Corporate Governance Culture Research Articles

Integrating facets of information technology governance at a professional council in South Africa

Purpose The purpose of the study is to explore the integration of facets of information technology (IT) governance at a professional council in South Africa with the view to develop a framework. Design/methodology/approach This critical emancipatory study used the Information Governance Initiative pinwheel to explore the architecture facet of information governance at the professional council, with a view to developing a framework for entrenching a culture of good corporate governance. Qualitative data was collected through interviews and document analysis. The study was a participatory action research project that involved collaboration between the researcher and study participants in defining and solving the problem through a needs assessment exercise. Findings The key findings report on the processes taken by a professional council in identifying and implementing the facets of information governance, that is, records management, IT, content management, data governance, information security, data privacy, risk management, regulatory compliance, long-term digital preservation and, even, business intelligence. Research limitations/implications The study was a participatory action research project that involved collaboration between the researcher and study participants in defining and solving the problem through a needs assessment exercise. Practical implications The study’s findings suggest that, with the right information governance policy in place, adopting the facets of information governance can be used to address concerns related to information integrity in the short and medium terms. As a long-term option for retaining data and information, it would have various drawbacks and would not, however, ensure the initial dependability of the information. Originality/value A framework for information governance to ensure that the professional organisation and board members adopt a tailored governance system is suggested.

Dimensions of corporate culture and financial performance: Evidence from Chinese publicly listed companies

Corporate culture is the soul of the enterprise and plays a vital role in creating corporate cohesion and improving business performance; in many cases, the role of corporate culture on business performance is not direct, but there are a series of intermediary influencing mechanisms. Most of the current academic circles have studied the influencing mechanism between corporate culture and business performance from the perspective of dynamic matching. Still, there is a lack of research results based on the theoretical perspective of Edgar H. Schein's corporate culture dimensions. Based on Edgar H. Schein's theoretical perspective of corporate culture dimensions, this study explores the influencing mechanism between corporate culture and the business performance of Chinese listed companies from the dimensions of corporate governance culture in the external environment and corporate governance culture in the internal environment. It conducts empirical research using the data of A-share listed companies in China's Shanghai Stock Exchange and Shenzhen Stock Exchange as samples. The results are twofold. First, the adaptability of the enterprise's external environment has a significant and positive effect on the Weighted average return on net assets in the financial dimension; it has a substantial and positive impact on customer satisfaction in the non-financial dimension. Second, internal corporate governance culture has a significant and positive effect on weighted average return on net assets, Debt-to-Equity Ratio, Earnings per share in financial dimensions, Percentage of highly educated employees, customer satisfaction survey, and non-financial dimensions. Percentage of highly educated employees, Customer Satisfaction, Customer retention rate, and R&D investment as a percentage of operating income in non-financial dimensions have significant positive effects. The findings of this study provide theoretical and practical guidance for Chinese listed companies to strengthen the construction of external environment adaptive culture and internal corporate governance culture.

Board diversity and value creation for business sustainability

The primary objective of a firm is not the creation of profit; it is the creation of value for shareholders. Corporations need to be innovative to create value, and this entails the need for corporations to embark on research and development (R&D) endeavors. This study’s objective is to determine the impact of Malaysian publicly listed companies’ board diversity (qualification, gender, and age) on the intensity of companies’ R&D investment. In conjunction with the 2017 Malaysian Code on Corporate Governance’s, which took on a new approach that promotes board diversity in corporate governance culture, samples were selected from the Minority Shareholders Watch Group ’s Malaysia: List of Top 100 Companies Overall CG & Performance (By Rank) from 2017-2019, which portrayed good corporate governance practices. The agency theory and the resource-based view were integrated to explain the effects of board diversity on R&D investment. Tests and analysis were conducted, and the results indicated that only age diversity had a positive influence on R&D investment. Practitioners could use the findings of this study to choose the ideal board composition for a company looking to gain a competitive edge. Regulators could also use this study to develop good corporate governance procedures for Malaysian publicly traded companies. The findings of this study may not truly portray the overall industries listed in Bursa Malaysia, as the samples used were limited and the data of certain companies was unavailable.

The Deterrence Effects of Whistleblowing Provisions, Corporate Governance Culture, and Machiavellianism

ABSTRACT Corporate fraud imposes significant costs on stakeholders. Accordingly, firms strive to deter fraud ex ante and detect fraud ex post. Using a sample of experienced business managers, we experimentally examine the degree to which selected whistleblowing incentives provisions and a strong corporate governance culture serve ex ante to deter complicity in fraudulent financial reporting by increasing the perceived likelihood that observed violations will be reported. We find that reward provisions marginally increase perceived risks compared to a control condition, whereas penalty provisions significantly increase perceived risks. We also find that the existence of a stronger (compared to a weaker) corporate governance culture increases perceptions that observed violations will be reported; but greater Machiavellianism leads to diminished perceptions of risk. Additionally, we find that the influence of whistleblowing incentives provisions only manifest among participants low in Machiavellianism. We conclude by discussing the contributions of our research and by suggesting future research. Data Availability: The data are available from the authors upon request.

SOE Corporate Governance Reform in Lithuania - Explained & Еmpirically Tested

Following previous research on management efficiency of state-owned enterprises (SOEs) in Lithuania, this paper continues previous discussion via extension of the observed time period seeking to continuously analyze the impact of corporate governance principles to the management effectiveness of Lithuanian SOEs.For the purpose of this study, elements of corporate governance principles established in the initial reform of the SOEs in Lithuania are used as key dependent variables to measure and quantify the dynamics of corporate governance culture and its impact to the management efficiency of SOEs. Analysis performed is of a special importance as it covers the 10-year period (2010–2020) and could serve as a case study in analyzing practical implications of managerialism principles in public sector and SOEs specifically.New public management paradigm (Politt, 1993) combined with policy learning theory (Bennett, Howlett, 1992) are used as the theoretical background to explain the initiation and logical framework of SOE reform as well as the selection of variables used in this study. Additionally, principles of corporate governance established by OECD and other international organizations (OECD, 2015) are also used to enrich the analytical framework.The results of the analysis do not only prove that the implementation of corporate governance principles has a positive influence on the efficiency of management of SOEs, but also reveals additional factors that were not identified in the previous research – this impact is not static, but rather dynamic changing in accordance with the maturity of managerial practices within SOEs. The revealed dynamic nature of effects of the SOE policy should lead to the continuation of research seeking to expand it both geographically and vertically including other governmental organizations into the scope of future research.

Eff ective management of public enterprises in Africa for the successful implementation of development goals

While some literary sources express the opinion that it is practically impossible to cultivate a good corporate governance culture at state-owned enterprises (SOEs), others believe that new strategies for implementing corporate governance systems in combination with political will can bring SOEs to a more effective level of management. The article presents an analysis of controversial views on the possibility of creating effective management mechanisms in state-owned enterprises, examines the eff ective costs of management failures in state-owned enterprises in Kenya, Zimbabwe, South Africa and Ethiopia. The author draws conclusions and recommendations that the determining factor for the success of state-owned enterprises in African countries is the reaction of the central government to the problems of state-owned enterprises. Structural reforms, good governance, clear goals and effi ciency require a strong stance from Governments. As a long-term remedial measure, knowing which enterprises and when to unload through privatization is one of the options for solving management problems in African state-owned enterprises. As for strategic state-owned enterprises, the document recommends that governments consider the possibility of placing them on public stock exchanges.

Myths and ceremonies among the corporate governance institutions: introducing the concept of corporate governance culture

PurposeThe purpose of this study is to provide the conditions for governance effectiveness and explain why the same rules often result in not the same norms.Design/methodology/approachThe author proposes a “corporate governance culture” concept explaining the differences within corporate governance institutions and making it possible to measure their effectiveness. Based on a literature review that included 186 research studies published in the corporate governance field, the author found that most (160) concern structural numerical variables. Only 26 refer to behavioural and cultural issues, and they support the idea of an interdisciplinary approach to governance problems.FindingsA significant contribution of this paper is that it proposes an integrative framework that operationalises psychological, sociological and philosophical issues that influence corporate governance mechanisms. The proposed concept can reanimate the debate about the need for tight governance regulations or leaving room for a loose governance regime.Originality/valueThe idea of “corporate governance culture” explains the divergences identified in studies on corporate governance mechanisms, pointing out behavioural and cultural issues as crucial aspects of governance bodies.

ВНУТРІШНІЙ АУДИТ В УКРАЇНІ: ЕВОЛЮЦІЯ, ПРОБЛЕМНІ АСПЕКТИ ТА ПЕРСПЕКТИВИ РОЗВИТКУ

The purpose of the article is to summarize the views on the current state of internal audit in Ukraine and identify general promising areas for its development. The evolution, current state and prospects of internal audit development in Ukraine are revealed. The history of internal audit is covered, the stages of development of internal audit in the world and in Ukraine are considered. It is determined that the development of internal audit in Ukraine takes place with the adoption of relevant legislation governing its implementation in a particular area. The current state of internal audit in Ukraine is characterized, the current legal framework for internal audit is analyzed. The level of legislative regulation of internal audit of enterprises of various spheres of activity is revealed. It was found that the establishment of an internal audit function at the legislative level is not mandatory for the private sector, while such companies have all the necessary legal framework that can be used in the process of implementing and conducting internal audit. Views on modern problematic aspects of internal audit development in Ukraine are generalized. It is determined that the most acute issues hindering the implementation of internal audit in enterprises are the lack of methodological and organizational support for internal audit, the low level of development of corporate governance culture, as well as the lack of qualified internal auditors. The actual directions of further improvement of the process of introduction of internal audit in the practice of domestic enterprises are formulated. The necessity of further improvement of normative-legal provision of internal audit regulation, development of methodical recommendations on organizational-technological schemes and procedures of internal audit and improvement of the system of professional training of specialists in internal audit is substantiated. It is concluded that the development of internal audit in Ukraine at the present stage is due to the need to understand internal audit as a potential tool to improve the efficiency of the enterprise, as well as the existing regulatory requirements. Prospects for the development of internal audit in Ukraine must have all the prerequisites to meet modern global trends.

Corporate Governance and Investors’ Decision in Quoted Deposit Money Bank in Nigeria

Investment decision involves risk and uncertainty. An investor makes the choice of where and what to commit funds into for future returns. Studies have shown that due to pressure to satisfy investors’ desire and to make their company attractive to investors, corporate managers manipulate financial books and pay dividends to shareholders on profits not earned. This practice may lead to wrong investment decisions by investors. This study examined corporate governance and investors’ decision in quoted deposit money banks in Nigeria.
 Ex-post facto research design was employed. The research population comprised the fifteen deposit money banks quoted on the Nigerian Stock Exchange as of December 31, 2017. Total enumeration method was used. Validated data were obtained from the Nigerian Stock Exchange and audited financial statements of the sampled deposit money banks. The data were analyzed using descriptive and inferential statistics.
 Results indicated that corporate governance proxies of board size, board composition and audit quality jointly had a significant and positive effect on volume of shares traded (F(4,130) =13.43; Adj. R2 = 0.0753; p = 0.0093); corporate governance and control variables of firm size and profitability had a joint and positive effect on volume of shares traded (F(6,126) =20.15; Adj. R2 = 0.0654; p = 0.0026).
 The study concluded that corporate governance affects volume of shares traded and firm size and profitability of firms have controlling influence on volume of shares traded. Management and board of directors should imbibe transparent corporate governance culture in their organizations to attract investors when making investment decision.

Is Board Independence a Panacea for Improved Corporate Performance? Evidence in a Developing Country Setting

Corporate governance was brought back into the limelight over the last decade, with the large number of dramatic corporate collapses around the world which drove some of the financial giants in the finance industry to bankruptcy. The need to revisit the mechanism for monitoring governance, especially since many of the big scandals emanated from the West, where a culture of good corporate governance was seemingly embedded in the corporates. The board of directors has long been recognized as the primary and dominant internal corporate governance mechanism for aligning the interests of managers and all stakeholders to a firm. Separation of ownership from management raises a key issue of how to effectively monitor managers to ensure that they act in the best interest of the shareholders and other stakeholders as well. The role of independent directors in improving the effectiveness of control has been the subject of debate in academic literature, especially in the context of a developing country where unlike in the developed economies, a culture of poor corporate governance is the norm rather than the exception. The paper explores this issue, paying particular attention on the relationship between corporate board independence and firms’ financial performance in a development country setting. Using data obtained from Colombo Stock Exchange, Sri Lanka for the period 2004 through 2009, a sample consisting of fifty firms were used to assess board independence and their impact on performance. Data was gathered through published reports and a primary survey. Independence of the board was deconstructed to board composition as measured by proportion of independent directors and proportion of non-executive directors. The firm performance was measured using both financial and market performance indicators. After controlling for industry, firm size and CEO duality, the results indicate support for stewardship perspective, with no convincing evidence to indicate that inclusion of independent directors is associated with improved financial performance. The weak governance structure which could be exemplified by ownership entrenchment, cross sitting of board members and lack of cumulative voting may explain the lack of evidence found. However, the results indicate that inclusion of independent directors is valued by investors and reflected in enhanced firm value. Keywords: Board independence, corporate governance, performance DOI: 10.7176/EJBM/12-33-06 Publication date: November 30 th 2020

THE EFFECT OF CORPORATE GOVERNANCE AND CORPORATE CULTURE ON FIRM MARKET VALUE TO IMPROVE FINANCIAL PERFORMANCE

The purpose of this research is to analyze the effect of corporate governance and corporate culture on firm market value to improve financial performance. Corporate governance is measured by audit committee,boards of directors, board meeting and nomination . Corporate culture is measured by Corporate culture promotion While financial company performance is measured by return on assets. This research was conducted on companies listed on the Indonesia Stock exchange on indexed LQ 45 for period of 2016-2018. The sample was selected for 25 companies. The method of analysis uses associate descriptive analysis with path analysis. Based on the results of the study found that corporate governance and culture promotion indirectly effect on financial performance with firm market value as intervening variable.

The Effect of Good Corporate Governance and Local Culture Values on The Performance of Village Credit Institutions

Lembaga Perkreditan Desa (LPD) is one of the elements of village institutions that performs the functions of traditional village finance to manage the potential of traditional village finance. In Balinese context, LPD is a financial institution adapted to the concept of community in Bali. LPD has the potential and proven capable of advancing the welfare of the village community as well as meeting the needs of the village concerned. The number of LPDs currently in Bali are 1433 LPDs. This study aims to investigate the effect of Good Corporate Governance and Tri Hita Karana as a Balinese local culture toward the performance of Village Credit Institutions (LPDs). The data in this study were collected using questionnaires that were distributed directly to the LPDs in Denpasar area. The technical analysis used in this study is multiple linear regression and t (t-test) for partial analysis. Based on the results of multiple linear regression analysis, the regression equation Y = 20,783 + 0,157X1 + 0,516X2 is obtained. The t-test analysis from the regression results shows that Good Corporate Governance and Tri Hita Karana have a significant effect on LPD’s performances. Keywords : Good Corporate Governance, Tri Hita Karana , LPD performances DOI: 10.7176/EJBM/12-24-11 Publication date: August 31 st 2020

Disqualifying unfit directors: what lessons can Nigeria learn from Commonwealth Countries?

This article examines the legal and institutional framework for the disqualification of unfit directors in Nigeria. It notes that while several countries around the world have developed robust structures for the disqualification of errant directors, as part of strategies aimed at fostering good corporate governance, Nigeria on the other hand has largely ignored its directors disqualification regime, which incidentally, is not robust enough to tackle the myriad of corporate misbehaviours which regulators are increasingly grappling with. Drawing lessons from some select Commonwealth countries such as the United Kingdom, Australia, and New Zealand the article will suggest that Nigeria should aim at enacting an elaborate disqualification regime aimed at deterring directors from wrongdoing, protecting the unsuspecting public from their misconduct, and furthering a strong corporate governance culture in the country.

The Governance of State-Owned Enterprises in Africa: an analysis of selected cases

Whilst some literature is of the view that; it is nearly impossible to cultivate good corporate governance culture in state-owned enterprises (SOEs), others believe that new strategies of implementing corporate governance systems together with political will can deliver SOEs out of their efficiency doldrums. This paper presents a scientific analysis of the contentious view on the possibility of creating efficient governance mechanisms in SOEs, explores the effective cost for governance failures in SOEs in Kenya, Zimbabwe, South Africa and Ethiopia. The paper makes conclusions and recommendation that the determinant factor to the success of SOEs in African countries is underpinned on the response of central government to the challenges of SOEs. Structural reforms, good governance, clear objectives and efficiency requires governments to take a decisive position. As a lasting remedial action, knowing which entities and when to offload them through privatisation, is an option in addressing the governance challenges in African SOEs. For strategic SOEs, the paper recommends that governments should consider listing them on public stock exchanges.

Corporate Governance and Ethical Culture: Do Boards of Directors and Ownership Structure Mattter?

A poor ethical culture has been considered one of the reasons for the emergence of many corporate governance scandals. In this paper, I investigate the link between two corporate governance mechanisms – the composition of the board of directors and ownership structure – and ethical culture for a sample of Brazilian companies. My measure of ethical culture is based on a text analysis of around 50,000 employee reviews posted at Glassdoor for around 1,400 terms associated with five ethical dimensions: organizational trust, ethical leadership, benevolent orientation, empathy, and speaking out & efficacy. I find partial support, though far from conclusive, for the hypotheses that a higher ratio of independent directors or of women on boards is associated with better ethical culture. My clearest results refer to a corporate governance feature little discussed in the literature: the percentage of directors appointed by minority shareholders. In this case, all specifications show a strong negative relationship between the percentage of such directors and ethical culture. As minority directors are usually appointed by institutional investors, one conjecture is that the short-term horizon of some institutional investors could lead these directors to prioritize short-term profits instead of focusing on building an ethical culture whose benefits would be mostly reaped over the longer term. Other variables related to the board of directors and ownership structure, such as ownership concentration and the identity of the shareholder of reference, were not significant in explaining ethical culture. To my knowledge, this is the first paper to document a link between ethical culture and corporate governance mechanisms.

Demonopolization SOEs Policy as An Efforts To Restructured Roles and Institutions in Facing Global Competition

This article discusses how SOEs prepare themselves in an effort to deal with economic globalization over the demonopolization policy. Demonopolization is a policy undertaken by the government as a commitment to implementing free trade required WTO. Economic globalization is a condition that will not be able to be avoided, a sure step that must be taken by the government is to prepare for the resilience of the nation's economy through institutional strengthening strategies. One of them is by improving the performance of SOEs through policies that can create a synergy of effort and will be able to improve the quality to face competition globally. Create competitors to SOEs will be able to encourage SOEs to improve their institutions internally and externally, this condition is one of the strategies to create professional and independent SOEs, in order to face global challenges. Restructuring of SOEs by applying corporate culture and implement of concept good corporate governance is a strategy for internal institutional reform, internal institutional strengthening will have an impact on external institutional which will provide the best service for consumers and public. The Concept of SOEs performance must be based on the principles of economic democracy that promote fair efficiency for all economic actors, the main aim of providing protection for the people of Indonesia.

Challenges of the Nigerian Banking Sector and the Way Forward

Nigerian banking sector struggle with challenges in the day to day running of their business activities, challenges are enormous and can either be market or operational challenges and regulatory or reforms challenges instituted by the regulatory agencies such as CBN, NDIC, SEC and CIBN etc. Therefore, this paper seeks to examine the challenges facing the Nigerian banking sector and proper possible solutions to the challenges based on the prevailing economic environment. The paper utilized questionnaires as source of data collection, fifteen out of 24 banks were selected based on purposive sampling method. Chi-Square (x2) method was adopted as a statistical tool of data analysis to analyze the collected data. The result reveals that myriad of challenges exist in the Nigerian banking sector some of which are challenges both within and outside Nigeria. Banks are left behind in technological innovation aspect of banking transactions, movement of high volume of deposit or capital flight to foreign banks by the political class which reduce banks opportunity to expand their market base and the prevalent of fraud in the sector also hinders the banks progress, these challenges affects the sector to compete equally with banking sector in the developed nations. However, we also found that the challenges does not affect their financial performance. It is recommended that that government and relevant regulatory agencies should put heads together to render support and address those challenges identified that affect the sector, also Nigerian banking sector should invest in both technological innovation and human capital development, they should imbibe the culture of good corporate governance and stick to the issue of banking ethics and professionalism among others.

Corporate governance practices and comprehensive income

PurposeThe purpose of this paper is to analyze the effect of corporate governance practices on firms’ financial performance, as measured by comprehensive income (CI).Design/methodology/approachUsing a sample of 237 firms from the Standards & Poor (S&P) 500 index during the years 2004-2009, multivariate statistical analyses are conducted to confirm the authors’ main hypothesis.FindingsThe results indicate that having high levels of corporate governance culture has a positive impact on a measure of firms’ financial performance, namely, CI. Furthermore, they indicate a positive correlation between a higher percentage of external directors and financial performance, and a negative relationship between number of board meetings and financial performance.Originality/valueThe main contribution of this research is that good corporate governance strategies deliver superior financial performance for businesses in terms of CI. This serves as a method of value creation, which is the ultimate goal of a business. In addition to the use of CI as an indicator of financial performance, a unique measure of corporate governance level is tested.

Pengaruh Penerapan Corporate Governance (GCG) Dan Budaya Organisasi Pengelola Zakat Terhadap Motivasi Pembayaran Zakat Penghasilan Di DIY

Zakat is a worship that has two dimensions of the vertical and horizontal, which is worship as a form of obedience to God (vertical) and as a duty to fellow human (horizontal). One of the large potential of zakat is zakat income. But so far zakat income has not been well managed including aspects of collection. This study was conducted to determine the effect of the application of the principles of good corporate governance and organizational culture on the motivation to pay zakat income in Yogyakarta Special Region. The result of t test on the variable of good corporate governance has an effect on the motivation of zakat payment of income, it is shown with tcount 3,063 with significance value 0,003. While the organizational culture variable is 2,800 with significance value 0,006. This test shows that the significance value <0.025. F test results on the concurrent effects of good corporate governance and organizational culture shows F count is 6.673 with a significance value of 0.002. This test shows that the significance value <0.05. This test shows that there is a positive influence of Good Corporate Governance and organizational culture on the Motivation of Zakat Payment “. R square value of 0.126 shows that about 12.6% of zakat payment motivation is directly influenced by good corporate governance and organizational culture. Keywords: good corporate governance, organizational culture, zakat income

Sistem upravljanja u društvu za osiguranje prema direktivi Solventnost II

The author of this article examines the system of governance in insurance companies according to new regulatory regime „Directive Solvency II“ which entered into force in the European Union on 1 January 2016. A lack of corporate culture in the financial sector is one of the main reasons of the global economic crisis. In order to eliminate the problems raised in connection with the culture of corporate governance, the creators of the Solvency II Directive regulated in detail how the system prescribed by the management in the insurance company must operate. The author further analyzes the role of each of the four key functions in the insurance companies provided for in the Directive Solvency II. These key functions are: risk management, internal control system, internal audit and actuarial. In the last part of the article the author estimates that the provisions of the Serbian Insurance Act relating to the system of governance are largely harmonized with the Directive Solvency II.