Corporate Governance Practices Of Companies Research Articles

Governance structures, cash holdings and firm value on the Ghana Stock Exchange

PurposeThere is an existing relationship among shareholders, boards of directors and management of companies. Corporate governance practices of companies are expected to ensure that this relationship maximises the wealth of shareholders. Differences exist among corporate governance of companies listed on the Ghana Stock Exchange. Companies, for purposes of liquidity, hold cash, but cash holdings also add to the cost of financing, according to working capital theories. The study, thus, sought to examine the relationship between corporate governance practices, ownership structure, cash holdings and firm value.Design/methodology/approachThe study deployed the seemingly unrelated regression to reduce the problem of multicollinearity resulting from the strong relationship between cash reserves and some control variables.FindingsThe study found no significant relationship between board size and firm value. Similar findings were also made on the relationship between proportion of non-executive directors on the board and firm value. However, firms audited by the big four audit firms are valued higher by the capital market. Cash holdings of firms negatively affect performance, and this is statistically significant. A positive relationship arises between a firm’s cash holdings and its value as a result of debt financing, even though this is not significant.Originality/valueThe study is the first of its kind that deploys Tobin’s Q as a measure of firms’ value to reflect investors’ valuation of firms in Ghana. The study is also the first of its kind to test the interactive effect of debt financing and cash holdings on firm value in Ghana.

Corporate Governance, Institutional Characteristics, and Director Networks in Malaysia

This study explores the structural relationship of director networks among boards of directors in publicly listed companies in Malaysia using social network analysis (SNA) techniques at both the director and company levels. This paper examines whether company corporate governance practices and institutional characteristics are associated with company network size and pattern. SNA performed using UCINET and NetDraw software shows that the directors and company in the networking are moderately connected. This suggests that there is a small group of directors or companies that are well-connected and well-positioned to exercise power, control, and influence over the network. This study also reveals the interconnectedness of board members and companies. The regression results also identify a group of the most well-connected and well-positioned directors and companies in Malaysia’s corporate governance environment. The results suggest that board size, board meeting, and duality are the corporate governance practices, which most influence company network size and pattern. The presence of a Bumiputera or politically-connected director is an institutional characteristic, which especially determines the network of a company.

IDA

This article presents an intelligent corporate governance analysis and rating system, called IDA System, capable of retrieving SEC required documents of public companies and performing analysis and rating in terms of recommended corporate governance practices. With the techniques of analogical learning, local knowledge bases, databases, and question-dependent semantic networks, the IDA system is able to automatically evaluate the strengths, deficiencies, and risks of a company's corporate governance practices based on the documents stored in the “SEC EDGAR database by (U.S. Securities and Exchange Commission 2013)”. A produced score reduces a complex corporate governance process and related policies into a single number which enables concerned government agencies, investors and legislators to assess the governance characteristics of individual companies.

Board of Directors: an analysis of the impact in debt levels

The financial scandals of the last two decades have highlighted the debate on corporate governance practices of companies. In the same period non-governmental bodies have contributed to the evolution of governance, enabling greater security for potential investors. In this context, the board is presented as a mechanism for Corporate Governance, whose mission is to protect and enhance the assets and maximize the return on corporate investments. This article aims to determine the influence of the board on the indebtedness of companies listed in different levels of corporate governance BM&FBovespa, in the year 2008.The present work can be classified as a descriptive and empirical research. To analyze the influence of advice on corporate debt we have used OLS method, a sample of 129 companies. The results have shown that the proxy board presented a negative relationship with total debt and long term. For the short-term debt ratio was positive. These results can be interpreted as a sign that companies with best governance practices, ie, with higher scores on the index used, tend to use more short-term debt and less long-term debt. Thus, it is understood that due to concentration of ownership of Brazilian companies, this evidence reflects the debt aversion on the part of drivers. Another interpretation would be that debt, in particular, the short-term debt has a potential to discipline managers.Key words: Board of directors. Corporate governance. Debt.

The stock market reaction to criticism of corporate governance practices of companies listed on the JSE

ABSTRACTThis paper investigates a key aspect of possible reputational damage to a company: the publication of criticism of corporate governance practice in the financial press. To understand the valuation effect associated with such criticism, long-run abnormal returns following the publication date are examined. In addition to the initial negative reaction on publication, the companies in the sample experienced further significant risk-adjusted returns of -15,15% and -22,94% respectively over the next one and two years. A decline in future operating performance appears to be an important reason for the poor stock market performance of the companies. These results underscore the importance of investors fully understanding the disclosure of a company's corporate governance practice.

Corporate governance and regulation: Can there be too much of a good thing?

For a large number of companies from different countries, the authors analyze how company corporate governance practices and country regulatory regimes interact in terms of company valuation. They confirm that corporate governance plays a crucial role in efficient company monitoring and shareholder protection, and consequently positively impacts valuation. They find substitution in valuation impact between corporate governance measures at the company and country level, with a possibility of over-regulation. Corporate governance appears more valuable for companies that rely heavily on external financing, consistent with the hypothesis that the main role of corporate governance is to protect external financiers.

Towards an impartial and effective corporate governance rating system

PurposeThis paper aims to investigate the most popular corporate governance rating systems and to scrutinize their usefulness to shareholders and the public at large. It proposes to examine whether the advertised good governance scores reflect corporate performance, fraud, lawsuits, and the like.Design/methodology/approachThe analysis focused on the methodology used by rating agencies to rank corporate governance practices of companies. Analysis of the categories and variables used in the rating systems were also scrutinized and critiqued.FindingsThis research shows that there is a weak relationship between corporate performance and corporate governance rating. Ideas and suggestions have been proposes to remedy the shortfalls of existing rating systems.Research limitations/implicationsMany researchers use corporate governance scores in their studies to investigate the relationship between these single scores and corporate performance. Potential vulnerability and risk are demonstrated using such kind of methodologies. Research should be accomplished with the corporate governance indicators separately.Practical implicationsSeveral corporate governance ratings systems have been developed and implemented. These systems reduce a complex corporate governance process and related performance into a single score. Such outcome does not in any way reflect the real nature of corporate governance or its performance. Ranking, if it is at all needed, should be interpreted carefully and not be used as a simple measurement of good or bad corporate governance practice.Originality/valueThis paper is the first of its kind to critically evaluate corporate governance systems scores launched by different rating agencies.