Aspects Of Corporate Governance Research Articles

Blockchain technology in corporate governance and future potential solution for agency problems in Indonesia

The aim of this study is to determine stakeholder acceptance of the blockchain and to investigate a suitable model using a Technology Acceptance Model with specific reference to corporate governance through cryptography in solving decades of financial record-keeping problems. Stakeholders in corporate governance, namely customers, creditors, suppliers, communities, employees, owners, investors, trade unions and social activists, can benefit in different ways. Investors can benefit from buying equity at a lower price and selling it on a market with greater liquidity, but they will find it difficult to disguise their trades. This study argues that almost all aspects of corporate governance can be improved through the application of this technology, which results in greater transparency, increases liquidity, and lowers costs. Corporate governance will also be better because blockchain technology uses the concept of a distributed ledger which allows data to be distributed at every connected point in an efficient and accountable manner, so that all parties in the blockchain can exchange data in real time.

Book review: “Board of directors and company performance: An international outlook”

This review covers the book titled “Board of directors and company performance: An international outlook”, edited by William Megginson, Pablo de Andres, Marina Brogi, and Dmitriy Govorun (Virtus Interpress, 2019; ISBN: 978-617-7309-04-7), which examines the state of regulations and the studies about corporate governance (CG), boards of directors, and company performance in 11 countries. The chapters of this book cover different aspects of CG, devoting a primary focus on the board of directors, which is considered by Brogi in the Foreword as “the very heart of corporate governance”

Comparative Corporate Governance

The question how the governance of enterprises, including the governance of capital markets, should be arranged is as old as the market economy and capitalism itself. Reforms have been stimulated by recently corporate scandals that imposed a critical discussion on the way public corporations are directed and controlled. The literature on corporate governance (CG) originated in the US and the UK, and was initially concerned with a fairly narrow set of issues such as how shareholders can monitor and motivate management to act in their interests. This literature distinguishes between two dichotomous CG models. First, the shareholder-oriented model, which is characterized by strong shareholder rights, single powerful CEO and protection of minority shareholders, prevails mainly in Anglo-Saxon countries. Second, the stakeholder-oriented model, which is characterized by weaker shareholder rights, consensus leadership, and concentrated ownership, prevails in most of the European continent and Japan. For a number of reasons, comparative CG and convergence debates often take place within the contours of the cultural–institutional or societal approach used in this book. Since institutionalists and the societal approach stresses the embeddedness of national institutions and ‘complementarities’ between institutions, alternative responses to internationalizing capital markets, other than convergence, appear possible. Companies may respond very differently to similar sorts of pressure, and distinct sets of ‘best practice’ contingent on the national context may emerge. The current chapter applies this approach by examining the interaction between CG aspects in large, small and medium-sized firms and national institutions in different countries, in the context of internationalizing capital markets. By adopting an institutional approach, the first section describes the major CG features influencing post-war company decision-making in advanced economies. The in-depth explanation of the two main models is followed by an analysis of the Japanese CG model, which is argued to be similar to the Rhineland model. The second section explores the continental European models, which are variants of the two main models. The analysis shows that variations among the advanced and transition economies in these CG features stem from differences in key societal institutions, such as governmental regulation, the character of the financial system, corporate law, and cultural values. In the third section, we offer a brief overview of the models of CG in BRIC countries and more specifically, we discuss in the form of case studies, CG in Russia and China. The fourth section deals with the worldwide diffusion of CG codes, which are instruments of self-regulation, defining best practices with respect to boards, management, supervision, disclosure and auditing. We discuss the main drivers of their diffusion and characteristics across countries, as well as the possible convergence of CG best practices. Finally, the closing case, dealing with the Ahold scandal, should be seen in the light of the link between CG and CSR. The chapter concludes with the major strengths and weaknesses, as well as future directions of change in both CG models.

Evaluation Method and Simulation of Accounting Integrity in View of Grey Correlation Model

Accounting dishonesty is still a problem that is far from being solved, both in theory and in practice. In the existing research on accounting dishonesty, scholars mostly analyze the causes and countermeasures of the lack of accounting integrity from the aspects of external accounting system and internal corporate governance and fail to establish a theoretical system and analytical framework for accounting integrity analysis. This limitation inevitably makes the analysis stay on the surface of things with lack of a deep grasp of its essential problems. Through the study of the relevant literature, the grey correlation model can sort the proportion of the factors affecting accounting integrity and get the primary and secondary factors affecting accounting integrity, so as to put forward more targeted countermeasures to solve the problem of accounting integrity. Based on this, this paper uses the method of combining theory with practice to study the problem of accounting integrity. Combined with the current situation of accounting integrity, this paper uses the grey correlation model to sort the proportion of the factors affecting accounting integrity, analyzes its specific reasons, and finally puts forward the measures to solve the dilemma of accounting integrity according to the analysis results. In view of the problems of enterprise accounting integrity, it is necessary to strengthen the publicity and education of accounting practitioners’ integrity system. Accelerate the construction of the legal system of accounting integrity and promote the legislation of accounting integrity. A full‐time organization for accounting integrity evaluation should be established to measure the accounting integrity of enterprises by using reasonable evaluation means and methods, clear and standardized evaluation contents, and integrity level standards.

Impact of board characteristics and ownership structure on firm performance: empirical evidence from India

This study attempts to assess the empirical relationship between corporate governance and the financial performance of firms in the Indian context by using a set of board and ownership characteristics as representatives of corporate governance practices. We employ a panel dataset comprising of a large sample of 1,347 Indian non-financial companies for the period 2010 to 2018. For studying firm performance, we use both accounting-based performance measures like return on assets (ROA) as well as market-based performance measures like Tobin's Q (TQ). Starting from the basic static panel estimation approach using the fixed-effects estimator, we gradually move on to dynamic panel estimation using different GMM and system GMM estimators to examine the various board characteristics that influence firm performance in India. Based on our final model estimated using system GMM, we infer that on one hand, board size, board activity, and promoter ownership are found to positively influence firm performance while on the other hand, board meetings are found to be negatively related to firm performance. For policymakers and corporates, our study provides valuable insights into the specific aspects of corporate governance that can be targeted and implemented effectively to improve the financial performance of firms.

The main aspects of effective corporate governance at the modern level

The article outlines the main aspects of effective corporate governance, the formation of corporate relations in Ukraine. The main components of modern corporate enterprise management are studied. The problems of modern corporate management of enterprises related to the implementation of control processes are considered. The international experience in corporate governance is analyzed, which demonstrates a solid basis for creating basic principles and provisions for conducting this type of activity. It is proved that for the reliability and legitimacy of economic relations, for the protection and investment confidence of shareholders and their partners, the corporate governance system is obliged to provide full and timely demonstration of information on financial condition, performance, ownership and management. The directions of development of the corporate governance system for the economy of the country in general are determined, and the necessity of partnership relations between the shareholders in particular is considered. It is investigated that the current conditions require the development of an effective corporate governance policy during the global pandemic. To do this, the main tasks must be solved, such as the formation and implementation of a strategic modern system of corporate governance and the creation of conditions for effective interaction between all participants in the management process. It is considered that there is no generally accepted model of corporate governance, which would be used at the international level. It is noted that the vast majority of Ukrainian enterprises use the national model of corporate governance. This model was formed on the basis of a combination of basic principles of the German and Anglo-American models. According to this model, the main shareholders of companies are its employees, management, banks, the state. At the same time, banks remain the main source of funding, and this is more typical of the German model of corporate governance. The domestic model of corporate governance, which also has common features with the Japanese model, namely, a significant role is given to the state in the management process. It is noted that in Japan, the inclusion of government representatives in the system of corporate governance is not based on the presence of a significant stake in the state, as in Ukraine. In the Japanese model of corporate governance, the interaction between the main participants in the relationship is aimed at establishing new business contacts, rather than obtaining the maximum amount of profit It is determined that corporate governance at the current level is a system of relationships that sets up certain procedures for making management decisions. The effectiveness of corporate governance is to increase the level of profitability of the enterprise through the introduction of proper control, effective management and financial transparency.

The Influence of Bank Health Level with RGEC and Methods Market Share on Liquidity Level (Study on State-Owned Banks Listed on the IDX for the Period 2012-2020)

This study aims to determine how the influence of the financial soundness of banks based on the RGEC (Risk Profile, Good Corporate Governance, Earnings and Capital aspects) method and Market Share, on the level of liquidity in state-owned banks listed on the IDX for the period 2012 to 2020. This study was carried out by processing secondary data, the analysis technique used multiple linear regression. The results of this study indicate that the financial soundness of banks using the RGEC method has no effect on liquidity, and the market share of both Loan market share and Deposit Market share has a negative effect on liquidity. The effect of financial soundness of banks and market share only affects about 30% of the Loan to Deposit Ratio, and about 70% is influenced by other factors.

The impact of the COVID-19 pandemic on selected areas of a management system in SMEs

The current pandemic, that has wider economic and social impacts, will put to the test all enterprises, which will be forced to search for new survival strategies and to create existential prognoses of business operations during great economic and social uncertainty and new crises whose impacts are hard to predict. This fact motivated the team of authors to realise the study that aims at researching and quantifying the impacts of the pandemic COVID-19 on selected areas of management in SMEs in the Czech Republic (CR) and the Slovak Republic (SR). The research sample consisted of 1502 SMEs, 822 SMEs before the pandemic, 680 SMEs during the pandemic, 814 from CR, and 688 from SR. Attitudes between SMEs according to nationality and period of research were verified with a chi-squared test and Kruskal-Wallis tests. The results of both countries confirmed that the pandemic has a negative impact on the financial performance of SMEs. The government economic measures may help the enterprises to recover, said 40.0% of Czech entrepreneurs, but only 30% of Slovak entrepreneurs. However, the entrepreneurs in SMEs equally perceive other aspects of corporate governance and business risk management during the pandemic.

Modelling Investment Choice Preference of Government Venture Capital Guiding Funds

The continuous development of the government venture capital guiding funds (hereinafter referred to as the “government guiding funds”) has provided financial support and development opportunities for the development of many small- and medium-sized enterprises (SMEs), and government guiding funds have been paid attention by more and more entrepreneurs and investors of SMEs. This paper takes the SMEs listed on the National Equities Exchange and Quotations (“NEEQ,” known as the New Third Board) as a research sample, systematically examines the factors that influence the selection of investment objects of government guiding funds, and studies the preference of government guiding funds from the aspects of financial characteristics and corporate governance of SMEs. The research results show that on one hand, ownership concentration, date of establishment, and asset size are significantly related to government guiding funds, while the return on equity (ROE), the asset-liability ratio, liquidity of assets, growth rate of main business income, and the operating net profit ratio failed to pass the significance test; on the other hand, operating profit ratio, investment interests, asset size, and the amount of investment of government guiding funds are significantly related, while investment rounds, date of establishment, ownership concentration, ROE, asset-liability ratio, liquidity of assets, and operating net profit ratio failed the significance test.

Does family matter? The moderating role of family involvement on the relationship between CSR and firm performance

PurposeThe purpose of this study is to investigate the moderating role of family involvement on the corporate social responsibility (CSR)-firm performance (FP) relationship in the US hospitality industry. Building on agency theory, this study examines how family ownership, management and board control influence the relationship between CSR and FP.Design/methodology/approachTo examine the moderating effect of family ownership, family management and family board control, this study adopts the two-way fixed-effects model and performs a panel regression analysis with robust standard errors. The sample period spans 1994–2018 and 565 firm-year observations are included.FindingsThis study finds that the impact of CSR on FP is positively moderated by the extent of a firm’s family member involvement. In specific, all three aspects of corporate governance (i.e. ownership, management and board control) positively moderate the relationship between CSR and FP.Research limitations/implicationsFindings of this study yield several recommendations for hospitality managers, including shaping strategic decisions for implementing CSR, by providing a unique perspective that the involvement of founding family members can be helpful in enhancing firm value through CSR activities.Originality/valueThis study sheds light on the further understanding of the CSR-FP link in the hospitality literature. In addition, this study provides practical guidelines for hospitality firms in the context of CSR by revealing possible advantages of strengthened founding family involvement.

Investigating the Determinants of Credit Spread Using a Markov Regime-Switching Model: Evidence from Banks in Taiwan

In this study, we investigate the determinants of credit spread using a Markov regime-switching model. We consider corporate governance variables and credit risk to analyze the determinants of credit spread. The corporate governance mechanism is an indicator of company sustainability, and credit spread is the main factor in profits obtained by banks. However, the relationship between credit spread and corporate governance is seldom discussed. We focus on loans from banks in Taiwan between 2000 and 2019 and apply a Markov regime-switching model, which is superior to other models in capturing different effects in various regimes. We specify two regime types: corporate governance and credit risk regimes. Furthermore, we consider four aspects of corporate governance: firm ownership structure, board structure, deviation, and information environment. In this study, the determinants of credit spread are investigated more thoroughly than in previous studies. Moreover, in this study, we examine the effects of monetary policy and economic status on credit spread using a Markov regime-switching model; such models are not employed to their full extent in related studies of credit spread. Empirical results indicate that credit spread has different effects in various regimes. Thus, understanding the determinants of credit spread in different regimes is crucial for financial analysts, investors, economic policymakers, and banks. Consequently, we expect that this study can improve the management and measurement of credit risk and be of value to financial institutions.

Evaluating the Application of CSR in the High-Tech Industry during the COVID-19 Pandemic

Since its conception, corporate social responsibility (CSR) has seen continuous growth and become a highly discussed issue. In this paper, we propose an evaluation of how the COVID-19 pandemic could impact CSR applications. The pandemic has provided an opportunity for commerce to move on to being more authentic, to offer genuine CSR applications and to contribute toward dealing with pressing environmental and social issues. Hence, this purpose of the research is to obtain a better understanding of whether the integration of environment, social, corporate governance and economic (ESGE) aspects into CSR strategies can support sustainable development toward more sustainable growth during the COVID-19 pandemic. To meet this challenge, we offer a mixture multiple-criteria decision making (MCDM) model. Very few empirical studies have discussed CSR in the high-tech industry and proposed strategies and planning for ESGE efficiency. Using interviews with experts and a literature review, we identify the elements related to actual practices of the high-tech industry’s appraisal and the integrated MCDM techniques to suggest efficient enhancement models. The best worst method (BWM) and modified VIKOR are implemented to estimate the strategic weights and the gaps of the aspiration value. The results are valuable for classifying the priorities of CSR and are therefore helpful for those who are associated with high-tech industry management, practices and implementation.

IMPLEMENTATION OF GOVERNANCE IN SMEs: COMPARISON OF IMPLEMENTATION IN FAMILY AND NON-FAMILY BUSINESS (CASE STUDY IN SMEs IN YOGYAKARTA)

The purpose of this study is to identify the application of aspects of corporate governance in family businesses and SMEs scale non-family businesses in the Special Region of Yogyakarta and to identify differences in the application of aspects of corporate governance in family businesses and non-family businesses on the scale of SMEs in the Special Region. Yogyakarta. Respondents in this study involved SMEs in the Special Region of Yogyakarta. Five family businesses and five SME scale non-family businesses in the Yogyakarta Special Region were selected in each sampling location. The sample was determined by the convenience sampling method. This study will first examine the application of governance in family businesses and non-family businesses separately, then compare the application of governance between the two types of business.This study indicates that each type of business has carried out corporate governance in its business, but not maximally. There are advantages and disadvantages in its application. Most of the reasons for these differences in implementation arise from the basic characteristics that differentiate family businesses and non-family businesses, namely the ownership structure and the business structure. The more concentrated ownership and business structure, the less transparency, accountability, responsibility, independence, and fairness the company tends to be. On the other hand, in companies with more dispersed levels of ownership concentration and business structure, the application of the five aspects of corporate governance will increase.Keywords: Good Corporate Governance, Small and Medium Enterprises, Family and Non-Family Business

Fraud and Governance: The Importance of People

ABSTRACT This paper describes my professional journey focusing on human aspects of fraud and corporate governance. I describe the initial “light bulb” moments that highlighted the importance of people and the years of human-focused fraud and governance research and teaching since those events. I use five themes (skills, signals, relationships, fairness, and persuasion [with bad intent]) to summarize insights from a variety of human-focused research projects in fraud and governance and to provide avenues for future research. My overall goal is to use my professional journey to highlight key human-focused research themes, avenues for additional exploration, and ways to use research in class.

Dynamics between ownership structure and dividend policy: evidence from Bangladesh

PurposeThe purpose of this study is to examine the impact of ownership structure such as family, government, institutional, foreign and public on dividend payouts as a representative of dividend policy of nonfinancial firms in Bangladesh.Design/methodology/approachThis study employs a dynamic panel data model, namely, differenced generalized method of moments (GMM), which follows a two-step process. The study uses annual data of a sample of 159 nonfinancial firms of Dhaka Stock Exchange for the period 2008–2017, which constitutes a panel data of 1,590 firm-year observations.FindingsThis study’s findings reveal that family and public ownerships have a significant and positive effect on dividend payouts, while government and institutional ownerships have a significant but negative effect. This study additionally incorporates some very important controlled variables and finds that except for size, all the selected controlled variables, i.e. lagged-one of dividend payout, returns on assets, debts to assets, price-earnings (PE) ratio, age and financial crisis have a significant effect on the dividend payouts. However, the findings support several dividend-related theories or hypotheses, i.e. agency cost theory, dividend stability theory and reputation hypothesis.Research limitations/implicationsThis study could consider some other aspects of corporate governance, as well as other emerging markets and financial institutions to perceive whether the results differ. Also, investigation could be carried out on conventional and Islamic firms individually to observe if the findings are different. However, the researchers are suggested to incorporate these issues in their future studies.Practical implicationsThis study offers an important insight into the relationship dynamics between dividend payouts and ownership structure in the context of an emerging market like Bangladesh. Moreover, it enhances the understanding of the ties of dividend payouts with the firm-specific factors as well as the financial crisis. The findings of the present study have also important implications for managers, policymakers and researchers, who are in quest of directions on the dividend policy of publicly listed nonfinancial firms.Originality/valueMost of the previous studies consider one or two types of ownership to examine the impacts on dividend payouts, while this study uses five types of ownership accompanied by a different data set. Moreover, to the authors’ knowledge, no study in Bangladesh has yet addressed this issue in such a comprehensive manner as theirs.

The Analysis of Corporate Governance on Non-Performing Loans: Evidence from Indonesia

Objective – This study aims to know the impact of corporate governance mechanisms on the non-performing loan of a bank. This study also aims to analyze which corporate governance aspects are significant to the banks’ non-performing loans in Indonesia. Another objective of this study is to examine whether the relationship between corporate governance and non performing loan depends on bank ownership. This study’s corporate governance variables are the board size, board independence, and bank ownership category. This study focuses on the non-performing loan of the banks in Indonesia.
 Methodology – This study will examine 26 banks in Indonesia listed on the Indonesian Stock Exchange (IDX). It includes both foreign-owned (foreign bank) and domestic banks. The length of the period of observation is seven years, from 2012 to 2018. Panel data of these banks are analyzed using the fixed-effect regression.
 Findings – The regression result shows that board size and bank ownership category have no significant impact on the non-performing loan, while the board independence impacts non-performing loans negatively.
 Novelty – This study contributes to the academic literature, specifically on the issue of corporate governance in the banking sector. This study’s result and findings could be used as the reference for other studies and further research on the corporate governance issue. This study will also expand the literature about corporate governance in the Indonesian banking sector since there are still a limited number of studies that discussed this specific matter.

Effect of Good Corporate Governance Mechanism on Company Profitability Ratios

Determining good corporate governance mechanisms’ effect on profability of company specifically companies that are a part of property and real estate sub-sector which also exist on the list that belongs to the Indonesia Stock Exchange (IDX) from year 2014-2019 is the purpose of this research. Purposive sampling is used as a research method, 12 companies are involved as sample. The results showed that the GCG-forming variables consisting of institutional share ownership, managerial share ownership, board of directors, independent board of commissioners and audit committee do have effect on company profitability. The profitability of said company wouldnt even be partially affected by institutional share ownership, managerial share ownership, board of directors and independent commissioners. Meanwhile, the audit committee partially affects the company's profitability. It is important for investors to look more into the aspects of Good Corporate Governance as a consideration in investing. Further researchers are expected to conduct research on Good Corporate Governance against profitability by taking a sector other than Real Estate and Property.

Chanda Kochhar at ICICI bank: lessons in governance

Learning outcomes After a successful discussion and analysis of the case, the participants will be able to distinguish and appreciate the situations of conflict of interest (COI), whistle-blowing, etc. Initiate appropriate methods to avoid/minimize the impact of COI and ensure justice and fair-play to all stake-holders. Identify and appreciate the work-context of each executive-position and initiate standard operating procedures to protect the interests of the enterprise and all its stakeholders. Appreciate the relevance of whistle-blowing and to initiate appropriate methods to ensure justice and fair-play to all stake-holders. Case overview/synopsis In the context of the Industrial Credit and Investment Corporation of India (ICICI)-bank, the systemic inadequacies seemed to have failed in preventing the incidences of COI. The organization was too centralized to be able to respond proactively to the allegations. The case lays bare the inadequacy of professionalism among the media in responding promptly to such instances. The case generalizes that, with increasing globalization, such incidences have global ramifications and the organizations face much greater risks than ever. The case concludes that to emerge as a mature and leading organization in the global market, ICICI-bank needed to strengthen various aspects of corporate governance; similarly to emerge as a developed economy, India needed to develop independent watchdogs to monitor the activities of corporations continuously. Media needed to be independent and mature to fulfil its duty of continuous and transparent communication to the public. Complexity academic level The case can be understood and analysed by management students in the post-graduate level or by working executives with at least four to five years of experience in the corporate sector. Supplementary materials Teaching notes are available for educators only. Subject code CSS 11: Strategy.

Teaching Corporate Governance in an MBA Class: An Academic Note*

ABSTRACTCorporate governance is a new and emerging discipline in academia. The discipline of corporate governance has increased in importance, driven mostly by multiple financial scandals. These scandals have motivated regulators and the business community to require business professionals who are properly trained in various aspects of corporate governance. The problem, however, is that corporate governance covers many different subjects, such as finance, strategy, and law. This problem of multidimensionality of corporate governance is coupled with the fact that it is a field of study that has rapidly changed to keep up with changing regulations and the changing needs of the business community. These problems make the task of teaching corporate governance challenging for educators. Notwithstanding these challenges, business programs for MBA and CPA students are incorporating corporate governance into their programs. Therefore, our objective is to provide reflections on our three‐year experience of teaching corporate governance. We highlight the challenges that we experienced, such as the diversity of the clientele and the multidisciplinarity of corporate governance, and we discuss how we addressed these challenges. We also identity opportunities we used to develop our teaching approach, such as team teaching and using data from real companies. We present our reflections with the help of education frameworks that should help the community of educators if faced with challenges similar to ours.

Aspects of Corporate Governance in Developing Countries

This research article throws light on the impacts of Corporate Governance in the developing countries particularly to Pakistan, Mexico, Brazil and Bangladesh. The paper starts with discussions on how and when there is an alteration in different features of company administration during the practice of financial advancing in Mexico. It encompasses ultimately the impact of transforms in the replica of business control regarding the expansion of the state e.g. enlargement in purchaser commodities in favour of central group buyers, growth revelation through home firms, fewer help in favour of community public schemes etc. The authors of this research article assert that problems of governance in Bangladesh are at the helm of affairs of its economy. We observed the data regarding governance of Bangladesh of period 1996-2004 and analysed these various governance dimensions out of the aforesaid economic progress analysis the key dimensions have been divulged. These are political governance, institution dimensions and technology dimensions. The political governance in Bangladesh has been paralysed from 1998 to 2004. When the performance of governance in Bangladesh become functional it had positively affected the economy. We cannot say the importance of company authority within growing kingdoms. The commercial domination might include a slightly different system than prevalent in the European countries and North America due to insufficient infrastructure and destroy governmental policy interventionism. We also throw light on important features of Brazilian firm’s changes after the application for communal power exercises. After making a deliberation on the implementation of joint supremacy in Brazil, Mexico, and Bangladesh and subsequently we have emphasized the impact of Corporate Governance and proper growth in Pakistan. The relationship between good governance and proper growth is proportional generally. Having studied different scenarios of the countries under remonstration, the writers have reached the conclusion that good governance is an essential component for upgrading the economies of developing countries because of these reasons it may be said that high-quality control leads towards a country obtain sky-scraping and frequent monetary increase through establishment of congenial environment for savings and investment, entrepreneurship, yielding implement upon manufacturers, generating constancy among marketplace, expansion in souks though elimination of hurdles/barriers towards inner job and progress over the competitors. Keywords: Business Control, Economic Development and Proper Growth.