Corporate Governance Index Research Articles

Corporate disclosure and earnings management: The moderating role of corporate governance mechanisms

Notwithstanding the enormous amount of regulation and standards governing the financial reporting process, corporate failures and prior research have strongly indicated that earnings management (EM) is becoming a regular business practice in most firms today. Although this practice is more common in developed economies, there is limited research on corporate governance (CG) failures that have occurred in East Africa’s emerging economies. In this study, therefore, we examine whether corporate governance mechanisms (CGM) moderate the association between corporate disclosure (CD) and EM using evidence from listed firms at the Uganda Securities Exchange (USE). We employ disclosure and corporate governance indices to measure the extent of CD and corporate governance. Additionally, we use the magnitude of discretionary accruals (DACC) obtained from the modified Jones model as a proxy for EM. We find that audit committee (AC) characteristics have a negative and significant moderating effect on the association between CD and EM. Our study contributes to the growing strand of literature on the moderating or complimentary effect of CGM in constraining EM in the context of an emerging economy.

Building The Nigerian Corporate Governance Index (NCGI) and Intellectual Capital Disclosure Practices

Building The Nigerian Corporate Governance Index (NCGI) and Intellectual Capital Disclosure Practices

Proposal of an innovative MCDA evaluation methodology: knowledge discovery through rank reversal, standard deviation, and relationship with stock return

Financial performance analysis is of vital importance those involved in a business (e.g., shareholders, creditors, partners, and company managers). An accurate and appropriate performance measurement is critical for decision-makers to achieve efficient results. Integrated performance measurement, by its nature, consists of multiple criteria with different levels of importance. Multiple Criteria Decision Analysis (MCDA) methods have become increasingly popular for solving complex problems, especially over the last two decades. There are different evaluation methodologies in the literature for selecting the most appropriate one among over 200 MCDA methods. This study comprehensively analyzed 41 companies traded on the Borsa Istanbul Corporate Governance Index for 10 quarters using SWARA, CRITIC, and SD integrated with eight different MCDA method algorithms to determine the position of Turkey's most transparent companies in terms of financial performance. In this study, we propose "stock returns" as a benchmark in comparing and evaluating MCDA methods. Moreover, we calculate the "rank reversal performance of MCDA methods". Finally, we performed a "standard deviation" analysis to identify the objective and characteristic trends for each method. Interestingly, all these innovative comparison procedures suggest that PROMETHEE II (preference ranking organization method for enrichment of evaluations II) and FUCA (Faire Un Choix Adéquat) are the most suitable MCDA methods. In other words, these methods produce a higher correlation with share price; they have fewer rank reversal problems, the distribution of scores they produce is wider, and the amount of information is higher. Thus, it can be said that these advantages make them preferable. The results show that this innovative methodological procedure based on 'knowledge discovery' is verifiable, robust and efficient when choosing the MCDA method.

Research on improving the key indicators of enterprise ESG rating

ESG ratings, as a metric for assessing corporate social responsibility, have garnered escalating interest from both domestic and international investors within China. However, critical indicators for augmenting ESG scores remain underexplored. Utilizing data from 2017 to 2020 on CSI 300 and CSI 500 constituent stocks, this study employs advanced machine learning algorithms, including XGBoost (XGB), LightGBM (LGB), and Random Forest (RF), to conduct a quantitative analysis of corporate feature values and their correlation with institutional rating outcomes. The findings indicate a predominant influence of corporate governance indicators, particularly in the realm of information disclosure, followed by social responsibility and environmental metrics. The paper further delineates specific, actionable short-term and long-term strategies that corporations can adopt across environmental, social, and governance dimensions, tailored to the nuances of various sub-indicators.

The Effect of Compliance with Corporate Governance Principles on Intellectual Capital Investments

Purpose –The purpose of the study is to research whether the level of compliance with corporate governance principles affects intellectual capital investments.Design/methodology/approach –In this study, the connection between the degree of conformity with corporate governance principles and intellectual capital investments for 21 companies in the BIST Corporate Governance Index (Borsa Istanbul XKURY) was tested, utilizing the Generalized Moments Method (GMM), one of the panel data analysis methods. Constituting the dependent variable of the study intellectual capital investments were calculated with the VAICTM(Value Added Intellectual Coefficient) method developed by Ante Pulic.Findings –At the stage of determining the degree of conformity with corporate governance principles, which is the independent variable, it was observed there was no unity in the variables used, and the grades of conformity with corporate governance principles were accepted as an objective measurement unit and used as a measurement variable. As a result of the findings, it was concluded that the degree of conformity with corporate governance principles positively affects intellectual capital investments.Discussion –In conclusion, it can be said that corporate governance practices are truly related to intellectual capital, boost the efficiency of intellectual capital, and that corporate governance practices are a hidden force that improve the capability of businesses to captivate more intellectual capital

The Effect of Accounting Conservatism On Corporate Social Responsibility: Evidence from the Corporate Governance Index in Türkiye.

The purpose of this study is to measure whether the companies listed in the BIST Corporate Governance Index have conservative accounting policies and examine the impact of this conservatism on Corporate Social Responsibility (CSR) and its components. Panel data analysis was used in the study. The results mean that companies listed on the BIST Corporate Governance Index prioritize conservative accounting policies and apply them in their financial reports. Additionally, it has been determined that accounting conservatism has a positive impact on companies' CSR scores and their components, with a stronger influence on board of directors scores and stakeholder scores. This finding suggests that companies with conservative accounting policies prioritize the interests of internal management while also valuing external stakeholders.

PENGARUH GOOD CORPORATE GOVERNANCE TERHADAP MANAJEMEN LABA PADA PERUSAHAAN MANUFAKTUR YANG TERDAFTAR DI BEI SEBELUM DAN SEMASA PANDEMI COVID

This study aims to obtain empirical evidence from Managerial Ownership, Institutional Ownership, Independent Board of Commissioners, and the Audit Committee which is an indicator of Good Corporate Governance as an independent variable, and other variables namely Leverage and Firm Size as control variables, and Pandemic Covid as a dummy variable, on the dependent variable namely Earnings Management in Manufacturing Companies sub-sector Food and Beverage listed on the Indonesia Stock Exchange (IDX). Discretionary accruals with the Kothari model used as a proxy for earnings management. The sample was obtained by purposive sampling method with predetermined criteria, and resulted 40 in manufacturing companies sub-sector food and beverage in the 2016-2020 period with a total of 200 data. Descriptive statistics and multiple regression were used as data analysis methods. The results of this study can be summarized as follows. The first regression analysis, namely before the covid pandemic period, showed that Institutional Ownership and Audit Committee had a significant negative effect on Earnings Management, while Managerial Ownership, Independent Board of Commissioners, Leverage, and Firm Size had no effect on Earnings Management. The second regression analysis, before and during the covid pandemic, showed that Managerial Ownership, Institutional Ownership, and Leverage had a significant negative effect on Earnings Management. Meanwhile, the Independent Board of Commissioners, Audit Committee, Firm Size, and the Covid Pandemic have no effect on Earnings Management. Based on this explanation, it can be concluded that the implementation of Good Corporate Governance in Manufacturing companies in the Food and Beverage Subsector can be said to be still relatively ineffective, because only Managerial Ownership, Institutional Ownership and Audit Committees in this study are able to carry out their duties effectively to minimize the practice of earnings management happened to the company.

The effect of financial performance on islamic ethical identity disclosure of ASEAN sharia banks

This research aims to analyze the influence of Risk Profile, Good Corporate Governance, Earnings and Capital (RGEC) on the disclosure of Islamic ethical identity in Sharia banks in ASEAN. The method used in this analysis is descriptive analysis and regression testing on 23 Islamic banks from 11 ASEAN countries. The research results show that non-performing financing (NPF), which measures risk profile, negatively influences the disclosure of Islamic ethical identity. In contrast, audit committee competency (KAA), as an indicator of good corporate governance, has a positive influence. Likewise, the return on assets (ROA) ratio, which measures earnings, positively influences the disclosure of Islamic ethical identity. However, as a capital indicator, the Capital Adequacy Ratio (CAR) does not have a significant influence. Based on this research, Sharia banks in ASEAN are expected to increase the optimization of their Islamic ethical identity disclosure through risk management, good corporate governance, improving financial performance, and paying attention to capital adequacy. However, this study has limitations, such as a limited sample size and high variability in the dependent variable. Therefore, further research is recommended to expand the sample, add variables, and reduce subjectivity in identifying disclosures of Islamic ethical identity.

THE EFFECT OF IMPLEMENTING CORPORATE GOVERNANCE ON FINANCIAL REPORTING FRAUD (EMPIRICAL STUDY OF COMPANIES LISTED ON THE INDONESIAN STOCK EXCHANGE 2016-2021)

This study aims to explore the impact of corporate governance and its mechanisms in preventing companies from resorting to fraudulent financial reporting. The mechanism is based on eight corporate governance mechanisms, including board independence, board remuneration, managerial finance expertise, management industry expertise, board financial expertise, board industry expertise, board scope of effort and managerial ownership. For this purpose, using systematic random sampling, information from 40 companies listed on the Indonesia Stock Exchange (IDX) for six years from 2016 to 2021 was collected, and hypotheses were tested using a linear regression model. To measure fraudulent financial reporting, the Beneish-adjusted model was used to evaluate corporate governance. The mechanism used has been reviewed and calculated as a composite index of corporate governance. The findings indicate that strong corporate governance significantly reduces corporate intentions towards fraudulent financial reporting. A negative and significant relationship was observed between each of the eight corporate governance mechanisms, except for board remuneration which showed an insignificant positive relationship.

Climate uncertainty and green index volatility: Empirical insights from Chinese financial markets

This study investigates the influence of climate uncertainty on green index volatility (e.g., the China Low Carbon Index (CLC), CSI Green Investing Index (GI), CSI Environmental Governance Index (EG), SSE Social Responsibility Index (SR), and SSE Corporate Governance Index (CG)) by employing three climate uncertainty indicators: Chinese climate policy uncertainty (CPU), Chinese climate uncertainty (CU), and the US climate policy uncertainty index (UCPU). Employing an autoregressive (AR) model extended with climate uncertainty indicators for forecasting, our empirical findings shed light on the substantial predictive power of CPU and CU over green indices while highlighting the limited effectiveness of UCPU.

"Catalysts of Corporate Change”: A Profound Examination of the TCS vs. Cyrus Investments Legal Odyssey

In this scholarly investigation, we delve into the highly discussed legal conflict between Cyrus Investments Pvt Ltd. and Tata Consultancy Services Limited (TCS), which brought important issues in corporate governance to the fore. The main goal of this study is to provide an in-depth analysis of this legal dispute, its implications, and the long-lasting effects it has had on India's corporate landscape. An introduction to the case serves as the preface to our discussion and sets the stage for a deeper investigation. Here, we go into the main goal of this study, which is to analyse the many parts of this dispute and shed light on its implications for India's corporate governance sector. We unfold a narrative scenario in the section devoted to the historical and contextual background, illuminating the historical events that led to the estrangement between Tata Sons Private Limited (TATA Sons) and Cyrus Mistry's family. The core of this scholarly paper is encompassed in the analysis of governance conundrums, which includes a critical assessment of Section 241 of the Companies Act, 2013 (Act) and the Articles of Association (AOA) of Tata Sons, specifically Article 75. We examine the legal ramifications while focusing on the discussions and court rulings that have shaped the outline of this battle. The study explores the Tata Group's influence in more detail, thinking about how it may affect the conglomerate's reputation and operational strategy. To determine whether this legal conflict has prompted changes in the field of corporate governance methodology, the regulatory implications are carefully investigated. In this discourse, ethical considerations are painstakingly weaved into the fabric to reveal the case's ethical dimensions, which include corporate morality, fiduciary duties and corporate accountability. We summarize important findings and offer suggestions, highlighting the significant ramifications for corporate governance in India. This research study offers essential insights for policymakers, academics and practitioners in the field of corporate governance by providing a thorough dissection of a legal conundrum that has significantly altered the corporate landscape.

Pengaruh Penerapan Good Corporate Governance Terhadap Kinerja Keuangan

This research aims to determine the influence of managerial ownership, institutional ownership, board of commissioners, audit committee and the simultaneous influence of Good Corporate Governance indicators on the financial performance of Bank Raya Indonesia. The type of data used is quantitative data and the data used in this research is secondary data in the form of annual financial reports obtained through IDX and the official Bank Raya Indonesia website. The collection technique uses documentation studies. This research uses multiple linear regression analysis techniques using data processing tools, namely SPSS. The results of this research are that managerial ownership in good corporate governance partially has no effect on the company's financial performance with the test results showing a significance value of 0.115 or greater than 0.05. Institutional ownership of good corporate governance partially has no effect on the company's financial performance with the test results showing a significance value of 0.811 or greater than 0.05. The independent board of commissioners on good corporate governance partially has no effect on the company's financial performance with the test results showing a significance value of 0.354 or greater than 0.05. The audit committee on good corporate governance partially influences the company's financial performance with the test results showing a significance value of 0.008 or less than 0.05. Managerial ownership, institutional ownership, independent board of commissioners and audit committee on good corporate governance simultaneously influence the financial performance of Bank Raya Indonesia, the significance result is 0.006 < 0.05 and obtains a ftable value of 6.39, which means fcount ≥ ftable, namely 20.318 ≥ 6.39.

Analysis of the Influence of Good Corporate Governance and Intellectual Capital on Financial Performance (Studies of Entertaintment and Media Industry Companies Listed on the IDX in 2014-2021)

The purpose of this research is to examine the impact of good corporate governance and intellectual capital on the financial performance of entertainment and media companies listed on the Indonesia Stock Exchange from 2014 to 2021. Good corporate governance is measured using the good corporate governance index, while intellectual capital is measured using the VAICTM. This study adopts a quantitative research approach and utilizes secondary data. The sampling technique employed is non-probability sampling with a purposive sampling method. The samples obtained from the selection results were 4 companies. Logistic regression is used as the data analysis technique in this research, utilizing SPSS 26 software. The findings of this study indicate that good corporate governance does not have a significant impact on financial performance, whereas intellectual capital has a positive and significant impact on financial performance.

Does Corporate Governance and Quality of Disclosure Affect Firm Performance? An Empirical Study on Indian Banks

Financial markets, particularly in the developed markets, have started including non-quantitative disclosures as one of the important key performance indicators and valuation drivers. Notably, the quality of corporate governance, reflected in the board of directors and audit quality, serves as a key performance metric. This paper explores the relationship between market performance, corporate governance practices, and quality of disclosures (QOD) (measured through an index) in Indian financial firms (government-owned banks, private banks, and NBFCs). We assess market performance using price–book value and its dependence on qualitative variables such as corporate governance index (CGI) and QOD. Findings indicate that the market performance of financial firms is influenced by standard accounting ratios such as return on assets, capital adequacy ratio, and non-performing assets, as expected. CGI and QOD have improved over time across all financial firm categories. However, while CGI exhibits a positive relationship with firm performance, the link between market performance and QOD is less definitive. This study, limited to select banks based on market capitalization, explores the relationship between market and accounting performance over five years (2016–2020), with a focus on three consecutive years (2012, 2016, and 2020) to explore the correlation between their market performance and key qualitative factors such as CGI and QOD.

A decade of corporate governance in Brazil: 2010-2019

We take advantage of the Brazilian mandatory corporate governance (CG) reporting system to build an overall Brazil Corporate Governance Index (BCGI) and subindices (CGIs), and track changes in firms' scores over the 10-year period from 2010-2019. We show that overall CG level improved significantly between 2010 and 2019, with most of the improvement over the first part of this period. The improvement has two sources: an increase in the proportion of high-standard listings (Novo Mercado and Level 2, NML2) versus low-standard listings (Level 1 and regular, L1R), and within-firm improvement in CG practices. In the first half of the sample period, both NML2 and L1R firms improved CG practices considerably. Overall improvement in the second half of the sample period reflects an increasing proportion of NML2 firms, plus gradual improvement in L1R CG levels; with nearly constant NML2 levels. Improvements were stronger for Board Procedure and Disclosure subindices. Firms in both listings improved their CG. Overall improvement was stronger in NML2 than in L1R, but was concentrated in the period from 2010-2015.

Do Indian banks perform better in corporate governance than other SAARC nations? An empirical analysis

Purpose This paper aims to investigate the role of corporate governance on the bank profitability of Indian banks vis-à-vis South Asian Association for Regional Cooperation (SAARC) nations. Design/methodology/approach For the Corporate Governance Index, the authors examined board accountability, transparency and disclosure and audit committee, while Tobin’s Q, return on equity and return on assets are used to measure the bank’s profitability. The study used a two-stage analysis based on balanced panel data for robust findings. Sample of this study consists of 60 commercial banks from India and 60 banks from SAARC nations for the period of 2009–2021. This study used panel regression and a generalized method of moment approach using the CAMELS framework on banking industry-specific variables to determine their respective impacts. Findings The findings of this study suggest that board accountability is positive and significantly affects the profitability of banks as indicated by return on assets, return on equity and Tobin’s Q. In contrast, the audit committee has a positive and insignificant impact on return on assets, return on equity and Tobin’s Q, while transparency and disclosure have a negative and significant impact on these metrics. Furthermore, the country dummy result shows a significant positive impact on all the bank performance parameters, implying that Indian banks have the highest degree of convergence with corporate governance as compared to other SAARC nations. Research limitations/implications This study provides insight to the regulators, policymakers and financial institutions to evaluate the role of corporate governance in emerging economies. However, the findings of the study should be interpreted with caution, as the results are sensitive to the disparity between India and other SAARC nations' government policies, climatic circumstances and cultural or religious traditions. Originality/value To the best of the authors’ knowledge, this is the first attempt to gauge the performance of Indian banks vis-à-vis SAARC nations using the CAMELS framework approach. Further, findings of this study suggest some novel evidence tying corporate governance quality with the profitability of banks among SAARC nations.

Corporate governance, financial indicators and asset impairments during the COVID-19 pandemic period

This study examines the effect of corporate governance and financial indicators on long-lived asset and goodwill impairments during pre-COVID-19 and COVID-19 periods for a sample of United States (U.S.), France, Germany and the United Kingdom (U.K.). We find that goodwill impairment is greater during the COVID-19 than the pre-COVID-19 periods for all four countries, and long-lived asset impairment is greater during the COVID-19 period for the U.S. and the U.K. The effects of corporate governance on asset impairments and the effects of short-term financial indicators (cash flow and/or sales) and long-term financial indicators (stock returns) vary by country.

Trend of the Research on Islamic Corporate Governance in Islamic Banking: A Bibliometric Analysis

Objective: Islamic Corporate Governance in Islamic Banking companies is a topic that is still poorly studied, and this study aims to test research trends regarding Islamic corporate governance in Islamic banking. Methodology: This research is presented in literature by combining bibliometric (quantitative research) and in the form of content (KualiTatif Research) analysis using 1040 Scopus articles, using several indicators of Islamic corporate governance in Islamic banking. Result: The results of this study show a shift in the total number of publications regarding indicators of Islamic corporate governance in Islamic banking from 2017 to 2023. However, there are publications that have not increased from 2018-2022 due to the declining number of publications. The highest level of publication was in 2014, when the visualization was determined by the co occurance network by title and abstracts, with a minimum provision of 10 sentences from research related to Islamic corporate governance. In the diagram that appears in vosviewer shows that there are several sentence indicators that appear related to Islamic Banking including, corporate governance, Islamic economy, stability, trust, religiousity, brand role clarity, Islamic banking performance, personal financing and Islamic interbank benchmark and other determining indicators. Conclusion: However, researchers find it difficult to trace islamic corporate governance indicators in analyzing bibliometrics in this study.

Revealing stock liquidity determinants by means of explainable AI: The role of ESG before and during the COVID-19 pandemic

The purpose of the paper is to reveal the impact of different environment, social, and corporate governance (ESG) indicators on stock liquidity in the emerging Russian market, which is heavily dominated by the natural resources sector. We first apply Explainable Artificial Intelligence (AI) to identify and rank determining factors for stock liquidity on a sample of Russian companies whose stocks are traded on the Moscow Exchange is examined over the period from 2013 to 2020. The main focus of our research is on environmental performance, including using of natural resources. We use a novel methodology based on a three-stage approach: 1) the principal components analysis is used to construct integral indices of stock liquidity, 2) neural networks with dense layers help to account for nonlinear effects, and 3) the Shapley values from the game theory help to interpret empirical results. We obtain several new conclusions on the influence of ESG and macrofactors influence. In the pre-pandemic period, environmental factors (implementation of environmental innovations, the use of «green» technologies in a company's supply chain management and the reduction of emissions) were important for stock liquidity, but their influence was negative. During the pandemic, environmental factors changed in their direction of influence. We attribute this to the fact that investors changed their preferences during the pandemic and started to view stocks of eco-friendly companies as defensive assets. The social responsibility score was not important during the COVID-19 pandemic.

THE EFFECT OF CORPORATE GOVERNANCE ON TAX AVOIDANCE WITH CORPORATE SOCIAL RESPONSIBILITY AS MEDIATION

This research was conducted to analyze the relationship between corporate governance and tax avoidance, mediated by corporate social responsibility. Tax avoidance is the dependent variable measured by the effective tax rate (ETR), while corporate governance is the independent variable measured by the Corporate Governance Index (CGI-score). The mediating variable in this study is corporate social responsibility. The study also includes control variables such as firm size, return on asset, and leverage. This research sample is based on a sample of Indonesian companies listed on the Indonesian Stock Exchange (IDX) for the period 2017-2021. The survey sample that meets the criteria includes 60 companies with a total of 300 observational data collections. Research results show that corporate governance has a significant impact on tax avoidance, corporate governance has no significant impact on corporate social responsibility, corporate social responsibility has no significant impact on tax avoidance and corporate social responsibility is not able to mediate corporate governance and tax avoidance.