Corporate Board Characteristics Research Articles

Corruption prevention practices and tax avoidance: The moderating effect of corporate board characteristics

This paper examines the impact of corruption prevention practices on tax avoidance from a neo-institutional theoretical perspective. Our study also contributes to the existing corruption and tax literature by considering the moderating effect of corporate board characteristics on the association between corruption prevention practices and tax avoidance. Based on a sample of FTSE 350 United Kingdom (UK) listed firms, our findings illustrate that a firm’s commitment to good anti-corruption practices is linked with lower tax avoidance. Furthermore, corporate board characteristics complement anti-corruption practices in minimizing corporate tax avoidance. Our findings provide useful evidence to governments, regulators, and other stakeholders who aim to determine best business practices that could help in reducing the risk of corporate tax avoidance. In general, our findings are robust to alternative measures of tax avoidance and different types of multivariate regression methods, namely ordinary least squares, two-stage least squares and Tobit regression techniques.

Corporate Board Characteristics and Performance of Non-Financial Firms in Nigeria

This study investigates if there is any relationship between certain corporate board characteristics and financial performance of non-financial listed firms in Nigeria. It uses secondarily sourced panel data over the period from 2005 to 2020 of 76 such firms listed on the floor of the Nigerian Exchange Group (NXG). The generalized method of moments (GMM) results reveal that while board size(BS), board compensation(BC), board meetings(BM) and board members with military experience(BME) are positively significant with performance; board independence(BI), board gender diversity(BGD), board national diversity(BND), board tribal diversity(BTD), board busyness(BB), board members’ education level(BE) and board foreign directors(BFD) are negatively significant with performance but board shareholding or ownership(BSH) is insignificant. All the control variables (leverage, market–to-book ratio, firm size, year fixed effect dummy as well as the industry sector fixed effect dummy) are statistically significant. This study concludes with some recommendations.

The impact of corporate social responsibility disclosure and board characteristics on firm performance: evidence from Vietnam-listed firms

The impact of corporate social responsibility disclosure and board characteristics on firm performance: evidence from Vietnam-listed firms

Corporate social responsibility, board characteristics, and family business in Thailand

AbstractExploring the relationship between corporate social responsibility (CSR) strategy, family business, and board characteristics in Thailand provides invaluable insights into how boards of family businesses integrate CSR considerations, leading to responsible business practices and sustainable development in Thailand. Relying on the top 100 listed firms in the Stock Exchange of Thailand and the Refinitiv's CSR strategy score, we find that family business firms or firms with CEO serving as the chairman of board engage less CSR strategy, being consistent with the agency cost hypothesis and the expropriation view of family businesses. Additionally, in line with the resource dependency theory, female directors, independent directors, board tenure, and board size positively influence a firm's CSR. Additional analyses including the Heckman's sample selection bias and 2SLS instrumental variable approaches show that our results are robust and are not driven by unobserved heterogeneity. More importantly, gender diversity is an exemplary governance mechanism as it is the only board characteristic with a positive effect on CSR in both family and non‐family sub‐samples. While board tenure is positively associated with CSR in the non‐family business sample, larger board size and more board independence in the family business positively influence a firm's CSR. Findings from the family business sample support the functional view of board and socioemotional wealth of family firms.

Board Informal Hierarchy and Digital Transformation: Evidence From Chinese Manufacturing Listed Companies

Board informal hierarchy plays a crucial role in board governance and corporate strategic decision-making. The article empirically examines the impact of board informal hierarchy on corporate digital transformation based on relational contract theory, using a fixed-effects model with Shanghai and Shenzhen A-share listed manufacturing companies from 2012 to 2019 as research subjects. The findings of this study demonstrate a positive correlation between board informal hierarchy and digital transformation. Specifically, the presence of a chairman with the highest rank in the informal hierarchy strengthens this relationship, while the presence of a CEO with the highest rank weakens it. Mechanistic analysis shows that informal hierarchy accelerates digital transformation through three channels: improving board decision-making efficiency, mitigating management myopia, and facilitating information communication. This study extends existing research. On the one hand, this paper explores the drivers of digital transformation in manufacturing firms at the level of corporate governance and board characteristics. The findings provide empirical evidence to support the understanding of transformational change behaviors of manufacturing enterprises in the digital economy. On the other hand, it also opens up the “black box” of the internal operation of the board and provides valuable lessons for strengthening board governance. JEL Classification: D21; M12; Z13.

Impact of Corporate Board Characteristics on Financial Firms' Reputation: A Cross-Sectional Study

A firm's reputation is a critical intangible asset that affects its competitive advantage, stakeholder trust, and long-term sustainability. The contents and attributes of a company's "board of directors” are very important, especially in shaping its reputation in the financial industry. As the governing body responsible for strategic decision-making and oversight, the corporate board shows a significant exertion on shaping the firm's operations, policies, and its reputation. The expertise and qualifications of board members, particularly in financial matters, instill confidence in stakeholders, demonstrating the firm's commitment to sound governance and risk management. This paper explores the association between "corporate board characteristics” and the reputation of "financial firms". The findings of this study can help with further research and guide policymakers, executives, and stakeholders in their efforts to enhance financial firms' reputations through effective board governance. The study survey was conducted among 190 people working in the financial sector to know the role and impact of Corporate Board Characteristics on Financial Firms' Reputation. The study concludes that there is significant impact of Corporate Board Characteristics on Financial Firms' Reputation. &nbsp

Board Characteristics and Financial Performance of DMBs: Evidence from Nigeria

The study examines the effect of corporate board characteristics on the performance of listed DMBs in Nigeria. This study used secondary data extracted from the annual reports of 12 listed firms in Nigeria during the period 2011 – 2020. The study employed Tobin’s Q as a proxy of firm performance, while Board size, Independence, diligence, gender diversity, and ethnic diversity are employed as the proxies of board characteristics. The Pooled Ordinary Least Square regression (POLS) and panel fixed effect regression methods were used to analyse the data collected. Findings revealed that board size and board ethnic diversity exerts a statistically significant negative influence on DMBs' financial performance, board independence has a negative and non-significant effect on DMBs financial performance, while board diligence and gender diversity have a positive non-significant effect on DMBs' financial performance. The study recommends among others that board size be carefully analysed by shareholders and balanced according to the expected result, board independence be continuously maintained and periodically reviewed, a maximum of 6 board meetings excluding emergency meetings be held annually; board members should consist of at least half gender diversity, and finally, ethnic heterogeneity be allowed on the boards of Nigerian firms for equity, fair representation, and relative peace

Does board structure drive Sustainable Development Goals disclosure? Evidence from an emerging market

The study investigates to which extent corporate board characteristics influence the disclosure of Sustainable Development Goals (SDGs) in Omani-listed financial institutions. Using hand-collected data for 34 Omani financial institutions listed on the Muscat Stock Exchange for the period between 2016 and 2020, the study applies multivariate analysis to examine the association between corporate board characteristics and SDGs disclosure following Al Lawati and Hussainey’s (2022) method in measuring SDG variables. Drawing from agency theory and resource dependence theory, our results showed that the independence and financial expertise of the corporate board promote better disclosure of SDGs. On the other hand, gender and nationality diversity of the board were found to be negatively associated with the disclosure of the SDGs. Our paper contributes to the growing literature by being the first study to examine the extent to which corporate board characteristics drive SDGs disclosure in one of the emerging markets. In addition, in our study, we employ the resource dependence theory with the agency theory to investigate our research hypotheses in order to capture the full practice of the SDGs disclosure. The study implies that the characteristics of the corporate board are one of the main determinants of SDGs disclosure in emerging markets. Furthermore, not all boards behave the same with regard to the disclosure of the SDGs, and this behavior is determined by its characteristics. The study recommends that a sustainability committee may be initiated to enhance the disclosure of the SDGs in Omani financial institutions.

Analysis of the relationship between corporate board characteristics and corporate performance

Analysis of the relationship between corporate board characteristics and corporate performance

Unveiling the alliance between corporate board composition and earnings management through meta-analysis

Misconduct in the financial sector, such as earnings management, has garnered significant attention from researchers due to the peculiarities of managers in financial reporting. Effective corporate boards have the potential to limit managerial opportunism in this regard. However, the existing literature yielded inconclusive results. Therefore, the present study aims to examine the influence of corporate board characteristics on earnings management through meta-analysis. The dataset comprises 72 published empirical studies with 3,66,417 firm-year observations. A two-step methodology is adopted following the PRISMA guidelines proposed by Moher et al. (2009) and the meta-analytic technique propounded by Hedges and Olkin (2014). The major findings of the study uncover that active, gender-diverse and larger corporate boards are most influential in controlling earnings management practices. Furthermore, different discretionary accrual measures, corporate governance systems, and the International Financial Reporting Standards (IFRS) adoption moderate the association between earnings management and board composition. The study provides a quantitative generalization to the inconclusive outcomes of published empirical studies from different timeframes and jurisdictions. The findings may help academicians and researchers to develop a holistic understanding of the impact of corporate boards on earnings management. This is one of the first studies to undertake a meta-analytic review of the association of board gender diversity and board activity as board characteristics with earnings management.

Corporate social responsibility assurance, board characteristics and social performance disclosure. Evidence of listed firms in India

AbstractThe study examines board characteristics, corporate social responsibility (CSR) assurance and social performance disclosure of listed firms before and after mandatory CSR reporting in India. We used the Indian stock market as the testing grounds and applied panel regression and difference‐in‐differences to analyse 960 firm‐year observations between 2010 and 2021. The first findings show that independent board directors and total board size are insignificant in CSR assurance engagement in a mandatory CSR policy period. However, CEO duality is less than likely causing CSR assurance engagement. The second findings show that CSR assurance engagement more than likely causes an increase in social performance disclosure before mandatory CSR policy implementation and increases social performance after policy implementation. The third findings show that the interactive effect of board characteristics (independent directors, total board size and CEO duality) and CSR assurance engagement causes an increase in social performance disclosure. The study sought clarity on the impact of CSR assurance and mandatory CSR reporting on information asymmetry problems to stakeholders. The study also contributes new knowledge on the influence of the interactive effect of board characteristics and CSR assurance on the social performance disclosure of listed firms in India.

Exploring the relationship between corporate governance and firm's performance: Does political connection matter?

AbstractThe purpose of this research is to investigate the influence of corporate board and audit committee characteristics on firm performance as measured by accounting‐based ratios (earnings per share, return on asset, and return on equity) as well as the market‐based measure (Tobin's Q). In addition, this research introduces political connections to examine whether it can moderate the relationship between corporate board characteristics and firm performance. The study reveals that a higher proportion of independent directors and CEO duality positively affected firm performance. However, board meetings and board financial experience have no affected firm performance. The study also shows that audit committee independence, audit committee size, and audit committee expertise are positively related to firm performance. In contrast, it finds no discernible impact of audit committee meetings on firm performance. Our findings also suggest that the beneficial influences of the corporate board, in terms of higher firm performance, are greater in firms with political connections. To the best of the researchers’ knowledge, this is almost certainly the first analysis to examine the relation between the corporate board, audit committee characteristics, and firm performance, and the moderating effect of political connection of this relationship.

The Effect of Corporate Board Characteristics on Environmental Innovation

The Effect of Corporate Board Characteristics on Environmental Innovation

Corporate Social Responsibility (CSR) Disclosure on Politically Connected-Family Firms

Research aims: This study examines the relationship between political connections and family ownership toward CSR activities disclosure.Design/Methodology/Approach: This study employed 624 Indonesian public companies on the Global Reporting Initiative (GRI) list for 2010-2018. The researchers used OLS (Ordinary Least Squares) regression by considering the fixed effect diversity of industry, year, and type of GRI to examine the relationship between political connections and family ownership on CSR disclosure.Research Findings: This study discovered that companies with political connections disclosed more CSR activities because they desired to bind themselves with the government, instruments of legacy, and social motivation. However, family firms were not found to have a significant relationship with CSR disclosure. In addition, the strong family ownership in the firm impacted the reduced strength of political connections, thereby reducing the company's CSR activities disclosure. Theoretical contribution/Originality: This study is interesting because the researchers combined the issue of the politically connected board and family firms, which are frequently found in the context of Indonesian companies. The researchers expect this study to enhance corporate board characteristics and CSR disclosure literature. Practically, the researchers expect this study could provide useful information for investors to make investment decisions. Furthermore, this study provides insight for regulators, who need a view of how political connections and family companies exist in responding to the regulations they set. Therefore, the existing regulations can be improved. Yet, this study was limited to the proxy of political connection based on local regulation of politically exposed person (PEP).

The role of corporate board and auditors in tax planning: evidence from Italy

PurposeThe purpose of this paper is to investigate the effects of corporate governance mechanisms, namely, board of directors and auditors, on tax aggressiveness in Italian companies listed on the Milan Stock Exchange.Design/methodology/approachThis study used a population of 168 Italian non-financial firms listed on the Milan Stock Exchange, holding shares in at least one foreign subsidiary in countries other than Italy in fiscal year 2018. Data on corporate boards and auditors were collected through the evaluation of companies’ annual reports over the period 2011–2018. Five panel data analyses with fixed effects were performed for each tax aggressiveness index, yielding 1,176 observations to test the research hypothesis.FindingsThis paper finds that corporate board characteristics, such as size, gender diversity and CEO duality, and auditors’ features, such as external audit quality, increase corporate tax aggressiveness.Practical implicationsThis study provides investors with an understanding of corporate boards’ and auditors’ roles in preventing agency conflicts and evaluating a company’s tax approach. Furthermore, the findings are useful for international political bodies in regulating corporate board composition and managerial monitoring.Originality/valueAlmost all studies focusing primarily on corporate governance mechanisms’ effects on tax aggressiveness are within the US context. Empirical evidence on the topic in the European contexts is limited. The legislative discrepancy between countries is reflected in the computation of indices measuring tax aggressiveness, affecting US studies' generalizability across nations. This paper extends the literature on the topic by investigating other unexplored corporate governance mechanisms. Five indices were used to measure corporate tax aggressiveness and to assess analysis reliability and data robustness. Moreover, to the best of the authors’ knowledge, this study is the first attempt to investigate the link between corporate governance mechanisms and tax aggressiveness in Italy.

Corporate board and dynamics of capital structure: Evidence from UK, France and Germany

AbstractTheoretical arguments suggest that capital structure will adjust to the dynamics of the corporate governance environment. In line with this prediction, we examine the impact of board characteristics on capital structure dynamics and the speed of adjustment. Using 2690 firm‐year observations for 2009–2018, we find that firms in a stakeholder‐oriented corporate governance environment adjust their leverage faster than those in a shareholder‐oriented environment. We also find that corporate board characteristics influence firms' capital structure and speed of adjustment towards target leverage. Our findings are robust to alternative measures of leverage and endogeneity. The overall evidence supports the relevance of the corporate board's composition in both shareholder‐oriented and stakeholder‐oriented corporate governanc (CG) environments. We conclude that board composition mitigates agency conflict.

Antecedents of corporate social responsibility disclosure: evidence from the UK extractive and retail sector

PurposeThis study aims to examine the level of corporate social responsibility (CSR) disclosure among the UK extractive and retail sectors and consequently ascertain whether corporate board characteristics and firm characteristics can explain observable differences in the extent of CSR disclosure.Design/methodology/approachBased on the KPMG survey 2017, the sample comprises all the firms in the extractive industries, such as mining and oil and gas and also retail industries, such as food and drug retailers and general retailers for the sample period of 2005 to 2018.FindingsThe findings show that the level of CSR disclosure from extractive sector is much higher than that of their counterparts in retail sector. In addition, the multiple regression results show that CSR disclosure is positively and significantly associated with board gender diversity, board independence, board size. Nevertheless, the results show that board meetings and Chief Executive Officer duality do not have a significant impact on CSR disclosure.Originality/valueThis study contributes to the existing literature on CSR in that it advances the understanding of the interaction between governance mechanisms and specific firm characteristics of two distinct sectors of the UK economy and how this in turn influences the CSR in the two sectors.

Corporate governance and its impact on organisational performance in the Fourth Industrial Revolution: A systematic literature review

This paper aims to systematically review the existing studies of corporate governance with organisational performance in the Fourth Industrial Revolution and put forward theories, research methods, topics, and variables that emerge from the review. The systematic literature review is based on 42 peer-reviewed journal articles on the topic written by reputable academics on the Science Direct Database focused on corporate governance, board characteristics, and ownership structure. This study’s conceptual framework is based on agency theory, which is the most widely used to analyse corporate governance (Fama & Jensen, 1983; Jensen & Meckling, 1976). The majority of results show a positive correlation between corporate governance and organisational performance (Pucheta-Martínez & Gallego-Álvarez, 2020) with agency theory being the most utilised theory of choice (Bergh, Ketchen, Orlandi, Heugens, & Boyd, 2019; Panda & Leepsa, 2017). This paper undertakes a significant thorough systematic review of corporate governance with firm performance and the Fourth Industrial Revolution literature. It gives an 11-year review with a reference index from 2011 to 2021, useful for both academics and professionals. This study recommends more evidence-based systematic reviews for different aspects and within different regions. It is further recommended to expand geographical spread across all continents to cover corporate governance area and to improve studies related to the Fourth Industrial Revolution and its impact on corporate governance. Lastly, it is recommended that more studies that look at the impact of the Fourth Industrial Revolution on corporate governance and firm performance should be performed

Board Characteristics and Intellectual Capital Disclosures: Evidence from Sri Lanka

Purpose: The purpose of this study is two-fold. First, to examine the state of intellectual capital disclosures. Second, to investigate the relationship between board characteristics and intellectual capital disclosures. Design: This study selected thirty non-financial listed companies with the highest market capitalization from the Colombo Stock Exchange in Sri Lanka. An intellectual capital disclosure index comprising 61 items was developed to understand the level of intellectual capital disclosure in the selected companies. Panel data analysis techniques were applied to test the proposed hypotheses. Findings: Results indicated that role duality and proportion of female directors have a significant and positive impact on intellectual capital disclosures. Firm leverage was found to have a significant and negative effect on intellectual capital disclosures. Insufficient empirical evidence between other corporate board characteristics and intellectual capital disclosure in Sri Lanka may be attributed to a non-mandatory corporate disclosure environment. Originality: This is among the few studies to examine the link between corporate governance and intellectual capital disclosures employing panel data in Sri Lanka. However, a discourse on the role of corporate governance and corporate disclosures is warranted in a small island developing economy with a fragile financial system like Sri Lanka. Future Research Directions – The study calls for more studies to investigate the relationship between corporate governance and intellectual capital disclosures in the case of Sri Lanka by employing data from different industries for longer periods.

Corporate boards' and firms' R&D responses to performance feedback

PurposeA firm will respond to performance feedback, i.e. a comparison of its current performance with the goals to which it aspires, by means of changes in its search activity. There is an emerging body of literature that studies how such behavioral responses are shaped by important decision-makers inside firms. The study focuses on the corporate board – one of the most influential decision-making groups in terms of strategy. More specifically, the study aims to study the moderation effect of the size, turnover and age diversity of the board.Design/methodology/approachThe sample is based on the largest listed German automobile and manufacturing firms followed between the years 2001 and 2015. The sample is analyzed using fixed-effects panel data models.FindingsThe findings indicate that the age diversity of the corporate board and, partially, also the turnover of its members moderate firms' responsiveness to performance feedback. On the other hand, the size of the board does not seem to play a role. The study, therefore, supports the notion of taking into account the characteristics of the corporate board when analyzing strategic decision-making and points to areas for further research.Originality/valueThe study contributes to the literature by empirically testing the moderating effect of three characteristics of corporate boards that have not been largely tested in the literature to date.