Corporate Governance Factors Research Articles

AN ASSESSMENT OF SHAREHOLDERS PROFITABILITY AS A STRATEGY FOR TAX AVOIDANCE.

Tax avoidance is a common problem among many nations all over the world, especially the developing and third world countries. Most citizens see tax payment as very offensive, and seek all means to avoid tax liabilities. Kenya is not exempted from this economic menace. In spite of the several tax holidays enjoyed by firms in Kenya, most firms have resorted to creatively avoid tax under the disguise of shareholders wealth maximization. This act is seen by the researchers as a corporate governance factor because the provision of bonus schemes by shareholders for managers for abnormal wealth maximization had justified the act of tax avoidance in the Kenyan corporate world.

The interaction between socially responsible investment and macroeconomic indicators in the developing countries

Purpose- The purpose of this study is to examine the interaction between the change in the sustainability index and macroeconomic indicators in developing countries in order to be able to set forth the significance of the impact level of economic conditions on sustainability in the developing countries. Sustainability is a multidimensional concept that expresses not only sensitivity to environmental policies, biodiversity and climate change, but also corporate governance principles and human rights. Accordingly, socially responsible investment is a kind of investment considering not only financial criteria but also environmental, social and corporate governance factors as well. In today's world, both the increase in social chaos, disasters and epidemics all over the world reveal the importance of addressing the issue of sustainability at the institutional and even governmental level and taking urgent action. In this context, sustainability indices have been created in many international stock markets since the end of the 1990s, which are created according to various criteria. These indices follow the companies that comply with the concept of sustainability. Today, many developing country stock markets also have sustainability indices. Methodology- The study employs panel data obtained from 7 developing countries, namely Brazil, China, India, Indonesia, Malaysia, South Korea and Türkiye for the period of 2015-2022. As the indicator of sustainability, annual percentage change in sustainability index of the related country is taken into consideration. Selected macroeconomic variables are economic growth, change in consumer price index, change in dollar based exchange rates and the ratio of current account balance-GDP. Within the scope of the subject, the importance of adapting to sustainability in the developing countries and the activities carried out are also discussed. Findings- The analysis reveals that only changes in exchange rates and consumer price index have statistically significant effect on the change in sustainability index. Accordingly, while increases in exchange rates have negative effects, increases in consumer price index have positive effect on the sustainability index. Conclusion- Despite the fact that countries have started to provide sustainability indices within their stock exchanges quite recently, and hence analysis had to be conducted by limited data, this study is expected to be among the first studies aiming to set forth the interaction between sustainability and macroeconomic conditions. Hence, this study is expected to make a significant contribution in the existing literature. Based upon the analyisis, it may be concluded that the policies should be implemented so as to compensate the negative effects of exchange rates. Furthermore, it should also be analysed more closely what the components behind inflation affecting sustainability in the selected countries, and the trigger behind these findings are. Keywords: Sustainability, socially responsible investment, macroeconomic indicators, developing countries, panel data. JEL Codes: C23, G15, Q50

Determinant Factors of Corporate Governance on Company Performance: Mediating Role of Capital Structure

The purpose of this study is to investigate the role of capital structure as mediating variable in the relationship between corporate governance and company performance. Data for this study was obtained from financial statements and was done in Indonesia’s non-financial sector. From among the companies listed on the Indonesia Stock Exchange between 2017 and 2021, 15 companies were chosen as a sample. Findings show that corporate governance (board independence, board size, and audit committee) were significantly associated with capital structure and company performance, but gender diversity has an insignificant relationship with capital structure and company performance. Moreover, this research found that capital structure is not able to mediate the effect of corporate governance (board independence, board size, audit committee, and gender diversity) on company performance.

Managerial compensation and firm performance: The moderating role of managerial ownership and other governance factors

AbstractThis study looks at how executive compensation affects firm value and the extent to which this relationship is sensitive to managerial ownership and corporate governance factors. We use data from UK FTSE 100 firms for the period 2007–2012, generating a total of 578 firm‐year observations. Consistent with optimal compensation theory, we find that the managerial compensation –firm value is more sensitive to executives’ ownership levels and other corporate governance indicators. Our results remain robust to alternative econometric models. We contribute to the literature on corporate governance and firm value . While the paper builds on the executive bonus compensation literature, it also furthers our understanding on the extent to which managerial ownership, institutional ownership, board size and non‐executive ownership matter in the executive bonus compensation—corporate value relationship with specific emphasis on UK FTSE 100 firms. Our second contribution is related to the moderating role of managerial (executive) ownership. We show that as executives residual interests go up, managers become more conscious of the firm's idiosyncratic risk, and hence lessen their aggressive investment and financing strategies culminating in lower firm value.

Perception and awareness levels of retail investors on corporate governance practices in an emerging economy.

Many criteria encompass the concept of corporate governance. There is an apprehension that it’s the non-retail investors who would be interested in such governance of firms rather than retail investors, as they hold a small fraction of ownership, usually being passive investors and not in a capacity to influence the management. This study is an attempt to understand the attitude and perception of retail investors in India toward corporate governance practices and for that purpose, a questionnaire was served to consist of a range of corporate governance factors. The data was studied through percentage analysis and chi-square was run. It was established, that retail investors pay attention to corporate governance factors, more importantly to the board of directors, this finding supports the results of Chakraborty et al. (2023). But there is no strong course of action that they prefer to resolve any of their governance-related issues. India, where promoter groups are dominant, has a long way to go to bring out shareholder activism at par with developed markets

Інтегроване еко-соціальне управління сталим інклюзивним розвитком

The aim of the article is to develop proposals for improving the model of management of economic development, which is based on taking into account ecological, social and managerial criteria and ensures the achievement of synergistic effects in conditions of complex, non-linear and radical uncertainty. The ways of influence of factors of sustainable development on the economic, in particular financial, parameters of the company’s activity are studied. The ways in which ecological, social and corporate governance (ESG) factors affect money flows, profits and value creation are demonstrated. The spheres of integration of the conception into the management system are considered. The relationship of ESG parameters with corporate social responsibility, investment analysis, financial indicators, non-financial advantages, risk management, and resilience is revealed. The essence of the concept of resilience as the ability of a dynamic socioeconomic system to quickly and successfully adapt to a new environment and recover in conditions of complex, non-linear and radical uncertainty, showing resistance to unpredictable events and destructive phenomena (adversity, failures, crises, shocks) is disclosed. A conceptual vision of management in the context of sustainable development has been formed, taking into account the prospects and challenges. A model of an integrated eco-social management has been proposed in the form of a balanced set of supplementing areas of application of ESG (investment and business financing, corporate social responsibility, risk management, ensuring resilience), the complementary implementation of which ensures the achievement of synergistic effects on the way to sustainable inclusive development.

Corporate Governance and Financial Performance in Saudi Arabian Listed Companies: A Integrative Literature Review

This research investigates the effect of corporate governance factors, including board size and multiple directorships, on firms' financial performance. Utilizing agency and stakeholder theories as its basis for analysis, this investigation seeks to understand board size's effect on decision-making efficiency as well as organizational efficiency. Additionally, this study investigates how interlocked directorships affect firm performance. Studies examining existing literature reveal mixed findings regarding the correlation between board size and financial performance, with some studies finding positive effects while others showing adverse results. Furthermore, the busyness hypothesis states that multiple directorships may hinder firm performance due to reduced management supervision and higher agency costs. This paper contributes significantly towards the understanding of corporate governance's influence on firm performance by offering insight into this complex relationship while serving as a basis for further study in this area.

Analisis Tingkat Kesehatan Bank Menggunakan Metode RBBR di Bank Tabungan Negara Syariah

This study aims to find out the health level of PT Panin Dubai Syariah Bank for the period 2017-2021 using the RGEC method. The valuation factors used are Risk Profile, Good Corporate Governance, Earning and Capital factors. The object of this research is the financial statements of research used is quantitative with a descriptive approach. The type of data used in this study is secondary data. The results showed that the health level of PT Panin Dubai Syariah Bank based on Risk Profile factors gets a healthy predicate, Good Corporate Governance gets a healthy predicate, Earning gets a unhealthy predicate and Capital gets a very healthy predicate.

The Impact of Corporate Governance Factors and the COVID-19 Pandemic on the Publishing Date of Annual Reports of UK Listed Companies

The aim of the current study is to examine the role of corporate governance structure and the COVID-19 pandemic on the issuing date of annual reporting of UK non-financial institutions. The corporate governance factors that were examined are: audit committee; board characteristics; ownership structure. To achieve the study objective, the sample’s data was collected from the financial reporting of companies listed on the London Stock Exchange during the period 2008 to 2021. To examine the effect of COVID -19, the sample was spilt into two groups: before and after 2019. The data collected was analysed by using the panel regression random effect method; the issuing date of annual reporting was measured by counting the number of days that passed between year-end and the date of the issuing of financial reports. The study’s findings show that there is a significant relationship between board size, independency of board, audit independence, audit experience, and the issuing date of annual reports. Moreover, after splitting the study’s sample, the empirical results supported that the COVID -19 pandemic has a negative effect on the corporate governance mechanisms that enhance the issuing date of annual reports. The study extends prior studies with evidence that demonstrates a relationship between issuing date (timeliness) of annual reports and the strength of corporate governance during the COVID-19 pandemic, and consequently, these findings confirm that corporate governance factors and auditing process enhance annual reporting quality.

Relationship between Corporate Governance Dimensions and Financial Performance of Listed Insurance Companies in Muscat Securities Market, Sultanate of Oman

This study aims at determining the factors of corporate governance that impact financial performance. It uses a panel analysis approach that considers data from 2004 to 2018 of the insurance companies in Muscat, Oman. Out of the 10 insurance companies listed in Muscat Securities Market, four companies were chosen based on pre-established criteria considering the availability of data for the period indicated. To analyze the data gathered, descriptive analysis techniques using SPSS version 21 and Stata version 14 were applied. Based on the findings, board size affects ROA positively but negatively on ROE; FBM affects ROE positively but negatively affects ROA; BI has a negative influence on both ROA and ROE; and, AC affects ROA positively but negatively on ROE.
 Conversely, audit committee size positively impacts ROA and the independence and impartiality is a must to be a member of the audit committee. Conclusion from the findings suggests that the increasing number of the members of audit committee contributes positive signs for ROA which can be supported by many studies. Findings proved the significant positive relationship between audit committee size and independence on a firm’s financial performance. For organizations such as insurance companies, the frequency of board meetings can be determining factor to decide in terms of profitability issues and business performance. Finally, the results provide the management to examine the implications of deciding how many members of the board, frequency of board meetings, board independence, and audit committee as these can influence financial performance such as ROA and ROE.

Customer Orientation and Financial Performance: Women in Top Management Teams Matter!

Using a longitudinal analysis of publicly traded Fortune 500 firms, the authors find support for their hypotheses that a relative increase in female influence in the top management team (FITMT) is positively associated with (1) customer orientation of the firm and (2) long-term financial performance (i.e., Tobin's q). They demonstrate that customer orientation partially mediates the relationship between FITMT and long-term financial performance. The authors also explore environmental and corporate governance factors that moderate the link between FITMT and customer orientation. They find that this link is attenuated for firms that operate under high environmental dynamism and low environmental discretion, and for firms with high family ownership. Having high female representation among board members and more marketing-experienced board members strengthens the link between FITMT and customer orientation. These findings have important implications for scholars, boards, chief executive officers, and investors interested in identifying environmental and corporate governance factors that facilitate a greater focus on customers at the highest levels of the firm.

Corporate Governance and Foreign Ownership in the Islamic Capital Market of Kuwait

This paper aims to explain the corporate governance factors of foreign ownership in the Islamic capital market in Kuwait. A triangulated lens of agency, stewardship, and resource dependence is used to collect data from 58 listed firms on Boursa Kuwait. The findings suggest that board size; risk management; Chief Executive Officer (CEO) duality; environmental, social, and governance (ESG) practices; and debt to equity are significant determinants of attracting foreign capital. Board independence, firm size, and return on assets are significant factors, though there are narratives to the contrary in the literature. These results are important as the Kuwaiti market has demonstrated evidence for unifying the three theoretical perspectives of resource dependence (board size, risk management), agency (CEO duality), and stewardship (ESG practices and capital structure). This unification will contribute to further development of the corporate governance theory and policy in the future in terms of inclusion and exclusion of corporate governance frameworks.

Impact of Corporate Governance Factors on the Profitability of Banks: A study on Indian public sector banks

The paper aims to look at the impact of corporate governance parameters on the financial performance of the banks. The variables considered for the quantitative analysis are the female directors, the chairman changed, the total remuneration, the total committees, the cost to income ratio, the non-performing assets ratio, and the provision coverage ratio. The performance of the banks is explained by the return on equity (ROE) and the return on assets (ROA). The descriptive statistics and fixed effects estimation model are considered for the quantitative analysis of the panel data. The sample consists of data from eighteen public sector banks during five years ranging from 2014-2015 to 2018-2019 when the banks were in the limelight for various discomforting reasons. The results of the study indicate that the variable the total remuneration showed a significantly positive impact on the performance of the banks. In contrast, the chairman changed, the total committees, the cost to income ratio, the gross non-performing assets ratio, and the provision coverage ratio displayed a significantly negative impact on the performance of the banks. The study is a preliminary attempt and can be considered as a basis for future research.

Corporate Social Responsibility and Sustainability: From a Corporate Governance Perspective

Sustainable corporate development has become essential for many enterprises in the context of economic globalization and fierce technological competition. In fact, it is being tackled at a strategic level by most companies. The fulfillment of corporate social responsibility (CSR) is significant in building a corporate image, improving brand competitiveness, and promoting sustainable corporate development. Simultaneously, the level of corporate governance is a crucial factor in an enterprise’s long-term development. Therefore, this study clarifies whether CSR has a positive impact on the sustainable development of enterprises through empirical analysis; it also analyzes the effects of internal governance factors on the relationship between the two, from the perspective of corporate governance. A fixed-effects regression analysis was conducted on a sample of Chinese A-share listed companies from 2015 to 2019. According to the results, active CSR can promote sustainable development. Furthermore, corporate governance factors such as internal control, management capabilities, and accounting information quality have a moderating role in the CSR process on sustainable corporate development. This study provides a theoretical basis for future research on CSR and sustainable development, and its findings can inspire governments and enterprises from the perspective of corporate governance.

An Analysis of Environmental, Social, and Corporate Governance (ESG) Ratings of Lean Versus Non-Lean Companies

Lean manufacturing is a business philosophy concerned with continually eliminating waste from business processes while producing quality products with greater efficiency. In addition to profits, organizations worldwide are beginning to focus on environmental, social, and corporate-governance (ESG) factors because of the changing global environment. The Environmental Protection Agency has specifically stated that many organizations have found that implementing lean manufacturing concepts and tools results in improvements in environmental performance. This study uses a matched-pairs design, matching lean companies with non-lean companies, and assesses whether lean companies experienced better Sustainalytics ESG risk ratings than non-lean companies. Results show that lean companies achieved more favorable ratings in environmental, social, and corporate-governance factors than did non-lean companies.

The Impact of Board Capabilities on Firm Financial Performance: A Resource-Based View Perspective

The study aims to examine the effect of board capabilities (board composition, board gender diversity and board independence) on firm financial performance in Malaysian public listed companies based on the Resource-Based View Theory (RBVT). The board capabilities are crucial for the investors to create a better organisational performance. The study also used regression analysis to determine the relationships between the variables. The data were extracted from Thomson EikonTM DataStream and annual reports of companies listed under Bursa Malaysia, comprising five years’ worth of information. The results demonstrated a significant impact of board capabilities on firm financial performance. Specifically, board composition and board gender diversity significantly affected firm financial performance. Conversely, board independence and firm financial performance presented no significant impact. Ultimately, the study outlines the essential factors that impact firm financial performance to restore public confidence towards the companies. Hence, the corporate governance factors should be emphasised to protect investors’ interests.

The impact of ESG-factors on financial stability

An increasing attention has been riveted recently on so called ESGfactors impacting financial stability. This paper provides a systematic review of the empirical studies which assess the impact of environmental (climatic), social factors as well as various aspects related to corporate governance on financial stability. Overall, higher ESG-rankings, both aggregate and in terms of the three pillars (E, S, G), tend to enhance the financial system stability from the microand macroprudential perspective by mitigating aggregate individual risk of financial institutions and the contribution to systemic risk, respectively. Nonetheless, the research intensity within the ESG pillars differs substantially. There are significantly more studies investigating the impact of environmental and corporate governance factors then tackling the effects of social ones. This literature review is closed with the discussion of possible directions for future investigation in the given research program.

Analysis of the Health of Islamic Banking in Indonesia

This study aims to determine the soundness of Islamic Commercial Banks using the measurement method regulated in Bank Indonesia Regulation PBI No.13/1/PBI/2011, concerning Assessment of Bank Soundness Levels using the RGEC method. The assessment factors in the RGEC method are the risk profile factor (bank risk), the Good Corporate Governance (GCG) factor, the earnings factor (profitability) and the capital factor (capital). The object of this research isFinancial Statements of Bank Muamalat Indonesia and Bank BJB Syariah from 2015 to 2018. The analysis technique in this study is quantitative descriptive by calculating financial ratios using the RGEC method. The results of this study indicate that Bank Muamalat and Bank BJB Syariah, show the period from 2015 to 2018 in the fairly healthy category.

Corporate Governance Mechanisms and Dividend Payouts of Listed Non-Financial Firms: Evidence from Selected Sub-Saharan African Countries

This study examined the effects of corporate governance elements on the dividend distribution of listed corporations in the three Sub-Saharan African countries of South Africa, Nigeria, and Kenya. The inquiry used inferential statistics in the form of the system generalized method of moments (GMM). The findings show that corporate governance factors have a fundamental influence on dividend distribution in the three Sub-Saharan African countries. More specifically, board independence has a significant negative influence on dividend payout, but board size, board gender diversity, and management ownership all directly and materially affect the dividend payout of listed non-financial firms. The paper suggested that authorities in charge of regulation in the examined Sub-Sahara Africa nation’s securities exchange have to continually ensure that all firms comply stringently with the codes of corporate governance in other to limit market infractions and boost stakeholders’ confidence and thus stimulate more investment in their respective capital markets.

Expansionary Fiscal Policy, Corporate Governance and Corporate Value

Among expansionary fiscal policy, corporate governance and corporate value, fiscal policy plays a unique influencing factor in the social organization as well as internal structure of countries with different levels of economic development. Such as the nature of different equity and governance characteristics, macro policy efficiency for firms and fiscal deficits. To measure the combined impact of fiscal policy expansion on corporate value, the governance structure of a firm is inextricably linked to the value of the firm itself if it is to be effective. The value of the company is reflected in the nature of equity and the management structure of the management. It is found that the higher the degree of fiscal policy expansion in the region to which the company belongs, the higher the value of the company itself. In terms of the marginal effect of fiscal policy, non-state owned companies are significantly stronger than state owned companies. State-owned enterprises are relatively weak and deficient in the efficiency of using funds to create valuable. Thus, analyzing the moderating role of corporate governance factors, it is clearly known that corporate management and corporate equity checks and balances can better ensure that companies can efficiently accomplish fiscal policy and create a reasonable value system.