Corporate Governance Compliance Research Articles

A nexus between corporate gender diversity and dividend payout: Evidence from Asia Pacific

The study investigates the impact of corporate gender diversity on dividend payouts in Asia-Pacific countries. The study used the data of 610 listed firms in the Asian Pacific region over eleven years, from 2006 to 2016, with 6710 observations. The regression results revealed that the representation of women on board and at least 30% on board positively relates to dividend payout. Board size and board independence have a significant negative relationship with dividend payouts. Overall, results suggest that gender diversity on corporate boards has a greater propensity to pay dividends in the mix of ownership structure, strong and weak corporate governance compliance, and horizontal agency conflict.

Analysis of the Implementation of Good Corporate Governance in Food Companies: PT. Indofood Success Makmur

PT Indofood Sukses Makmur, a renowned Indonesian food manufacturer, is assessed for Good Corporate Governance (GCG) compliance. The company has grown and transformed over the past two decades, becoming a major food industry participant. Indofood understands the relevance of GCG principles for openness, accountability, and stakeholder value despite its success. This study finds Indofood's GCG principles—transparency, responsibility, accountability, independence, and fairness—strong through literature and company actions. However, financial disclosures and sustainability efforts might be more transparent, accountability systems strengthened, and workplace culture more inclusive and varied. The research recommends that Indofood improve its governance procedures through constant monitoring and improvement to sustain stakeholder confidence and navigate the changing consumer food market.

Does nationality and gender of the board members influence corporate governance compliance? Evidence from selected Sub-Saharan Africa countries

Does nationality and gender of the board members influence corporate governance compliance? Evidence from selected Sub-Saharan Africa countries

Does certification of corporate governance compliance pay off? Evidence from a unique regulatory setting

AbstractResearch Questions/IssuesUsing insights from agency and signaling theories, we examine the effect on companies' market‐based performance of a unique monitoring mechanism of compliance with a corporate governance (CG) code, that is, independent certification of compliance with a CG code and type of certification provider. Furthermore, we examine the impact of two boundary conditions, family company status and company‐level information asymmetry, influencing the effect of independent CG compliance certification and type of certification provider on the market‐based performance of companies.Research Findings/InsightsBased on 1110 Bangladeshi company‐year observations from 2006 to 2017, we firstly find that independent CG compliance certification is positively associated with companies' market‐based performance. Secondly, we show that CG compliance certification by a chartered secretarial firm is related to higher market‐based performance. Thirdly, we document that family companies attenuate both these associations. Finally, we find that, while company‐level information asymmetry reinforces the association between CG compliance certification and market‐based performance, it weakens the relationship between certification by a chartered secretarial firm and companies' market‐based performance.Theoretical/Academic ImplicationsOur findings are consistent with the agency and signaling theory that independent certification of CG compliance and this certification by a chartered secretarial firm reduce information asymmetry between managers and external investors by signaling enhanced credibility of reported CG compliance information. However, the roles of CG compliance certification and certification by a chartered secretarial firm to reduce agency conflict and provide credible signals are conditional on two boundary conditions: family company status and company‐level information asymmetry.Practitioner/Policy ImplicationsThis study's findings highlight the economic implications of a unique mechanism for monitoring compliance with an adopted CG code. The findings have significant implications for policy makers and regulators in emerging economies.

A Critic on Legal, Ethical, and Regulatory Issues of Off-Label Medicines Shepardizing Intellectual Property Law towards Pharmacoeconomics: A Discussion of Pfizer’s Norvasc Patent Case

Purpose: Pharmacoeconomics is a pharmacy discipline designed to tackle issues on clinical, ethical, and safety factors leading to advocacy of healthcare corporate governance in fulfillment of the pillars of sustainable development. Thus, it is necessary to discuss illegal diversions of Intellectual Property of drug patents as these legal problems serve as impediments to Pharmacoeconomics. This paper aims to elucidate the advantages of Off-label medicines in favor of clinical, ethical, and safety aspects of Pharmacoeconomics towards patient safety and treatment for welfare.
 Methodologies: Quantitative measurement is crucial for validation of drug quality products. It is used for comparison of both legal and illegal diversions of healthcare corporate governance. Patent Law and its policy options are tools to measure the violations of the perpetrator under Intellectual Property Law. Meanwhile, the British National Formulary follows the Human Medicines of 2012 and communicate with FDA for the implementation of off-label medicines as policy for clinical practice under legal removal of patent protection for medical research and practice. This study follows a diagnostic design as a research method based on ethical, regulatory, and legal presentations to characterize problems involved in drug management system towards efficiency of evidence-based medicine practice utilizing theories, models, and frameworks towards financial intelligence. 
 Findings: The elucidation of Kano Model Framework exhibits the aberration and compliance of patent drugs towards compliance of healthcare corporate governance. Based on exhibition of intellectual property law, it can be extended to fulfill the goals of sustainable development of monetary success and hence, the human society can be reflected as their success to their financial intelligence as their inventorship is declared as non-obviousness to public welfare and safety. Moreover, the moral standard of ethical decision-making illustrated the importance of opting to off-label medicines emphasizing cost-efficiency goals of Pharmacoeconomics in drug therapy. Hence, the Shariah Jurisprudence Method for Pharmacoeconomics is the modelling of Clinical Pharmacy Practice towards Healthcare Corporate Governance in fulfillment of business ethics as public welfare and safety of human society.
 Recommendation: Kano Model Framework is an integrated tool of measuring the success of healthcare corporate governance. With the elucidation aids of modelling the importance of Pharmacoeconomics, it is recommended to develop ways of making artificial intelligence as a sole success, profit, benefit, and contribution to clinical pharmacy practice, starting from its drug development up to its intended purpose of human drug treatment in healthcare setting, in relation to its accompanied FDA regulating bodies, as British National Formulary team compliance of maintaining the crucial functions of observing and monitoring document for patient safety.

The Relationship between Family Firm's Socioemotional Wealth and Institutional Compliance of Corporate Governance: The Moderating Effect of Family Firm Life Cycle

The Relationship between Family Firm's Socioemotional Wealth and Institutional Compliance of Corporate Governance: The Moderating Effect of Family Firm Life Cycle

Does board structure matter firm’s value? The Jordanian evidence

This study aims to examine the impact of board structure on firms’ value in Jordan. Panel regression estimates were used to analyze the data collected from forty-four non-financial firms that listed on the Amman Stock Exchange for the period 2010–2021. Random effects model was applied using a dependent variable (Tobin’s Q), four independent variables (board size, independent directors, female directors, and CEO duality), and four control variables (firm size, age, leverage, and liquidity). The result provides ample evidence that CEO duality exerts a direct positive effect on firm value in Jordan. However, none of the independent variables used has a significant impact on firm value, conflicting with agency and resources dependence theories. Firms value is significantly influenced only by two control variables, i.e., a positive impact of firm size and leverage at the 5% significance level. The results indicate the imperfection of corporate governance compliance by Jordanian listed firms in the area of ensuring maximum firm value. These results could be helpful to the policymakers in Jordanian listed firms to enhance their leadership qualities and satisfy CEO desires to avoid agency conflict.

Corporate Governance and Market Value of Listed Manufacturing Firms in Nigeria

This paper examined the level of corporate governance compliance and its effect on the market value of listed manufacturing firms in Nigeria. The study adopted descriptive survey research design and used secondary data. The population of the study comprised of 78 listed manufacturing firms on the Nigeria Stock Exchange at the end of 2018. Using purposive sampling techniques, relevant data were obtained from 56 firms whose stocks were traded consistently on the stock market. Corporate governance practices and all other relevant economic data were obtained from the firm’s annual reports, the publication of the Nigeria Stock Exchange (NSE) as well as the website of the firms. The data were analyzed using tables, percentages and random effect estimation. The empirical and significant relationship between corporate governance index (t = 10.680 p < 0.001, t = 13.682 p < 0.001, and t = 11.206 p < 0.001) and firms’ value are found to be positive and highly significant in the three estimations. The study concluded that corporate governance is a value driver. The extended findings from the study also indicated that corporate governance mechanisms put in place by firms can ensure financial transparency and serve as catalyst towards ensuring proper utilization of the capital contributed to the firm by its inventors.

Determinants of corporate governance compliance: what matters and what does not?

PurposeThe objective of this study is to assess the level of corporate governance (CG) compliance and identify determinants of high compliance in Indonesian publicly listed corporations including family and nonfamily firms. The country uses a voluntary disclosure approach to enforce its regulations; thus, it is important to identify the factors affecting compliance.Design/methodology/approachEmploying a logistic regression model, this paper analyzes the CG index of high-compliance vs. poor-compliance companies and emphasizes factors that contribute to better governance compliance. The CG index of high-compliant firms is almost twice as high as that of low-compliant firms.FindingsThe study explores factors that contribute to high CG in an emerging market like Indonesian corporations. The study's findings indicate that family-owned businesses predominate in the low-compliance group. High-compliance firms are older and larger with higher financial performance, free float and leverage, as well as a positive influence of the founder's great leadership. The results support theoretical arguments that concentrated ownership and excessive majority shareholder control are key factors in determining the likelihood of good governance practices by firms. Hence, the market and regulators should devise effective strategies to encourage and reward high compliance.Research limitations/implicationsThe findings of the research offer several implications for the academic community and policymakers. Improving CG at the firm level is a viable goal, even though the agenda to reform minority investor protection laws and increase judicial quality is challenging and may take a long time to show significant results. Moreover, this study has some limitations that could be addressed in future research. The study focuses on a single-country setting, Indonesia. There are cultural aspects and governance settings that may be unique in the Indonesian context, which may limit the applicability of the findings to other countries with their own cultural settings and institutional legal framework.Originality/valueThe study investigates the factors that influence high governance compliance in specific CG regulations designed for the emerging Indonesian market. The study also discovers evidence that the crisis period has a favorable impact on the firm's decision to comply with governance provisions.

Corporate governance compliance in Central Public Sector Enterprises of India

Corporate governance compliance in Central Public Sector Enterprises of India

Corporate Governance Compliance in Alternative Markets. The Case of the Alternative Market of ATHEX

Corporate Governance Compliance in Alternative Markets. The Case of the Alternative Market of ATHEX

IMPACT OF IFRS ADOPTION ON CORPORATE GOVERNANCE: AN ANALYSIS ON SELECTED INDIAN COMPANIES

Purpose: This research seeks to show how the adoption of International Financial Reporting Standards (IFRS) has an impact on corporate governance (CG) by affecting shareholders’ rights, roles, and equitable treatment, as well as disclosures, transparency, and board duties. Design/methodology/approach: Using a sample of four companies, the author analyses IFRS adoption's effect on corporate governance through descriptive statistics, and the paired t-test is used to examine whether there is a significant difference between pre-IFRS and post-IFRS corporate governance compliance. Findings: This paper reveals that, presently, all the selected companies are following CG compliance in an effective manner, but due to some further concerns, these can often be moved to the ‘Leadership’ category. Additionally, disclosures regarding CG are significantly positively influenced by IFRS convergence. Practical Implications: This paper provides an accurate and deep understanding to users who are interested in learning more about how disclosures made through Ind.AS regulations affect CG compliance and improve data transparency. Moreover, it is also valuable for policymakers in developing guidelines that will allow for more thorough disclosures. Originality/value: This paper contributes to the literature of IFRS convergence in India by providing rational analysis of selected companies' CG scores and how IFRS adoption affects them.

Kurumsal Yönetim Komitesi Yapısının Kurumsal Yönetim İlkelerine Uyum Derecelendirmesi Notu Üzerine Etkileri

In this study, effect of corporate governance committee structure on corporate governance compliance rating (CGCR) was investigated, based on the assumption that the corporate governance committee may affect CGCR in terms of its roles and responsibilities. Firms included in XKURY are selected as a sample in the study. Statistical analyses are carried out for the existence of the specified relationship by using the data of the companies in question for the period of 2014-2020. Independent variables of the study are % of female members, % of members of the board, % of independent board members and % of non-executive board members in the corporate governance committee. The effects of these variables on the companies' compliance with corporate governance principles are analyzed by performing Mann-Whitney U test. The obtained results show that presence of non-executive board members at different rates in corporate governance committees makes a difference on the CGCR of the enterprises. To the best knowledge, there is no study in the national and international literature that investigates the effect of corporate governance committee structure on CGCR. It is thought that this study differs from other studies in this respect and contributes to the literature.
 Key Words: Corporate Governance, Corporate Governance Committee, Corporate Governance Committee Structure, Corporate Governance Compliance Rating, XKURY
 JEL Classification: M40, G34

IFRS adoption and real earnings management in Bangladesh: The role of board characteristics

The adoption of the international financial reporting standard (IFRS) has become an important research topic and received considerable attention from many empirical researchers worldwide. However, to the best of the authors’ knowledge, it’s one of the very few efforts to examine the relationship between IFRS adoption and real earnings management (REM) with the moderating role of board characteristics (board size, independence, expertise, CEO duality, and gender diversity). The study employs 94 firms listed on the Dhaka Stock Exchange (DSE) for six years, i.e., 564 firm year’s observations, over two time periods as pre (2004–06) and post (2013/14-15/16) adoption of IFRS. The underpinning theory of the study is agency theory, which explains the relationship among variables. To perform regression analysis on balanced panel data, STATA was used with PCSE estimators. The results show that IFRS has a significant negative relationship with REM. Board expertise and gender diversity have a significant negative relationship with REM, whereas CEO duality has a significant positive association with REM. Moreover, it is documented that board size and CEO duality have a significant negative moderating effect on the relationship between IFRS and REM. In contrast, board expertise, board independence, and gender diversity have significant positive moderation. It implies that a strong corporate governance mechanism may help to attain the objectives of IFRS adoption in Bangladesh. Thus, the findings of this study may persuade regulatory authorities in Bangladesh to make corporate governance compliance mandatory with punitive action, which would also act as a guideline for developing countries.

Corporate Governance Compliance among the Listed Firms in Colombo Stock Exchange: Does Size Matter?

Literature is conflicting on the determinants of corporate governance, particularly relating to emerging financial markets. Therefore, this study examined whether firm size affects corporate governance compliance based on firm-level data from 2016 to 2020 for a sample of 100 firms listed on the Colombo Stock Exchange selected using the systematic random sampling technique. Firm size was measured using the natural logarithm of total assets. A corporate governance index was used to measure corporate governance compliance on 18 board related best practices. Results of three random-effects panel regression models indicated that firm size has a statistically significant positive effect on corporate governance compliance. This implies that larger firms are better motivated or capable of complying with corporate governance due to their more extensive resource. This way they can benefit from the reduced agency cost and increased attractiveness for investors. Smaller firms might have considered compliance with corporate governance as less beneficial given the higher cost of compliance. Therefore, it would be more appropriate to make policies flexible enough in the application based on the firm-specific characteristics, such as the firm size. Even though attempts have been made to assess the effect of firm size on corporate governance using firm size as a control variable, this is the first study dedicated to investigating the size effect on corporate governance compliance in the Sri Lankan context.

Effect of corporate governance on stock return in firms listed in Colombo Stock Exchange

Despite the enormous attention that corporate governance received following a series of corporate scandals, the effectiveness of prevailing governance best practices in achieving intended objectives remains a puzzle. Therefore, this study assesses the association between corporate governance and stock returns using the data on a sample of 100 firms listed in the Colombo Stock Exchange for the five years from 2016 to 2020. Four corporate governance sub-indices were formulated to measure the level of corporate governance compliance by classifying 18 board-related best practices into four sub-indices where each best practice is given the same weight. Capital gain, dividend, and total stock return were used as proxies for stock return. A series of random-effects panel regression models used in this study to analyse the data did not show adequate evidence to claim a positive association between stock return and corporate governance compliance. Only the basic board-related best practices show a weak positive impact on stock return. The main reason behind this finding could be the concentrated and family ownership structure prevailing in a large number of smaller firms in Sri Lanka. More precisely, the Sri Lankan firms have maintained satisfactory levels of stock return even when they do not comply with the corporate governance best practices. These findings highlight the necessity of formulating contextually relevant best practices instead of encouraging firms to comply with practices deemed best in developed markets.

Barriers of Good Corporate Governance Practices: Evidence from Emerging Economy

Corporate governance (CG) is often split among rule and principle-based methods to regulation in distinctive institutional contexts. CG practices are divergent among countries due to differences in their institutional environments. Therefore, the purpose of this study is to identify the barriers of CG practices and compliance in Pakistan. The primary data is collected from 105 Pakistan Stock Exchange (PSX) listed firms through survey questionnaire. The study employed the exploratory factor analysis (EFA) to identify the barriers of good CG practices and compliance in Pakistan.
 Using exploratory factor analysis (EFA), this study identified five major barriers, i.e. firm level barriers (lack of auditor independence, board ineffectiveness, lack of shareholders’ awareness), external barriers (political and governmental interference in business activities, weak legal control and enforcement, high levels of corruption), social barriers (strong social ties among different stakeholders, interpersonal connections among boards of directors (BoDs), education and training barriers (lack of professional education and training among stakeholders) and legal barriers (fewer voting rights) which restrain good CG practices in Pakistan.
 The study contributes to existing CG literature and highlights the barriers which hinder the good CG practices and compliance, especially in the context of Pakistan. The findings are applicable to other emerging markets especially in Asian countries due to similar socio-economic environment.

Influence of Corporate Governance on Sustainability Disclosure in Bangladesh

This research aims to investigate the relationship between an organization’s corporate governance and sustainability disclosure in Bangladesh. The study further designates sustainability reporting disclosure practices. The study used content scrutiny of the yearly statement of 175 companies listed in Dhaka Stock Exchange (DSE) for the year 2018, applying determinants count procedure and ordinary least square (OLS) regression analysis. Findings revealed that the level of sustainability reported among the listed companies in Bangladesh is deficient. Board independence and audit independence have a positive relationship with sustainability reports, but the female members in the board, audit committee size, and corporate governance compliance index have a negative relationship with sustainability as reporting. The board size of the companies is not a significant determinant of sustainability reported. The use of content analysis method for the measurement of sustainability report considering the quantity and ignoring the quality of disclosure, data consideration for only one year may contain subjectivity matter from the researcher’s perspective. Future research should be conducted based on content analysis with a mixed method to increase the quality. The findings of this study guided the essentials for step-up and the pursuance of corporate governance on sustainability exposure. This study contributes to works of literature on the association of corporate governance with sustainability disclosure.

An empirical evaluation of the impact of agency conflicts on the association between corporate governance and firm financial performance

PurposeThe study aims to predict and understand the conditions under which the association between corporate governance and a company's financial performance is positive or meaningful by empirically accounting for agency conflicts. This study is motivated by the fact that the separation between ownership and control creates agency conflicts between company owners and managers. Therefore, strong corporate governance systems are expected to align the interests of conflicting parties whereby companies become more likely to improve their financial performance. However, previous research did not yield consistent results in this regard.Design/methodology/approachGiven the latent nature of corporate governance and agency conflicts, this study uses principal component and exploratory factor analyses to proxy for corporate governance and agency conflicts, respectively. Using dynamic panel data modelling, the authors estimate the change in the relationship between corporate governance and a company's financial performance as a function of the change in the level of agency conflict using data from the UK on 78 non-financial companies listed in the Financial Times Stock Exchange 100 (FTSE100) index between 1999 and 2014.FindingsThe corporate governance quality of companies is significantly differed. Moreover, companies operating at high levels of agency conflict outperform the companies' counterparts operating in low levels of agency conflict only when the former improves the corporate governance quality. This implies that financial performance improves by approximately 11% if companies improve corporate governance quality due to an increase in the level of agency conflicts.Research limitations/implicationsLack of data on ownership structure for the study period (1999–2014) was the main reason the authors excluded it from the analysis. Additionally, the lack of reliable and quantifiable corporate governance data on small-medium sized enterprises limits findings on large non-financial companies.Practical implicationsThe authors propose a framework/tool for the impact of the level of corporate governance compliance on financial performance conditional upon the level of agency conflicts whose importance has largely been neglected by the empirical literature. By providing the right “lens” to de-fragmentise the corporate governance mechanisms and estimate empirically the unobserved agency conflicts, researchers, practitioners and investors are able to get further insights on the composing elements of financial performance and evaluate it more objectively. Managers can allocate companies' resources more efficiently and thus improve financial performance. The auditors can get further background information when they compile their report on company's directors. The study's findings offer valuable suggestions for accounting and corporate governance regulators to further put forward and improve accounting standards so as to enhance existing regulations and internal mechanisms which, in turn, could decrease the scope for managerial opportunistic behaviour as the latter can be empirically estimated through our framework.Social implicationsThe findings point out the need for a revised framework accounting for the principal-agent (mis)alignment and the engrained information asymmetries. By acknowledging the level of corporate governance compliance and agency conflict, managers and shareholders should actively strive for the effectiveness of companies, the efficiency of the stock markets and the minimisation of the agency costs. Furthermore, policymakers can look into the development of a code of corporate governance to effectively regulate firms rather than enforcing rigid laws that may not be value relevant. With all these settings in place, the likelihood of corporate failures, corporate scandals as well as corporate violations with the ensuing penalties is set to be reduced. Hence, valuable resources, social capital and effort can be directed into more productive activities.Originality/valueThis study adds to the existing literature by offering empirical and explicit evidence on the dynamic association between corporate governance, agency conflicts and financial performance against a backdrop of high demand for strong corporate governance practices/codes. To the best of the authors' knowledge, there is no study that has yet empirically examined the moderating effect of the level of agency conflicts, given the level of corporate governance compliance on financial performance for listed and internationally aligned companies.

Effects of Corporate Governance on Corporate Performance of Deposit Money Banks in Nigeria

This study examines the gaps between principle based and rule based of corporate governance and its effects on the corporate performance of Deposit Money Banks in Nigeria (NDMBs). The population for this study consisted of all the listed sixteen NDMBs. Secondary data used for this study were derived from the annual financial statements of NDMBs listed in Nigerian Stock Exchange (NSE) covering a period of ten (10) years (2006-2017). Panel analysis (pool regression, fixed and random effect) were used in interpreting the variables; Board Structure (BOS), Audit Committee Independence (ACI) and Durability of Chairman and Executive Director (CEOD). The coefficient estimated at .0647115, -.2464618, -.0299811 for BOS, ACI, CEOD) with R 2 = 0.7272, connotes that BOS has a positive relationship on corporate performance (CP) of NDMBs, ACI and CEOD had negative relationship on the CP of NDMBs, CG has 72% positive effect on CP of NDMBs. The study recommended that NDMBs should change from principle based to rule based due to low level of corporate governance compliance in Nigeria. Government should discredit the activities of durability of executive directors of a company. Keywords: Corporate governance, Corporate performance, Deposit money banks, Board structure DOI: 10.7176/RJFA/13-14-02 Publication date: August 31 st 2022