Corporate Governance Factors Research Articles

Transformational leadership, ESG performance, corporate reputation and competitive advantage: a serial mediation model

PurposeGiven the competitiveness of the business environment globally, environmental, social and governance (ESG), which represents a sustainable development framework that integrates environmental, social and corporate governance factors, has become an increasingly recognized concept in emerging markets. In the case of Ghana, its implementation is influenced by several factors, including leadership.Design/methodology/approachDrawing on the resource-based view theory, higher-order theory and stakeholder theory, we developed and evaluated a serial mediation model to explain how ESG performance and corporate reputation can connect transformational leadership to enhance competitive advantage. Utilizing the Process Macro model 6 in SPSS, data were collected from 340 senior managers/executives and middle-level managers from European multinational firms operating in Ghana.FindingsThe results indicate that transformational leadership positively affects ESG performance. Enhanced ESG performance, in turn, leads to improved corporate reputation, which subsequently results in a stronger competitive advantage.Research limitations/implicationsThis study is limited to European multinational firms operating in Ghana, which may restrict the generalizability of the findings to other contexts or regions.Practical implicationsThe findings suggest that organizations aiming to strengthen their competitive advantage should prioritize transformational leadership practices that foster ESG initiatives, as these are critical drivers of corporate reputation and market positioning.Originality/valueThis study provides new insights into the interwovenness between ESG performance and leadership in enhancing corporate reputation and competitive advantage within the context of emerging markets.

How the ESG practices increase the job satisfaction?

Purpose This study aims to investigate the impact of environmental, social and corporate governance (ESG) factors on job satisfaction within the context of small and medium-sized enterprises (SMEs), addressing a notable gap in understanding these relationships. Design/methodology/approach Data were collected from 97 full-time and part-time employees using a tailored survey instrument. Control variables included demographic factors, such as gender, age, marital status and hierarchical position. The study postulated four moderation hypotheses, conducted rigorous significance tests and demonstrated strong model reliability and validity, along with highly satisfactory fit parameters. Findings The findings confirm a positive association between the E, S and G factors and job satisfaction perceptions. Marital status was identified as a moderator in the relationship between social dimensions and job satisfaction. In addition, the multigroup analysis revealed variations in the associations between ESG dimensions and job satisfaction across different age groups, marital statuses and hierarchical positions. Originality/value The main contribution of this research lies in filling a significant gap in the understanding of how sociodemographic variables influence the relationship between employees and socially responsible behavior in SMEs.

Financial challenges in Portuguese hospitals: debt influences

PurposeThis study aims to understand how specific variables of companies, corporate governance and macroeconomic factors influence the indebtedness of Portuguese hospitals, a key sector in the economy.Design/methodology/approachTo test the hypotheses, data from 256 Portuguese hospitals were used, in the period between 2015 and 2021. The models were estimated using the panel data methodology, specifically using the estimation method generalized method of moments (GMM) system, from Arellano and Bover (1995) and Blundell and Bond (1998).FindingsUsing three measures of indebtedness to assess whether the determinants vary according to debt maturity, the results show differences in the sign and significance of the variables determining total indebtedness across short, medium and long-term debt.Originality/valueThis article appears to be original and significant as it provides detailed awareness of debt levels and their management, particularly in the context of ongoing debates about Portugal’s national health system.

The Effect of Women’s Role on Board, ESG Performance, and Tax Avoidance

This research examines the impact of board gender diversity on tax avoidance, with ESG performance as an intervening variable. Using 87 non-financial companies listed on the Indonesia Stock Exchange (IDX) with ESG scores from Thomson-Reuters ASSET4 during the 2017-2019 period, the study reveals that board gender diversity significantly influences tax avoidance, indicating that diversity does not improve tax compliance. The male-dominated boards in Indonesia limit the effectiveness of monitoring corporate activities, including tax avoidance. Additionally, gender diversity negatively affects ESG performance, suggesting that the small number of women on boards diminishes efforts to enhance sustainability. ESG performance does not mediate the relationship between gender diversity and tax avoidance, though it can reduce tax avoidance when transparency in ESG reporting is increased. Limitations include a small sample size and data restricted to the 2017-2019. Future studies could explore alternative tax avoidance measures and other corporate governance factors.

Environmental, Social and Corporate Governance (ESG) and Total Factor Productivity: The Mediating Role of Financing Constraints and R&D Investment

Environmental, Social and Corporate Governance (ESG) and Total Factor Productivity: The Mediating Role of Financing Constraints and R&D Investment

Innovating for sustainability in food and beverage companies: the role of governance and environmental factors in climate change mitigation

PurposeFocusing on the food and beverage (F&B) sectors, this study aims to identify combinations of external environmental factors (natural disasters and water stress) and internal corporate governance factors (corporate social responsibility [CSR] sustainability committee, board gender diversity and stakeholder engagement) that lead to the integration of climate change mitigation innovation and technologies.Design/methodology/approachA fuzzy set qualitative comparative analysis (fsQCA) was conducted on a global sample of 262 listed companies in the F&B sectors. Two additional analyses were performed for European and Asian companies.FindingsIn the three models, the presence of CSR sustainability committees and stakeholder engagement was crucial for achieving the integration of climate change mitigation innovation and technologies. The relevance of board gender diversity differs between the European and Asian models, highlighting potential regional influences on corporate climate innovation decisions. The combination of external and internal factors is the key to justifying different approaches to achieving climate innovation.Originality/valueThis study offers insights into the factors driving the integration of climate change mitigation innovation and technologies into company strategies. Related strategies must combine external and internal factors to enhance the climate resilience and competitiveness of F&B companies while reducing their environmental impact.

Moderating Role of Corporate Governance on the Effect of Innovation Investment to the Financial Performance among Publicly-listed Software Outsourcing Companies in China

This study examines the relationship between innovation investment, corporate governance, and financial performance among publicly listed software outsourcing companies in China. Utilizing a mixed methods approach, the research integrates quantitative analysis of financial and governance data with qualitative insights from structured interviews with Chief Financial Officers (CFOs). The study explores how various corporate governance factors, such as board size, independence, meeting frequency, CEO duality, and compensation, influence the effectiveness of innovation investments in enhancing company performance. Findings indicate that while there is a positive correlation between innovation investment and financial performance, the relationship is not statistically significant. Moreover, corporate governance factors, except for board size, do not significantly moderate this relationship. The results suggest that aligning innovation strategies with strong corporate governance practices is essential but not sufficient to ensure enhanced financial outcomes. The study's findings have practical implications for industry practitioners, policymakers, and investors, emphasizing the need for optimized governance structures to support sustainable growth in the software outsourcing sector. However, limitations regarding data reliance, sample size, and sectoral focus are acknowledged, with recommendations for future research to address these constraints and explore additional variables influencing the innovation-performance link.

The Role of Corporate Governance in Firm’s Exporting Decision: Case Study from the Textile Sector in Pakistan

The aim of the current study is to determine the relationship between the factors of corporate governance and the firm exporting decision. In this study, board size, board independence, managerial ownership, institutional ownership, family ownership, and board meetings were considered factors of corporate governance. Data was collected from a sample of the textile weaving sector through purposive sampling, which consists of 11 textile sectors that were listed on the Pakistan Stock Exchange for the period of 2015 to 2020. The results of the regression analysis showed that board meetings and board independence had a positive relationship with the firm's exporting decision, meaning that both variables positively enhance the firm's exporting decision. Board size, managerial ownership, institutional ownership, board meetings, and family ownership had a negative relationship with the exporting decision of the firms, meaning that these variables have a negative influence on the firm exporting decision.

Tác động của quản trị công ty và thu nhập phi tín dụng đến hiệu quả tài chính của các ngân hàng thương mại Việt Nam

The roles of non-interest income and corporate governance on bank operations in the literature have not been a cooperative explanation. Therefore, the paper determines corporate governance and non interest income on the Vietnamese banks' financial performance from 2011 to 2021. SYS-GMM demonstrates that non-interest income, fees, and other income enriches Vietnamese commercial bank’s financial performance. Regarding bank corporate governance, the board size, CEO ownership, state ownership, and foreign ownership negatively impact ROA and ROE. Conversely, the number of female boards, board ownership, and board compositions enhances the banks' financial performance. The interesting judgment is the corporate governance factors will lessen the intensity of the effect of noninterest income and its components on the banks’ financial performance. The paper proposed some implications for optimizing corporate governance (board characteristics and ownership structure) and increasing non-interest income to improve Vietnamese commercial banks’ financial performance.

Fostering Investment Efficiency in Indonesian Firms: Empirical Evidence and Recommendations for Future Research

Objective –The purpose of this research is to review and examine the empirical evidence on investment efficiency in Indonesia.Design/methodology –This research employs bibliographic analysis. This research utilizes 30 articles published between 2015 and 2023 in internationally recognized Scopus journals and nationally recognized Sinta 2 journals.Results –This research identifies three categories of factors that impact investment efficiency namely financial, governance, and non-financial factors. Financial factors are essential in assessing investment effectiveness, while corporate governance factors can enhance a firm's investment decisions. Non-financial factors related to managerial personnel can also significantly impact a firm's investment efficiency. Future research on investment efficiency in Indonesia should incorporate diverse variables and external factors, conduct comparative studies with neighboring countries, and collaborate with industry stakeholders to bridge the gap between theory and practice.Research limitations/implications –This research focuses primarily on analyzing the literature on investment efficiency in Indonesia by using charting the field method. This research adds to the literature on the various factors that affect the investment efficiency of firms.Novelty/Originality –This research is the first to conduct a comprehensive literature review on investment efficiency in Indonesia. By systematically analyzing findings from various studies, this research offers a unique and thorough understanding of investment efficiency within the Indonesian context.

Corporate governance dynamics in financial institution performance: A panel data analysis

The study aims to identify the effect of corporate governance factors on financial institution performance in Bangladesh. This study employs annual data for 20 financial institutions, including banks, NBFIs, and insurance companies, data is collected from 2011 to 2022. Here, three corporate governance indicators are utilized – board size, board independence, and director’s ownership. The performance of the financial institutions is measured using return on assets (ROA), return on equity (ROE), and net asset value (NAV). Apart from the corporate governance variables, three company-specific factors, i.e., firm age, financial leverage, and firm size, are used as the control variables. Panel data analysis is conducted through the dynamic Feasible Generalize Least Square (FGLS) method, and the robustness is performed using the random effect model. The results show that corporate governance parameter such as board size has a significant positive influence on financial institution performance in Bangladesh, where board independence and director ownership do not have a significant influence on the performance of financial institutions. Thus, the performance of financial institutions increases when board size increases. This indicates that board members are actively engaged in strategic decision-making and ensure the rights of all stakeholders, which helps improve financial institutions’ overall performance. Therefore, financial institutions may increase their board size to the maximum level to ensure better corporate governance practices in the organizations, which ultimately increases performance.

The impact of board capital on open innovation with the moderating effect of executive equity incentives

As a predominant global innovation paradigm, open innovation constitutes a pivotal means of enhancing firms’ innovation performance. Scholars and practitioners are increasingly concerned about strategies to strengthen open innovation, but previous research has overlooked corporate governance factors. This study empirically investigates the impact of board capital on corporate open innovation using data from Chinese listed firms (1999–2009) within the resource dependence and upper echelons theory framework, employing the fixed effects model for panel data and the hierarchical regression method. Findings reveal that the breadth and depth of board capital positively affect the breadth of open innovation, though not significantly the depth. Additionally, executive equity incentives enhance the relationship between board capital and open innovation breadth. Robustness checks support these findings. Notably, board capital’s impact is more pronounced in large enterprises and high-technology industries. This study offers practical insights for firms to prioritize board capital considerations in fostering open innovation initiatives.

Corporate governance impact on risk disclosure in Shariah-compliant financial firms of Kuwait

Purpose This study aims to investigate the relationship between corporate governance characteristics and risk disclosure in Shariah-compliant financial firms operating in Kuwait. It aims to provide insights into the factors influencing risk disclosure practices within these institutions. Design/methodology/approach The research used manual content analysis to quantify risk disclosure levels in the annual reports of 47 Shariah-compliant financial companies listed in Kuwait in 2020. Subsequently, multiple regression analysis was conducted to assess the impact of various corporate governance factors on the extent of risk disclosure. Findings The study reveals that while Kuwaiti Shariah-compliant firms exhibit limited risk disclosure in their annual reports, larger boards and committees, along with a higher number of independent directors, positively influence the level of risk disclosure. Interestingly, the size of the Shariah supervisory boards did not show a significant impact on risk disclosure practices. Practical implications These findings hold regulatory implications for Kuwait, highlighting the need to ensure information adequacy and promote market efficiency. Additionally, they offer practical insights for managers and investors seeking to optimize fund sourcing and diversify investment portfolios within the context of Shariah-compliant financial institutions. Originality/value This study contributes to the existing literature by providing empirical evidence on the relationship between corporate governance characteristics and risk disclosure in the specific context of Shariah-compliant financial firms operating in Kuwait. Furthermore, it identifies avenues for future research to delve into the influence of additional governance factors on risk disclosure practices within this unique financial landscape.

Analisis Tingkat Kesehatan Bank Nagari Syariah Menggunakan Metode RGEC

The purpose of this study was to measure the health level of Bank Nagari Syariah using the RGEC method. The research method used is descriptive quantitative method. The data collection technique used is documentation. The data analysis technique uses ratio analysis contained in the assessment of the bank's health level using the RGEC method. The results showed that the health level of Bank Nagari Syariah in 2017-2022 was in a good rating. In 2017-2018, the Financing to Debt Ratio was in an unhealthy state. But in 2019-2022 the bank has been able to improve its performance. The Net Performing Financing ratio is in a healthy state from year to year. The profitability factor shows that the bank is able to make a profit from its operational activities. Operating Expenses to Operating Income are categorized as healthy. The Good Corporate Governance factor shows that the implementation of the bank's operational structures and processes is in accordance with the regulations set by the OJK. The Capital factor is calculated by the Capital Adequacy Ratio and is in a very healthy state. The health level of Bank Nagari Syariah is in a healthy position.

The role of auditing in corporate governance practice in emerging economies: insights from South African state-owned enterprises (SOEs)

PurposeWithin the context of public sector accountability, the purpose of this paper is to examine South African state-owned enterprises (SOEs) auditing practices and how they have contributed to mitigating prevalent corporate governance issues in South African SOEs.Design/methodology/approachThis paper utilised a thematic content analysis of archival documents relating to South African SOEs. Firstly, to assess the extent to which the auditing dimension of the corporate governance codes, applicable to South African SOEs, conforms with best practices. Secondly, to determine the extent to which the audit practices of all the 21 South African SOEs listed in Schedule 2 of the Public Finance Management Act, have implemented the identified best audit practices.FindingsThe findings suggest that South African SOEs appear to have adopted and implemented best audit practices to enhance the quality of their accountability in relation to their corporate governance practices, as contained in their applicable corporate governance frameworks. However, despite the high levels of conformance, the observation that most South African SOEs continue to fail and require government bailouts, appears to suggest that auditing has no bearing on poor SOE performance, and that other corporate governance factors may be at play.Practical implicationsThe discussion and findings in this paper suggest that the auditing practices of South African SOEs are adequate. However, that SOEs in South Africa continue to be loss-making may imply that this has contributed little to mitigating their corporate governance problems. Thus, policymakers and standard setters, including the Institute of Directors South Africa and relevant oversight bodies should pay attention to better developing means by which to curtail fruitless and wasteful expenditures by South African SOEs through improved corporate governance practices.Social implicationsMost SOEs’ mission statements encourage SOEs to be socially responsible and utilise taxpayers’ monies efficiently and effectively without engaging in fruitless and wasteful expenditure. This study is conceived in this light.Originality/valueTo the best of the author’s knowledge, while acknowledging previous studies, this paper is the first to explore this topic in the context of SOEs and in the context of Africa.

The Influence of Good Corporate Governance on Firm Value with Financial Performance as a Moderation

This study investigates the direct and moderating effects of various corporate governance factors on firm value. The direct effect analysis reveals that financial performance alone does not significantly influence firm value, whereas the roles of independent commissioners and independent directors are crucial, significantly enhancing firm value through improved governance and oversight capabilities. Conversely, the direct impact of independent audits on firm value is found to be non-significant, suggesting their influence is more indirect, supporting a trustworthy financial environment. The moderating effect analysis underscores the importance of corporate governance in leveraging financial performance to enhance firm value. Independent commissioners, directors, and audits all have significant moderating effects, enhancing the positive relationship between financial performance and firm value. Independent commissioners and directors ensure effective utilization of financial gains and risk mitigation, while independent audits ensure the reliability and transparency of financial reporting, building investor trust and confidence. Combining insights from both analyses, the study concludes that effective corporate governance is paramount in maximizing firm value. Strong governance structures, including the inclusion of independent commissioners, directors, and auditors, not only directly enhance firm value but also amplify the positive effects of financial performance. This study emphasizes the need for stakeholders and policymakers to prioritize strengthening corporate governance frameworks to achieve sustainable value creation.

Capital structure in Latin America: institutional and macroeconomic effects

PropósitoEste estudio analiza la influencia de los factores institucionales y macroeconómicos, además de los factores a nivel de empresa, en la estructura de capital de las empresas industriales cotizadas latinoamericanas (LATAM). El objetivo es proporcionar evidencia empírica sobre las empresas latinoamericanas desde (1) la perspectiva de las teorías tradicionales trade-off y pecking order, y (2) desde los enfoques que introducen el impacto de los factores institucionales y macroeconómicos en el análisis.Diseño/metodología/enfoqueEl análisis empírico adopta una metodología econométrica, utilizando datos de panel de empresas de Argentina, Brasil, Chile, Colombia, México y Perú, de 2008 a 2018.HallazgosLos resultados indican que, además de las características a nivel de empresa, las características institucionales y macroeconómicas de los países influyen en la estructura de capital de las empresas latinoamericanas.Limitaciones/implicaciones de la investigaciónEl estudio presenta algunas limitaciones, principalmente se centra en empresas cotizadas provenientes de solo seis países de LATAM, debido a la falta de datos. Sería recomendable realizar estudios similares con factores de gobierno corporativo, con empresas familiares y PYMES.Implicaciones prácticasLos resultados pueden servir de referencia para los agentes económicos y profesionales, animándolos a considerar la evolución de las variables institucionales y macroeconómicas a la hora de tomar decisiones. Académicamente, nuestros hallazgos verifican la validez de las teorías convencionales y la relevancia de incorporar variables institucionales externas en el marco de la estructura de capital.Originalidad/valorLa importancia de esta investigación radica en analizar la estructura de capital de empresas en un área geográfica poco explorada, LATAM, incluyendo factores institucionales y macroeconómicos y utilizando la nueva base de datos Orbis.

IMPACT OF CORPORATE GOVERNANCE ON INTELLECTUAL CAPITAL EFFCIENCY - EVIDENCE FROM SRI LANKAN BANKING SECTOR

The study explores the intricate link between Corporate Governance (CG) factors and Intellectual Capital (IC) efficiency within the Sri Lankan banking sector. It delves into the impact of variables such as Board Size (BSIZE), Board Activity (BACT), Board Independence Composition (BIND), Audit Committee Size (AUDS), and Frequency of Audit Committee Meeting (AUDM) on Intellectual Capital, treating the latter as the dependent variable. For the five years between 2018 and 2022, the research technique comprises a thorough investigation of banking sector company in Sri Lanka, excluding three banks. The goal of the study is to obtain understanding of the connection between CG variables and IC efficiency through secondary data analysis using data from stock market transactions and audited financial statements. The main analytical tools are descriptive statistics and regression modeling, which enable a detailed comprehension of the relationship between CG dynamics and IC efficiency. Through a detailed examination of these variables across time and across different financial institutions, the study seeks to illuminate the ways in which CG practices impact the creation and application of IC in the banking industry. In the conclusion, the results of this study are important not only for scholars but also for professionals and decision-makers in the banking sector in Sri Lanka. The study provides significant insights that can guide strategic decision-making, governance reforms, and resource allocation within banking institutions, ultimately leading to improved organizational efficiency and long-term sustainability. This is achieved by revealing the complex relationships between Corporate Governance and Intellectual Capital.

A Comprehensive Study on the Influence of Corporate Governance Factors on Financial Performance of Listed Banking Companies in Bangladesh

This comprehensive study investigates the influence of organizational management elements on the economic outcomes of publicly traded banking enterprises in Bangladesh. The research begins with an introduction highlighting the significance of this study Within the framework of the Bangladeshi Financial industry. The review of literature delves into existing research on Effective management of organizations and their economic achievements, providing a foundation for this study. It identifies gaps and emphasizes the need for specific analysis in the Bangladeshi banking industry. An abbreviated summary of corporate oversight principles and practices sets the stage for understanding the study’s framework. Subsequently, the analysis of the financial industry in Bangladesh offers essential context for the study. The examination and results portion showcases factual information and outcomes, demonstrating the correlation between corporate governance elements and economic efficiency in banks listed in Bangladesh. Here we use five years data of five banks and then we use SPSS as a statistical tool for data analysis. The conclusion synthesizes these findings, highlighting key takeaways and their implications for the sector. Finally, the study concludes by discussing policy implications. It outlines recommendations for regulatory bodies and banking institutions to enhance the financial performance of banks in Bangladesh by implementing effective corporate governance strategies and practices. This study intends to provide valuable perspectives for stakeholders and decision-makers in the banking industry.

Boardroom dynamics: the impact of board gender diversity on discretionary dividend policy in US REITs

Purpose This study aims to address a notable gap in the existing literature by exploring the relationship between gender diversity and dividend policy within the context of US Real Estate Investment Trusts (REITs). Design/methodology/approach The authors use a substantial data set comprising 1,398 firm-year observations across 209 US REIT companies from 2011 to 2021 to address the research aims. Fixed effects models and generalized least squares regression methods are used in the analysis. Findings The results demonstrate a significant positive association between board gender diversity and higher dividend payouts among US REITs. This relationship holds after controlling for corporate governance and other firm-level factors. The findings have strong implications that the presence of women on REIT boards contributes to a greater propensity for discretionary dividend increases in the USA. Originality/value This research contributes to the literature by empirically examining female directors’ role in influencing US REITs’ dividend policies, an area lacking adequate prior scholarship. The paper also considers the unique regulatory environment of REITs, highlighting the importance of the study for externally financed firms.