Corporate Governance Guidelines Research Articles

Regulatory influence, board characteristics and climate change disclosures: evidence from environmentally sensitive firms in developing economy context

Purpose This study aims to examine the impact of board characteristics on climate change disclosures (CCDs) in the context of an emerging economy, with a unique focus on regulatory influences. Design/methodology/approach This study analyzes longitudinal data (2014–2021) from environmentally sensitive firms listed on the Dhaka Stock Exchange, using a disclosure index developed within the Global Reporting Initiative framework. The authors use a neo-institutional theoretical lens to explore regulatory influences on CCD through board characteristics. This study uses hand-collected data from annual reports owing to the absence of an established database. Findings The results indicate that a larger board size, the presence of foreign directors and the existence of an audit committee correlate with higher levels of CCD disclosure. Conversely, a higher frequency of board meetings is associated with lower CCD disclosure levels. This study also observed an increase in CCD following the implementation of corporate governance guidelines by the Bangladesh Securities and Exchange Commission, albeit with a relatively low number of firms making these disclosures. Research limitations/implications This study contributes to the climate change reporting literature by providing empirical evidence of regulatory influences on CCD through board characteristics in an emerging economy. However, the findings may not be universally applicable, considering the study’s focus on Bangladeshi listed firms. Practical implications This study suggests growing pressures for diverse stakeholders, including researchers and regulatory bodies, to integrate climate change disclosure into routine activities. This study offers a valuable framework and insights for various stakeholders. Social implications By emphasizing the influence of good governance and sustainability practices, this study contributes to stakeholders’ understanding, aiming to contribute to a better world. Originality/value This study stands out by uniquely positioning itself in the climate change reporting literature, shedding light on regulatory influences on CCD through board characteristics in the context of an emerging economy.

Influence of Authentic Leadership on Employee Innovation and Creativity in Technology Companies in Pakistan

Purpose: The aim of the study was to assess the influence of authentic leadership on employee innovation and creativity in technology companies in Pakistan.
 Methodology: This study adopted a desk methodology. A desk study research design is commonly known as secondary data collection. This is basically collecting data from existing resources preferably because of its low cost advantage as compared to a field research. Our current study looked into already published studies and reports as the data was easily accessed through online journals and libraries.
 Findings: The study explores the impact of authentic leadership on fostering innovation and creativity among employees within technology companies. Authentic leadership, characterized by transparency, ethical behavior, and genuine concern for employees, is found to significantly influence employee innovation and creativity. Leaders who exhibit authenticity create an environment of trust and psychological safety, encouraging employees to express new ideas and take risks without fear of retribution. Such leadership fosters a culture that values diverse perspectives and encourages experimentation, leading to increased innovation and creativity within the organization. Employees under authentic leaders feel empowered to think outside the box, collaborate effectively, and pursue novel solutions to complex problems. Consequently, technology companies benefit from enhanced adaptability, competitiveness, and long-term success as a result of nurturing authentic leadership practices within their organizational structure.
 Implications to Theory, Practice and Policy: Transformational leadership theory, social learning theory and self-determination theory may be use to anchor future studies on assessing the influence of authentic leadership on employee innovation and creativity in technology companies in Pakistan. Develop and implement leadership development programs that focus on cultivating authentic leadership qualities among managers and executives in technology companies. Advocate for the inclusion of authentic leadership principles in corporate governance guidelines and regulations.

Does Audit Committee Busyness Affect Financial Restatement? Evidence from Audit Committee Share Ownership

We examine the association between audit committee (AC) busyness and financial restatement and determine whether AC share ownership moderates this relationship. Using logit regression analysis, we test our hypotheses on a sample of 6408 firm‐year observations from 2004 to 2015 for companies listed on the Australian Securities Exchange. The study reveals that firms with busy ACs engage more in financial restatements. We also find that AC share ownership reduces financial restatements and attenuates the association between AC busyness and financial restatement. Our results are robust to endogeneity concerns emanating from firms’ deliberate decisions to grant shares to AC members. The findings of this research have several important policy implications. For instance, shareholders can benefit from AC members’ monitoring ability by allowing for share ownership. Further, our findings suggest that principles‐based corporate governance guidelines have a beneficial effect on financial reporting quality. While prior studies offer mixed evidence, our research contributes to the auditing literature by providing evidence that AC share ownership moderates the association between AC busyness and financial restatement.

AUDIT COMMITTEE CHARACTERISTICS AND FINANCIAL PERFORMANCE OF MANUFACTURING COMPANIES IN CAMEROON

This study examines audit committee characteristics and financial performance of manufacturing companies in Cameroon. The study adopted ex-post facto research design. The population consisted of the 133 manufacturing companies in Cameroon. A sample of 20 companies was used and data collected from secondary sources within the period 2013 to 2022. The data were analysed with the aid of a panel regression analysis. The results showed that audit committee size, expertise, and independence all positively affect financial performance proxy by return on assets, net profit margin and Tobins Q. the study recommends that manufacturing companies should make an effort to add an audit committee that is more educationally diverse and inclusive. This opens up the possibility of doing more risk assessments because audit committee members who are also knowledgeable in accounting have established precedents for better risk assessment and asset management for improved operational performance. Manufacturing firms should strictly abide by the corporate governance guidelines promoted regarding the number of audit committee members, as it has been demonstrated that the more members, the more effective resources in terms of independence and expertise to facilitate an effective audit function disposition for efficient business decisions that will favorably affect financial performance. In maintaining the required number of audit members, manufacturing businesses should always include an equal number of shareholders and managements representatives. This will lead to the formation of an unbiased audit committee that is fair and free from outside interference.

Gender diversity of directors and financial performance: is there a business case?

Purpose Do women contribute to performance of companies on which they serve as board of directors? Many prior studies examine this issue, but no consensus is reached on the benefits of women taking on leadership positions. The present study considers this thorny issue from a slightly different perspective. Does the association between gender diversity and business performance vary across sectors and economic cycles?Design/methodology/approach The sample for this study was derived from the firms included in the S&P Australian Securities Exchange (ASX) 300 Index, and the study period of 2004–2016 allowed authors to consider the effects of different sectors as well as different economic cycles on the relationship between gender diversity of boards and business performance. The authors consider the Australian context, which is somewhat unique from the other Western countries, as quotas on boards of directors are not made mandatory and the corporate governance practices are principle-based rather than rule-based.Findings Employing panel data models, at the aggregate level, the authors find no evidence of board gender diversity impacting business performance. Consideration of sectoral differences and economic cycles in the empirical analyses yielded additional insights. In particular, gender diversity has a beneficial association with performance for businesses in the services and financial sectors after the changes to corporate governance guidelines relating to diversity in 2010. These economic benefits, however, are not evidenced in the resources sector.Research limitations/implications These findings offer support for critical mass and resource dependence theories.Practical implications The findings of this study have implications for inclusion and diversity policies of businesses and the society. Specifically, the findings offer support for gender diversity of corporate boards of directors.Originality/value This study highlights that women bring their unique skills and experiences to create economic value in sectors where they traditionally have more experience and opportunities.

Corporate Governance and Performance of Commercial Banks Listed at the Nairobi Securities Exchange, Kenya

This study examined the relationships among corporate governance, financial characteristics, macroeconomic variables and financial performance of banking firms listed at the Nairobi Securities Exchange. The specific objectives were to establish the effect of corporate governance on performance of listed commercial banks; to determine the intervening effect of financial characteristics on the relationship between corporate governance and financial performance of banking firms; to establish the moderating effect macroeconomic variables on the relationship between corporate governance and financial performance of listed commercial banks; and to determine the joint effect of corporate governance, financial characteristics and macroeconomic variables on financial performance of listed commercial banks. This study was anchored on, agency, stewardship, resource and wealth maximization theories and positivism philosophy. The study used census approach and targeted population of 11 listed banking firms between 2006 and 2020 was incorporated. The study used panel data extracted from annual reports of the individuals firms, while macroeconomic variables data were extracted from Central Bank of Kenya and Kenya National Bureau of Statistics economic reports. This study used longitudinal descriptive research design to determine relationships amongst independent, intervening, moderating and dependent variables. The study findings indicated that corporate governance, financial characteristics and macroeconomic variables were good predictors of listed commercial banks financial performance. Financial Leverage, Interest Rates and Inflation Rates had a significant effect on Return on Assets while Corporate Governance, Investments, Liquidity and Gross Domestic Product Growth Rate were found to have insignificant effect on Return on Assets. The findings also revealed that Financial Leverage, Inflation Rates and Gross Domestic Product Growth rate had a significant effect on Tobin’s Q of listed commercial banks in Kenya. The relationship between Corporate Governance, Investments, Liquidity and Interest Rates and Tobin’s Q was found to be insignificant. The study concluded that corporate governance, financial characteristics and macroeconomic variables affect financial performance commercial banks. Listed commercial banks therefore should adhere to corporate governance guidelines both from the Central Bank of Kenya and Capital Markets Authority of Kenya for continuous sound financial performance.

Corporate governance in Kuwait: joining the dots between regulatory reform, organisational change in boards and audit committees and firm market and accounting performance

PurposeThis study aims to examine the link between boards and audit committees and firm performance in Kuwaiti listed firms in the context of recent and extensive corporate governance regulatory reform.Design/methodology/approachPanel data regression analysis with fixed effects and clustered standard errors of firm performance for 61–97 listed industrial and services firms in Kuwait over a seven-year period. The dependent variables are the returns on assets and equity, the debt-to-equity ratio and leverage and Tobin’s Q and the independent variables comprise board of directors and audit committee characteristics, including size, the number of meetings and the numbers of independent and outside board and expert committee members. Firm size, subsidiary status and cash flow serve as control variables.FindingsMixed results with respect to the characteristics of the board of directors. Board size and independent and outsider board members positively relate only to Tobin’s Q and insiders only to debt to equity. For audit committee characteristics, committee size, independence and expertise positively relate to the return on equity and committee size and expertise only to Tobin’s Q. Of the five performance measures considered, board and audit committee characteristics together best determine Tobin’s Q.Research limitations/implicationsData from a single country limits generalisability and control variables necessarily limited in a developing market context. Need for qualitative insights into corporate governance reform as a complement to conventional quantitative analysis. In combining accounting and market information, Tobin’s Q appears best able to recognise the performance benefits of good corporate governance in terms of internal organisational change.Practical implicationsThe recent corporate governance code and guidelines reforms exert a mixed impact on firm performance, with audit committees, not boards, of most influence. But recent reforms implied most change to boards of directors. One suggestion is that non-market reform may have been unneeded given existing market pressure on listed firms and firms anticipating regulatory change.Social implicationsKuwait’s corporate governance reforms codified corporate governance practices already in place among many of its firms in pursuit of organisational legitimacy, and while invoking substantial change to audit committees, involved minor change to firm performance, at least in the short term. Some firms may also have delisted in expectation of stronger corporate governance requirements. Regardless, these direct and indirect processes both improved the overall quality of listed firm corporate governance and performance in Kuwait.Originality/valueSeminal analysis of corporate governance reforms in Kuwait, which have rapidly progressed from no corporate governance code and guidelines to an initially voluntary and then compulsory regime. Only known analysis to incorporate both board of directors and audit committee characteristics. Reveals studies of the corporate governance–firm performance relationship may face difficulty in model specification, and empirical significance, given the complexity of corporate governance codes and guidelines, leads in changing firm behaviour and self-selection of firms into and out of regulated markets.

Shariah supervision and corporate governance effects on Islamic banks’ performance: evidence from the GCC countries

PurposeThis study aims to analyze the impact of Shariah supervision and corporate governance (CG) variables on the performance of Islamic banks (IBs) in Gulf Cooperation Council (GCC) countries.Design/methodology/approachA dynamic panel regression model is used to analyze bank performance’s persistence and the results are estimated using the generalized method of moments estimator. The sample includes 27 full-fledged IBs in 6 GCC countries from 2005 to 2020.FindingsThe results reveal that Shariah supervision and CG-related variables are significant in determining IBs' performance. Furthermore, the results show that bank size, capital adequacy ratio, economic growth and inflation are significant and positive determinants of IBs’ financial performance.Practical implicationsThis study is conducted to fill a gap in the literature regarding the effect of Shariah supervision on IBs’ performance, recommending the implementation of CG guidelines in IBs to improve their current practices.Originality/valueDespite existing studies on the relationship between Shariah governance and performance, this study contributes to the Shariah governance and Islamic banking literature in GCC, which is the most important region of the Islamic financial industry. In addition, it provides additional insight into the fundamental role of Shariah supervision in IBs.

Disclosure and Reporting Practices - A Study of Public Sector Banks

Corporate governance is an aspect of corporate functioning that continues to increase in prominence. This assumes greater importance when it comes to public sector banks that are capitalising on government’s - and ultimately, public’s money. The author discusses the various aspects of corporate governance at four of the largest public sector banks (PSBs) listed in the BSE‘s top 100. The author compares the level adherence of corporate governance guidelines for the Financial Year 2020-21 at these banks. The present degree of adherence is then compared with the previous studies in this area. In the study, the corporate governance data is analysed on eighteen parameters to understand the progression of corporate governance at these PSBs.

The effect of social ties between the CEO and board of directors and fiscal council's members on earnings management

PurposeSocial factors can shape economic decisions. Corporate governance (CG) studies and guidelines usually neglect that the chief executive officer (CEO) and board members may be socially tied. This study investigates the effects of social ties between the CEO and board members on earnings management (EM).Design/methodology/approachThe authors run a series of regressions using a sample of Brazilian companies listed on the Brazilian Stock Exchange [B]³ between 2011 and 2017 to assess the effect of the social ties between the CEO and board members on EM using a social ties index. The authors also employ five robustness tests to verify the consistency of results, including alternative proxies of EM and social ties and an estimation using fixed effects.FindingsAfter developing and computing a social ties index between the CEOs and members of the board of directors (BD) and the fiscal council (FC), the study’s findings indicate that a significant level of social ties between the CEO and BD has a negative impact on EM. However, for FC members, the authors found non-significant results.Originality/valueUnlike previous studies, the authors built a social tie index (STI) from five elements of social ties assessed in an environment with a two-tier board system. Results show that elements of social interactions and personal relationships can benefit the company, as a CEO's level of social ties with the BD reduces EM practices.

Convergence and compliance of corporate governance codes: a study of 11 Asian emerging economies

PurposeThe purpose of this paper is twofold. The first is to explore the convergence of corporate governance (CG) codes of 11 Asian emerging economies with the United Nations (UN) CG guidelines (United Nations Conference on Trade and Development ISAR benchmark). The second is to find the compliance level of firms in each country with the UN CG guidelines.Design/methodology/approachBased on the 2017 GDP growth rate, the top 11 emerging economies were selected. CG codes of each country were then analyzed by using content analysis to find the convergence level with the UN CG guidelines. To find the compliance level of individual firms in each sample country, a sample of the top 15 non-financial listed firms were selected from each country, and their annual reports were analyzed. The binary scoring method was used.FindingsAfter analyzing the 11 national CG codes, 1 UN CG guidelines and 150 annual reports, this study found that Pakistan and Philippines CG codes have the highest level of convergence toward the outsider model recommended by UN CG guidelines, whereas China and India have the lowest compliance score. The Indian, Chinese, Malaysian and Indonesian listed firms showed more compliance toward the UN CG guidelines than their respective national CG codes.Originality/valueBy analyzing the top 11 emerging economies, and top 15 listed enterprises in each country, this study offered a combined convergence and compliance evidence at two different levels, i.e. country and firm-level. This study’s findings would be equally helpful for regulators, policymakers and investors in assessing their country’s CG codes against the international recommended best practices.

Impact of Corporate Governance on Financial Performance of Nifty 50 Companies : An Empirical Analysis

This paper attempted to study the impact of corporate governance guidelines on the financial performance of the NIFTY 50 companies. The CG score of each company was calculated to know its impact on financial parameters. Correlation and regression analysis on the data collected highlighted that corporate governance had no significant impact on the profitability of the companies. It was also found that the existing set of laws did not significantly impact the performance of companies. Therefore, the policymakers were advised to make the laws more stringent so that the CG guidelines by the statute shall be followed by every company resulting in their better performance. Furthermore, the study proposed an increased focus on practices that, in turn, would enhance the sustainability of a business.

Corporate governance: association the spots between institutional enhancement, organisational modification and earnings quality

PurposeThe purpose of this paper is to explore the link between earnings quality, Audit Committees and the Board of companies located in Jordan through the lens of enhancing corporate governance.Design/methodology/approachThe real earnings management (REM) and accruals earnings management models were notably used within the panel data robust regression analysis approach; these were used against certain Audit Committee characteristics (i.e. meeting frequency, amount of Board and Committee participants [both internal and external], size) and Board of Directors.FindingsThe former characteristics were found to have a positive relationship with REM, while the latter yielded mixed results: while there was no significant identifiable relationship between Board outsiders and REM, there was a positive relationship identified between Board meetings, Board insiders and Board size and REM. In regard to this study’s limitations, the qualitative data gathered for the Board of Directors through the lens of corporate governance enhancement should have been documented with more detail; furthermore, the study was limited to the study of just one nation.Research limitations/implicationsThe data is limited to only a single country. More explanation for Board of Directors need qualitative understandings into corporate governance improvement. The control variables are essentially partial in a developing market context.Practical implicationsThe different corporate governance code and guidelines improvements have varied influence on earnings quality. As predictable, boards of directors most effect on earnings quality. Improvements have included most modification to audit committees but through them slight measured effect on earnings quality.Social implicationsJordan’s corporate governance improvements expected organised corporate governance practices generally in place amongst its boards, and though invoking considerable modification to audit committees, eventually included slight modification to earnings quality. However, both improved earnings quality.Originality/valueThis particular research appears to be the first to consider both Audit Committee and Board of Directors characteristics in one model; indeed, in this vein, this research is also the first to explore the corporate governance enhancements that initially stemmed from there being zero code or guideline regarding its use, despite it becoming required recently. Hence, the authors can say this study has high originality.

Thematic analysis of the responsibilities of the board of directors in OECD, BCBS, and IFSB principles

At the center of this ongoing debate is the board of directors’ responsibilities, nevertheless, there are differences and similarities among the principles and guidelines of corporate governance worldwide when it comes to responsibilities of the board of directors. The interest in corporate governance and, specifically, the focus on bank governance have received increased attention from academics and policymakers after the global financial crisis of 2007–2009 (Pathan & Faff, 2013). Given the gap in the literature investigating these differences and similarities, this theoretical article aims to conduct a thematic analysis of the principles and guidelines of the Organisation for Economic Co-operation and Development (OECD), Basel Committee on Banking Supervision (BCBS), and Islamic Financial Services Board (IFSB), on board of directors’ responsibilities. This article provides a reference thematic analysis for policymakers, regulators, and researchers in developing national corporate governance principles and guidelines. The article highlights the shares themes between the principles of OECD, BCBS, and IFSB, and concludes with recommendations for future research in the area of the board of directors’ responsibilities.

Directors' interests, family control and firm performance: evidence from Hong Kong listed firms

Impact of the 2005 revision of corporate governance (CG) guidelines on firm performance in Hong Kong is examined through multiple regression models. A comprehensive corporate governance index (CGI) is used for measuring performance in the post-2005 period. Findings suggest CGI has a significantly positive relationship with firm performance. Family ownership (<=23%) or directors' interests (<=18.4%) also have a significantly positive relationship with firm performance. High proportion of outside directors on the board and larger boards also impact performance significantly. Family control has a stronger impact on performance in case of younger firms. Also, when family members draw relatively smaller salaries that too affects performance significantly. Most Hong Kong listed companies are family controlled and need to improve their governance to earn confidence of overseas investors. Besides, international investors and regulators can refer to results of sample firms which have ADRs listed in the USA.

Influence of Corporate Governance on Performance in Public Hospitals in Embu County, Kenya

Corporate governance is important to the performance of Public Hospitals (PHs) all over the world. This study investigated the Influence of Corporate Governance on Performance in PHs in Embu County, Kenya. The objective of the study was to assess how board characteristics influence performance in PHs in Embu County. The study’s main problem was to assess the performance in PHs using level of customer satisfaction, level of employees’ satisfaction and efficiency. Given that there is minimal research in corporate governance on management of PHs especially in Embu County, the study addressed challenges faced by management, thus helping formulate policies and strategic guidance for County Governments (CGs). The Stewardship Leadership Theory and Organizational Leadership Style were used to develop the theoretical framework on corporate governance. The information was gathered from 140 respondents using questionnaires. Quantitative data was analyzed using Descriptive Statistics whereas Qualitative data was analyzed using Content Analysis Method. The findings were then recapitulated to ascertain whether PHs have put in place policies and guidelines that conduct best practices of corporate governance. Some of the outcome were; PHs complied with the application of corporate governance but failed to implement it fully; the PHs adhered to most of the regulations and government policies but failed to fully adhere to corporate governance guidelines on board characteristics. Finally, the summary and recommendations were then prepared for policy formulation and future use in research on corporate governance on performance in PHs in Embu County, Kenya and globally.

ASPEK HUKUM TATA KELOLA PERUSAHAAN YANG BAIK (GOOD CORPORATE GOVERNANCE) PADA PERSEROAN TERBATAS (STUDI PADA PT. ASIANTFAST MARINE INDUSTRIES)

A company must provide adequate incentives for Commissioners and Directors to achieve company goals for the benefit of the company and its shareholders. By creating a system, Good Corporate Governance seeks to synergize through an ethics of the business world that is bound to certain rules that form the basis for adoption in the regulations, guidelines, and procedures that apply to carry out the operation of a company by implementing good corporate governance. GCG is a must in order to build strong and sustainable company conditions. The application of the concept is expected to be a more transparent company management for all interested parties. The problems formulated are 1. How to regulate the law of Good Corporate Governance at PT. Asianfast Marine Industries? 2. Has Good Corporate Governance at PT. Asianfast Marine Industries been carried out properly in accordance with the law? This type of research is a juridisnormative research, which is descriptive analytical. Data sources used in normative legal research are primary data and secondary data, with qualitative data analysis done deductively meaning using theories not only theory but also legal norms as tools, measures and even instruments to build hypotheses. The results of this study are that this research is focused on GCG in the context of Law Number 40 of 2007 concerning Limited Liability Companies and GCG guidelines issued by the National Committee on Governance policy which was approved by the Coordinating Minister for Economic Affairs of the Republic of Indonesia in 2006, in which PT. Asianfast Marine Industries makes a Good Corporate Governance Guidelines that follow the Guidelines issued by National Committee on Governance Policy which are the basis for implementing the implementation of GCG principles at PT. Asianfast Marine Industries. Keywords: Limited Liability Company, Principles, GCG

Corporate governance structure and bank performance: evidence from an emerging economy

PurposeThe purpose of the paper is to explore the association between corporate governance mechanisms and the performance of listed banks in Bangladesh.Design/methodology/approachDynamic panel data of two-step System Generalized Method of Moments (SGMM) estimators are used to analyze the influence of corporate governance characteristics on the performance of banks operating in Bangladesh over a period of eleven years from 2008 to 2018.FindingsBy employing the two-step SGMM, the authors find statistical evidence to conclude that board size has a positive impact on banks' accounting performance. However, it does not influence the market performance of banks operating in Bangladesh. The authors’ results also suggest that outside independent directors, managerial ownership and females' participation on the board are not linked with the performance of the listed banks in Bangladesh. It signifies that the mere presence of outside directors and female directors in the board does not guarantee the enhancement of banks' performance and the minimization of agency conflict between shareholders and management. The persistent characteristic of bank performance is one of the crucial findings of this paper.Research limitations/implicationsThis research has some limitations as the study's findings may not be generalized to other countries or industries because the current study considered only the small sample size based on the availability of the data and focused only on the banks listed in the DSE. Moreover, this study may not represent the whole financial industry because it includes all listed and non-listed banks and non-bank financial institutions. Hence, the findings may not be applicable to the other industries operating in different business ecosystems.Practical implicationsThe findings of this analysis have some managerial implications. This study provides managers empirical evidence regarding the influence of corporate governance elements on banks' performance, and they can now identify the factors that should emphasize enhancing the bank performance. The findings demonstrate that policymakers, regulatory bodies and bank management should pay more attention to the banks' overall corporate governance structures, especially in the case of appointing independent and female directors to challenge the executive power and to prevent the repetition of financial irregularities and loan scams in the banking industry of Bangladesh. Furthermore, the regulatory authorities should ensure the banks follow the corporate governance guidelines precisely for building a resilient banking industry to attain sustainable development goals in the long run.Originality/valueThis paper is the first empirical in-depth analysis applying the most recent data that examines the effect of bank governance elements on the performance of all the banks listed in the Dhaka Stock Exchange to the best of our knowledge.

THE SIGNIFICANCE OF INDEPENDENCE OF BOARD OF DIRECTORS ONFINANCIAL ANDADMINISTRATIVEPERFORMANCEEVALUATION IN COMMERCIAL BANKS A FIELD STUDY ON A SAMPLE OF SUDANESE COMMERCIAL BANKS

This research aimed to identify the effect of bank risk management on the performance evaluation in the banking sector. To effect the field study, the research used the questionnaire as a tool to collect the data. The research also used the descriptive analytical approach to describe the field study. The research has reached a number of findings, key of which, is that, the board of directors is committed to the regulations related to the stakeholders parties, in order to guarantee the treatment of any irregularities in accordance with the rules and principles in force in the bank. The application of corporate governance guidelines will help in the potentiality of the inspection and evaluation of the efficiency and effectiveness of the financial and administrative performance in the bank. The research findings have also shown that there is a correlation that is statistically significant between the independence of the board of directors and the financial and administrative performance evaluation in the bank. The research, on the other hand, recommended the activation of the role of the boards of directors in the commercial banks by assuming their tasks and duties, which may lead to reduce risk.

Corporate Governance: Joining the Dots between Institutional Reform, Organisational Change and Firm Performance

Purpose — Examine the link between boards and audit committees and firm performance in Kuwaiti listed firms in the context of recent and extensive corporate governance regulatory reform. Design/methodology/approach — Panel data regression analysis with fixed effects and clustered standard errors of firm performance for 62–95 listed industrial and services firms in Kuwait over the period 2010–2017. The dependent variables are the returns on assets and equity, the debt to equity ratio and leverage and Tobin’s Q and the independent variables comprise board of directors and audit committee characteristics, including size, the number of meetings, and the numbers of independent and outside board and expert committee members. Firm size, subsidiary status, and cash flow serve as control variables. Findings — Mixed results with respect to the characteristics of the board of directors. Board size and independent and outsider board members positively relate only to Tobin’s Q and insiders only to debt to equity. For audit committee characteristics, committee size, independence and expertise positively relate to the return on equity and committee size and expertise only to Tobin’s Q. Of the five performance measures considered, board and audit committee characteristics together best determine Tobin’s Q. Research limitations/implications — Data from a single country limits generalisability and control variables necessarily limited in a developing market context. Need for qualitative insights into corporate governance reform as a complement to conventional quantitative analysis. In combining accounting and market information, Tobin’s Q appears best able to recognise the performance benefits of good corporate governance in terms of internal organisational change. Practical implications — The recent corporate governance code and guidelines reforms exert a mixed impact on firm performance, with audit committees not boards apparently of most influence. But recent reforms implied most change to boards of directors. One suggestion is that nonmarket reform may have been unneeded given existing market pressure on listed firms and firms anticipating regulatory change. Social implications — Kuwait’s corporate governance reforms likely codified corporate governance practices already in place among many of its firms in pursuit of organisational legitimacy, and while invoking substantial change to audit committees, ultimately involved little change to firm performance, at least in the short term. Some firms may also have delisted in expectation of stronger corporate governance requirements. Regardless, these direct and indirect processes both improved the overall quality of listed firm corporate governance and performance in Kuwait. Originality/value — Seminal analysis of corporate governance reforms in Kuwait, which have rapidly progressed from no corporate governance code and guidelines to an initially voluntary and then compulsory regime. Only known analysis to incorporate both board of directors and audit committee characteristics. Reveals that studies of the corporate governance–firm performance relationship may face difficulty in model specification, and ultimately empirical significance, given the complexity of corporate governance codes and guidelines, leads in changing firm behaviour, and self-selection of firms into and out of regulated markets.