therefore, this study aims to establish the corporate governance challenges confronting Small and Medium Enterprises(SMEs) in the economy of Zimbabwe. This study is prompted by the dwindling performance experienced by SMEs. Notably, the study adopts an interpretivism research philosophy and the exploratory research design given that the study was the first of its kind. The corporate governance challenges which emerged from the data analysis are succession disputes, ownership concentration, lack of disclosure issues, limited resources, and lack of systems and structures. Therefore, it is recommended that SMEs should put in place a clear succession matrix in order to enable good corporate governance. Moreover, this study recommends that SMEs should strive to ensure that there is a separation of ownership and control in order to align with the best international corporate governance principles and practices.

Editorial: Corporate governance challenges — Dealing with unforeseen calls for agile board capabilities

The papers in this issue will be welcomed by experts in the field, academic researchers, and practitioners alike, since they provide insightful findings that may also trigger future research here revealing and discussing new trajectories to solve challenges that corporate governance discipline and boards are facing

Challenges for corporate governance at the national and firm levels

Challenges for corporate governance at the national and firm levels

Case Notes: Jurisdictional Quandaries Triggered by a New Variant for Dismissal

While the imperative tone of the Constitutional Court (CC) in Steenkamp v Edcon Ltd (2016) 37 ILJ 564 (CC) (Steenkamp I) leaves no doubt that the Labour Relations Act 66 of 1995 (LRA) does not contemplate invalid dismissals or an order declaring a dismissal invalid, or of no force or effect, the extent of the Labour Court’s (LC) jurisdiction to grant appropriate relief declaring dismissals unlawful and invalid because they constitute encroachment of the applicants’ fundamental rights is a vexed question. In Steenkamp I it was decided that when an applicant alleges that a dismissal is unlawful (as opposed to unfair), there is no remedy under the LRA. What this means is that the LC lacks jurisdiction to make any determination of unlawfulness. A multi-layered and complex jurisdictional problem arose in Chubisi v SABC (SOC) Ltd (2021) 42 ILJ 395 (LC) (Chubisi) where the question was whether Ms Chubisi could obtain a declaratory order that the termination of her contract of employment was unconstitutional, unlawful, invalid and of no force and effect. At issue was the termination of employment pursuant to non-recognition of the employee’s contract by the public broadcaster ostensibly to give effect to the Public Protector’s remedial actions. There is no doubt that the remedial actions of the Public Protector have a binding effect, unless, of course, they are reviewed and set aside (EFF v Speaker of the National Assembly 2016 (3) SA 580 (CC); see also Mhango & Dyani-Mhango, ‘The powers of the South African Public Protector: A note on Economic Freedom Fighters v Speaker of the National Assembly’ 2020 African Journal of Legal Studies 1). The court held in Chubisi that the termination of the applicant’s contract of employment by the South African Broadcasting Corporation (SABC) was unlawful, invalid and of no force and effect. The question that arises, therefore, is whether the LC in granting a declaratory order to the effect that the termination of employment was unlawful and invalid misinterpreted and misconstrued the ratio of Steenkamp I. To answer this question, the reasoning of Tlhotlhalemaje J in addressing jurisdictional difficulties requires close scrutiny and analysis. In effect, the resolution of the issues emerging from Chubisi allows for a detailed examination of the import of Steenkamp I. This also provides a platform for examining the fundamental but somewhat tenuous distinction between the jurisdiction and the powers of the LC. In legal parlance, the critical task for the court in any given case is to decide whether the statutory provision on which an applicant relies to found jurisdiction is indeed one that confers jurisdiction. At a more general level, Chubisi implicates corporate governance malaise at the SABC with the unfortunate reality of retrenchments. Therefore, a concise discussion of the corporate governance challenges is merited.

The Relationship between Corporate Governance and Organizational Performance of Insurance Companies in Kenya

The environment in which insurance companies operate has been fraught with various corporate governance challenges that have hindered its progress. Thus, a deliberate effort has to be made to avoid future corporate mismanagement and company failures given the important role insurance plays in the economy of Kenya especially towards the development of the small and large scale firms through ensuring financial security. This study sought to establish the relationship between corporate governance and organizational performance of insurance companies in Kenya. This study was anchored on Agency. Positivism philosophical foundation was adopted with a cross-sectional survey. The study population comprised of 52 insurance companies in Kenya licensed by the Insurance Regulatory Authority (IRA) as at December 2017.  This study utilized primary data collected using questionnaires. The influence of corporate governance was evaluated based on dimensions of three constructs namely transparency, board responsibility and ownership structure. The results indicated that corporate governance was positively and significantly associated to performance. This was an indication that corporate governance portrayed a strong connection with organizational performance. The null hypothesis of the study was corporate governance has no significant relationship with organizational performance of insurance companies in Kenya was rejected. The study concluded that good corporate governance influences organizational performance, therefore it can be concluded that higher profitability for the insurance firms is as a result of better corporate governance practices. Subsequently, insurance firms need to maintain good corporate governance practices by having appropriate board structure and composition that takes into consideration diversification of expertise. The study recommends that policy and decision makers need to ensure that appropriate corporate governance mechanisms are implemented in organizations. This constructs of corporate governance play a key role in effective governance of organizations. Policy and decision makers can use the findings in developing codes of governance that govern the practice. The management can utilize the findings to enrich codes of governance to include people management and leadership making them more effective especially against the backdrop of several corporate collapses that have been linked to the people factor in organizations. Keywords: Corporate Governance, Transparency, Board Responsibility, Ownership Structure, Organizational Performance, Insurance Companies & Kenya.