Corporate Governance Index Research Articles

Corporate governance impact on dividend policy of NIFTY-500 indexed Indian pharmaceutical companies (2014–2019)

PurposeThis study aims to evaluate the influence of corporate governance index (CGI), ownership concentration (OC) and other features on the dividends of listed Indian pharmaceutical companies. The other features included are leverage, excess return over cost of equity and stock-market return. This study thus helps to provide more insights on the dividend distribution issues for a shareholder in the challenging and demanding pharma industry, especially when stakes are high.Design/methodology/approachThe data for all 26 pharmaceutical companies which form part of the NSE NIFTY-500 index for six years (2014–2019) is procured using Centre for Monitoring Indian Economy’s (CMIEs) Prowess database. An eight-pointer scale (unweighted scale) is used to develop the CGI. For OC, this paper considers the proportion of promoters’ shareholding, domestic institutional investors’ shareholding and foreign owners’ shareholding. Both static and dynamic panel data models are used to evaluate the effect of CGI and OC on dividends.FindingsThe panel data analysis depicts that CGI significantly positively influences the dividends of pharmaceutical companies in India. Thus, the authors find support for La Porta et al.’s outcome agency model. The results also reveal that only promoters’ holdings are significantly inversely related to dividends out of the three OC variables used for this study. This discussion implies that family-run pharmaceutical companies in India tend to retain profits instead of distributing dividends.Research limitations/implicationsThis study provides two direct insights for policymakers and stakeholders. First, because this study shows that CGI significantly positively influences dividends, corporate governance (CG) is an essential factor for determining dividends. Second, because the results also reveal that OC in the hands of promoters hurts dividends, it implies that the higher the promoter holding, lesser is the dividend distributed by the company. Both these results can be used as a quantitative tool by investors to assess Indian pharmaceutical companies better. However, a similar study could be directed to assess the impact of CGI and OC on dividends of other industries. Moreover, additional variables of CG and OC can also be evaluated in further detail. There is also a need to empirically validate the impact of CG and OC on a company’s performance.Originality/valueThe results are robust and reveal that variation in CGI does impact dividend policy. This aids in confirming that CG is a crucial aspect influencing dividends. The findings also add to the increasing studies across the globe evaluating the influence of CG and OC on dividends.

A Comparative Study of Committee’s Reports on Corporate Governance in India

After the corporate world distorted due to various scandals, magnitude of corporate governance has been increasing continuously. Corporate Governance is termed as a detailed disclosure of information and an account of an organization’s economic situation, performance, proprietorship and governance, relationship with shareholders and obligation to business ethics and values. Corporate governance acts as a link between shareholders, stakeholders, and board of directors. It should be able to rebuild the trust and confidence of management and the company to the shareholders in the company. From 1991 to till today, corporate governance has gone through many stages for example committees were formed, new rules, regulations, acts, or revised laws came into existence. Since 1991 corporate governance has continuously been evolved to increase transparency, to match with world’s standard, improve and provide strength to companies in India to withstand with world’s companies. The main objective of this research paper is to analyse and compare various committee’s recommendations on corporate governance in India from Indian’s perspective, reports of SEBI and MCA were used for the comparison .

Development of Risk Index and Risk Governance Index: Application in Indian Public Sector Undertakings

The purpose of the paper is to develop a risk measure in the form of a risk index and a governance index as an indicator of the quality of governance structure. Using the Delphi technique, two indices are developed (risk index and corporate governance index (CGI)); subsequently, using the 10-year (2005–2015) data of top Indian Public Sector Undertakings (PSUs) and diff-GMM regression (to deal with endogeneity), indices have been validated. Though the data set may appear old, it has only been used to test the risk index and analyze the results. Empirical evidence on indices indicates that Indian PSUs have ‘moderate’ risk levels and ample scope for improvement in their governance structure. Further, a positive relation between governance index and returns and negative relation between risk index and returns lend credence to the indices developed in the study. Notably, the governance index appears to be a moderating variable in the relationship between risk and return. It is perhaps the first study to put forth a comprehensive measure of risk to measure risk levels of PSUs and prescribe a measure of the quality of governance structure. While constructing the CGI, certain non-compliances were observed, even in terms of mandatory requirements, such as the proportion of PSUs may take independent directors. The new datasets may further check for compliance and its effect on the results. Such infringements call for stringent penal provisions and better monitoring of PSUs. Further, if the normative frameworks are adhered to as per the study by the Securities and Exchange Board of India (SEBI) and Ministry of Corporate Affairs (MCA), more effective and efficient decisions with lower risks, and hassle-free management resulting in better return on assets and return on equity.

Governance quality and momentum returns: international evidence

PurposeMomentum returns are considered an anomaly in the finance literature as their existence cannot be fully explained under the asset pricing paradigm. This study attempts to shed more light on this anomaly by investigating the determinants of momentum returns.Design/methodology/approachThe panel data technique is applied to the sample of 40 countries worldwide from 1996 to 2018. The authors use the panel-corrected standard error (PCSE) model to estimate the coefficient of World Governance Indicators (WGI), whereas the fixed effect model is used to determine the coefficient for corporate governance indicators (CGIs). The choice of PCSE estimation methods is guided by the fact that WGI variables are subjected to serial correlation, heteroskedasticity and cross-sectional dependence problems while CGI variables are not. Furthermore, a composite WGI index is constructed using principal component analysis (PCA).FindingsRegression analysis shows a negative and significant relationship between WGI index and momentum returns. The negative coefficient value of WGI supports the prediction of the overreaction hypothesis, which postulates a lower behavioral bias in the market with high governance quality. Breaking down of the WGI by their six indicators reveals that four of the indicators (control over corruption, government effectiveness, stability and avoidance of violence) are negative statistically significant with momentum returns while two indicators are not significant. As for CGIs, only one (strength of investor protection) of the four tested indicators is negative and significantly related to momentum returns.Originality/valueThe study fills the gap in economic literature by highlighting the association between governance quality at the country (WGI) and firm level (CGI) on stock momentum returns.

Governance Structure and Quality of Accounting Reports in Covid 19 Era

This article investigated the impact of governance structure on the quality of accounting reports produced by firms operating in Nigeria during the pandemic. The study was carried out using the ex-post facto research design. The information was derived from the annual reports and accounts of firms listed on the Nigeria Exchange Group between 2011 and 2020. The correlation between corporate governance indicators of board structure (size-BRDSZ and independence-BRDID), audit quality (audit committee size (ADCMZ), the quality of external audit (EADTQ as measured by the presence of an auditor among the big-4), board experience (i.e. experience-BRDEX), and financial reporting quality is 93.47 percent, according to econometric analysis. The independent variables can explain 54.29 percent of the variance in the FRQDA. There is general relevance among the metrics assessing financial reporting quality, such as corporate discretionary accruals (FRQDA). The COVID-19 pandemic has a beneficial influence on board structure (BRDSZ), board experience (BRDEX), and external audit quality (EADTQ). Furthermore, as a consequence of the COVID-19 epidemic, independent directors on the board of company (independence-BRDID) and audit quality (audit committee size (ADCMZ) have a detrimental impact on financial reporting quality as evaluated by the firm's discretionary accruals (FRQDA). As a result, the research advised that a higher emphasis be placed on corporate governance indicators in order to achieve global standard financial reporting in the Nigerian growing market for investment opportunities.

Level of Bank Health, Growth Rate and Banking Value in Indonesia

This study aims to explore the soundness, growth rate and value of banking in Indonesia. This study also compares the level of soundness, growth rate and value of Islamic banks and conventional banks. This research is interesting and important to do, because as a country with the largest Muslim population in the world, the Islamic banking sector is the main solution to help the economy in an Islamic way. However, the use of Islamic banking services by the public is still not optimal. Meanwhile, Islamic banks are proven to be able to survive the global economic crisis. The motivation underlying this research is that different perspectives in the management of the two types of banks affect the level of bank resilience in facing the crisis. It is proven that when there is a global crisis, Islamic banks are more resistant to testing and survive. This study examines the development of corporate governance in an in-depth Islamic perspective for Islamic commercial banks and compares it with corporate governance in conventional banks. The Islamic context in doing business is very different from the conventional business context. Therefore, it needs to be developed separately based on the concepts of monotheism. The research provides input for the development of models for the application of Islamic Corporate Governance. Another benefit in this study is the level of public acceptance of Islamic banking services, which are carried out. The research output is an empirical model for developing the Islamic Corporate Governance index. The research provides additional input for similar research that are still theoretically reviewing.

The impact of public legal protection on the internal corporate governance efficiency in banking sector

PurposeThe purpose of this research is to reveal the impact of public legal protection on the efficiency of internal corporate governance in banks. In addition, this research proposes a new corporate governance index that could be employed by the banking sector to evaluate the performance of their internal corporate governance mechanisms.Design/methodology/approachOrbis database, annual reports and direct questionnaire are used to collect corporate governance data of 127 banks from 14 countries during 2020. The Mann–Whitney U-test is employed to compare the efficiency of corporate governance mechanisms based on three subsamples of countries having different legal protection levels (weak, middle and strong).FindingsThis research suggests a new corporate governance index for banks based on seven constructs and 62 variables. This new non-parametric index could be used by bankers to improve the monitoring process and enhance the overall performance of banking. The results of this research show that the existence of a strong public legal protection environment within a specific country enhances the efficiency of corporate governance mechanisms in the banking sector and thus, leads to improve the protection of shareholders, depositors and other relevant stakeholders. However, in countries that are characterized by weak legal protection level, the efficiency of corporate governance mechanisms is very low and there are possibilities of entrenchment, expropriation and extraction of private benefits. These findings could be interpreted within the prediction of agency, moral hazard, asymmetric information, political and entrenchment theories.Originality/valueThis research paper provides information that bankers and other relevant stakeholders in the banking sector working in MENA (the Middle East and North Africa) and European countries. A strong public legal protection level could improve the efficiency of internal corporate governance mechanisms within banks.

Firm Value Response to Internal and External Corporate Governance in the Nigerian Stock Market

The slow pace of firm valuation and the rising occurrences of fraud have been attributed in part to corporate governance. This research aims to educate the companies and their management who are capable of reversing the current pace to a much better pace. This study also aims to ascertain the firm value response to internal and external corporate governance using evidence from the Nigerian stock market, which covers the period from 2012 to 2019. To determine the response of firm value to the internal and external corporate governance mechanisms, two indexes were determined using the Principal Component Analysis (PCA), and data was sourced from the annual reports of the sampled firms listed on the Nigerian stock market. The variables used were firm value proxied by Tobin’s Q, and the internal corporate governance index composed of board independence, board meeting, board size, and board education; and then the external corporate governance index was represented by corporate disclosures, audit type, timeliness of reporting, and corporate governance code. The data was analyzed through a series of tests including the descriptive statistics, PCA, correlation matrix, and panel data static estimators, amongst others. The findings obtained from the analysis show that internal corporate governance has a positive and significant influence on firm valuation and that external corporate governance has a negative and insignificant influence on firm valuation.

BIST Corporate Governance Index Price Prediction with a Facebook Prophet Analysis Method

At the core of corporate governance are various financial policies that consider maximizing the wealth of shareholders as the main objective. Corporate governance has become a multidisciplinary subject in recent years. In Turkish Capital Markets the Corporate Governance Index (XKURY), which is calculated with the market prices of the companies selected according to the criteria determined within the scope of corporate governance data within the body of Borsa Istanbul (BIST), is of great importance as the tool in which the effect of corporate governance criteria on companies is best observed. In this study, which aims to test the effectiveness of this index and therefore the corporate governance criteria, Facebook Prophet Analysis (FPA), a new and ambitious analysis method, was used and the value estimates of the index for the year 2022 were made using the daily values of the index between 01.03.2019 and 30.11.2021. The results show that the index will start with an upward trend in the first half of 2022, and after the first quarter, it will enter a downward trend and move below its value at the beginning of the year. However, it is observed that it will enter a continuous upward trend from the second half of the year and close the year 2022 with an increase in a trend pattern similar to the previous year. The consistency of the FPA method used was measured by the Mean Absolute Percent Error (MAPE) method and the low rates obtained showed that the results of FPA method were consistent. In another analysis on consistency, the BIST 30 Index, which is calculated by BIST and has a high correlation with the XKURY Index, was analyzed using the same methods, and the results obtained in these analyzes confirmed that the FPA results were consistent.

A study on evolution of Corporate Governance in Indian context and its challenges

The aim of this article is to take stock of India's progress in corporate governance. In the age of globalisation and liberalisation, new technologies have completely altered the character of economic interactions. The complexity of business transactions and the difficulty of controlling risk grew as a result of the growth of corporate life cycles. It was partly due to the 1992 stock market scandal by Harshad Mehta that sparked concerns about corporate governance in India, as well as the current sathyam scam, that the issue of corporate governance became an issue in the country. Accounting scandals and concerns about the accuracy of financial reporting necessitated a focus on corporate governance. In a nutshell, corporate governance is concerned with fostering a culture of equality, openness, and responsibility inside organisations.

The Effect of Financial Performance and Corporate Governance on Tax Avoidance in Manufacturing Companies listed on the Indonesia Stock Exchange 2015–2019

Purpose: this study aims to study the effect of financial performance and corporate governance on tax avoidance in manufacturing companies listed on the Indonesia Stock Exchange in 2015–2019.Methods: financial performance and corporate governance as independent variables with financial performance indicators are ROA, ROE and Leverage while indicators of corporate governance are the board of commissioners, audit committee and external audit quality. Tax avoidance as the dependent variable was measured by using ETR (effective tax rate). This research uses purposive sampling to get a sample size of 60 companies around 5 years and use common effect panel data regression analysis. The data in this study were analyzed with Eviews 9.0.Results: (1) Financial Performance as measured by ROA, ROE and leverage. ROA and leverage has an indication on tax avoidance while ROE has no an indication on tax avoidance in listed manufacturing companies on the IDX in 2015-2019. (2) Corporate Governance as measured by the board of commissioners, audit committee and external audit quality shows that has an indication on tax avoidance in listed manufacturing companies on the IDX in 2015–2019.Conclusions and Relevance: the results of the study prove that ROA, leverage, the board of commissioners, audit committee and external audit quality have a significant and significant effect on tax avoidance, but the ROE variable has no significant effect on tax avoidance in listed manufacturing companies on the IDX in 2015–2019.

An Evaluation of the Compliance of Sri Lankan Listed Companies with Corporate Governance Principles and Best Practices

This study examines compliance with corporate governance principles and best practices by companies listed on the Colombo Stock Exchange by constructing a novel and comprehensive corporate governance index using a sample of 133 firms in 2009 and 2016. Overall, corporate governance improved during the sample period. Corporate governance also improved across all sub-areas of corporate governance, namely board of directors, shareholders, stakeholders, disclosure and transparency, and CEO and management. Moreover, corporate governance improved across all industries except for healthcare. Telecommunications, hotels, manufacturing, energy, and trading sectors show the largest increases while stores, banking, construction, services, and plantations have the lowest improvements. Services and stores sectors have relatively weaker corporate governance while telecommunications, diversified, banking, hotels, manufacturing, and energy show stronger governance. This study adds to the extant evidence on emerging markets and provides important evidence for policymakers to formulate and strengthen corporate governance in Sri Lanka.

Tracking water governance impacts: an example from the Kenyan water sector

ABSTRACT In 2015, the Kenyan Water Services Regulatory Board (WASREB) introduced a corporate governance indicator for the Kenyan water sector to measure the extent to which water service providers contribute to enhanced sector performance and the realization of the human right to safe drinking water and sanitation. An assessment shows that a utility that performs well on governance is very likely to perform well on the nine key performance indicators. Overall, the governance indicator serves to inform the public and guide utilities to improve their governance. It also provides guidance to partners and development institutions which may support the utilities in the future.

Corporate Governance, Corporate Social Responsibility, and Corporate Sustainability: The Moderating Role of Top Management Commitment

Purpose: The objective of this study was to investigate the influence of corporate social responsibility on corporate sustainability with the moderating role of top management. Theoretical Framework: Even though studies have been done within an emerging market context, there has been calls to explore CSR constraints in other geographical areas. This study explores how lack of top management commitment moderates the relationship between CSR and Corporate Sustainability. Design/Methodology/Approach: We used non-probability sampling technique by employing convenience sampling for data collection. By employing a survey questionnaire, data were collected from 397 employees of SMEs in Ghana. The IBM Statistical Package for Social Science (SPSS) version 25.0 and IBM's Analysis of Moments of Structures (AMOS) version 24 softwares packages were employed as analytical tools in this investigation. Findings: Board composition, the board size, institutional ownership, and CEO- Chair duality had varying influences on economic, environmental, and social dimensions of corporate social responsibility. The moderating role of top management commitment was confirmed for the relationship between the environmental dimension of corporate social responsibility and corporate sustainability. Research, Practical & Social implications: Future studies can consider other indicators of corporate governance and assess their influence on the various dimensions of CSR as well as their linkage with Corporate Sustainability. Implications/Originality/Value: It’s concluded that corporate governance systems exhibit varying interactions with corporate social responsibility dimensions which may be due to changes in the national and institutional framework as well as economic conditions and the type of industry.

Building a corporate governance index (JCGI) for an emerging market: case of Jordan

A comprehensive corporate governance index (JCGI, 0–100) is constructed to measure the quality of corporate governance practices of the universe of publicly traded Jordanian firms during 2018–2019. We survey all firms' corporate governance practices and manually collect governance data for listed corporations in Amman Stock Exchange to construct the first JCGI, which comprises five sub-indices and 60 elements.The results show that Jordanian companies did not progress in the corporate governance reform during the study period. The overall JCGI mean value is 67.80%. Sub-index results show that governance is weakest in both board procedure and disclosure, with a mean value of 57.36% and 52.43%, respectively. The board procedure subindex shows that most listed firms practice poor governance. Within the board structure sub-index, only 18% of the study sample has the policy to specify the board's professional qualifications and training requirements. Results of shareholders' rights show a rigid and nontransparent environment in the enterprises' control structure.

An Index to Study Corporate Governance Practices in Banks in India

Corporate Governance (CG) of banks needs a special attention for many reasons, one of which is that banks are highly vulnerable for financial manipulations. Many factors make up the CG of a firm. It is highly difficult to realize what exactly CG is and define it. Yet, research is essential to understand the rising needs of good CG practices and the impact of such practices. Since many factors make up CG, in this study a CG Index especially designed for banks has been prepared. To know the effectiveness of corporate governance, the index was divided into six sub-indices and to test the index it was used to find correlation of CG practices with firm value measures in terms of price to book value (PBV) and Tobin’s Q as dependent variables. We employed the fixed regression model was run to examine the relationship between the sub-indices and the dependent variables. Apart from CG index, capital adequacy ratio (CAR) and net NPA ratio were also taken as independent variables. Supporting to the existing literature, significantly high correlation was established between CG and PBV and Tobin’s Q, especially by the board of directors and CAR. This study also indicates that the index can be used as proxy for understanding the CG practices of banks in India.​

INFLUENCE OF CORPORATE GOVERNANCE RATINGS ON ASSESSMENT OF NON-FINANCIAL THREATS TO ECONOMIC SECURITY OF JOINT STOCK COMPANIES

Abstract. In modern conditions of transformation and globalization of economic processes, rapid development of information and science-intensive technologies, each company seeks to ensure effective management of its activities and achieve a higher level of competitiveness. The level of quality of corporate governance influences the formation of the rating of enterprises and plays an important role in making decisions about investing in the company. At the same time, ensuring financial security is the most urgent task of society, the state, enterprises and organizations of all forms of ownership, entrepreneurs, and every citizen. In this regard, the practical implementation of recommendations to maintain financial security at the appropriate level will contribute to the completion of market transformations in the financial and credit sphere of the country, increase the level of financial security of enterprises, increase human security. It is corporate-type enterprises, namely joint-stock companies and limited liability companies, that are the main types of business structures that ensure the development of a market economy. Therefore, it is advisable to pay attention to the features of ensuring and assessing the quality of corporate governance of enterprises aimed at implementing the model of long-term sustainable development. The purpose of the article is to establish the impact of corporate governance ratings on the assessment of non-financial threats to the economic security of joint stock companies. In the article In the article the systematization of corporate governance indicators by criteria is carried out; the main components of the S&P corporate governance rating methodology, the CORE rating, the main components of the RID-Expert RA corporate governance rating methodology, the main components of the corporate governance methodology of the Crichton-Miller and Warman methodology, the main components of the Corporate Governance rating rating Credit Rating Agency; the advantages and disadvantages of methods of compiling corporate governance ratings are highlighted. Keywords: rating, corporate governance, economic security, joint-stock company, threats, assessment. JEL Classification E44, G30, K22 Formulas: 2; fig.: 5; tabl.: 0; bibl.: 36.

Corporate Governance and Bank Liquidity Creation in Nigeria: Panel Vector Error Correction

The study surveyed the influence of sound corporate governance on banks’ liquidity creation in Nigeria using secondary data gleaned from annual reports and accounts of Five (5) quoted Deposit Money Banks (DMBs) in Nigeria between 2013 and 2019. The obtained data were subjected to several preliminary and inferential statistical analyses, the result of the descriptive statistics and PVEC Model revealed that all the specified indicators of Corporate Governance, for example, Board Size, Board Independence, and Audit Committee exact a positive influence on Banks Liquidity creation, while only Board Independence and Audit Committee have a significant influence on Liquidity creation of the selected banks. Thus, the study suggested that bank managers and policymakers must ensure that DMBs continuously design and implement effective corporate governance mechanisms to enhance their liquidity.

Corporate Governance in India : Efficiency in Financial Sector

Corporate administration has for some time been perceived as a basic part of a business' progress in the present serious climate. This has been brought to the front because of a progression of high-profile embarrassments, including those including Enron, Parmalat, WorldCom, and Lehman Brothers, and the worldwide local area has perceived the basic idea of successful corporate administration. Corporate administration standards should be intermittently reconsidered considering the undeniably unsure and complex business climate wherein we presently track down ourselves. There has been significant discussion about "what establishes great administration?" all through the world. Administration principles have fundamentally centeredaround more noteworthy leading body of chief obligations, more tight leading group of chief guideline, and expanded investor fomentation lately. Running against the norm, there are no generally perceived principles for evaluating the progress of corporate administration rehearses. Corporate administration as legally necessary has significant constraints as far as viability and ought to be kept away from if conceivable. Also, as verified above, depending essentially on an overall arrangement of standards with no limiting regulation has various weaknesses. Because of the "consistence or-clarify" administration rule, numerous nations have fostered a center street strategy that recognizes the basic variable for progress. This is a judicious procedure since it guarantees that organizations stick to center codes and norms. It empowers more noteworthy adaptability and embraces clever thoughts that benefit partners over the long haul. Because of this methodology, organizations are encouraged to be more straightforward, as any deviations should be openly clarified. At last, yet absolutely not least, a business' drawn out presence is dependent upon its conviction to persistently seek after higher administration norms. While the professional workplace is continuously changing, the key standards of straightforwardness, morals, and responsibility should remain resolute. Having strong corporate administration rules set up is a vital part of carrying on with work in the cutting edge time. As a precondition for battling with intense rivalry for practical development in a powerful worldwide market setting, it additionally goes about as an outflow of the reasonableness, obligation, revelation, and straightforwardness prerequisites important to augment an incentive for all partners. Corporate Governance is tied in with maintaining standards, taking part in moral strategic policies, making a helpful commitment to social issues, and leading business in a way that is reasonable for all partners. Compelling corporate administration is broadly perceived as a vital device for risk the board and financial turn of events, the last option of which is made conceivable by guaranteeing monetary productivity, development, and partner certainty. At the point when the seeds of present day corporate administration are analyzed, obviously the United States' Watergate issue planted the starts of the cutting edge corporate administration development. The resulting examinations empowered US administrative and official associations to pinpoint control shortcomings that empowered various firms to make unlawful political commitments. Subsequently, the United States laid out the Foreign and Corrupt Practices Act of 1977, which has clear arrangements for the foundation, upkeep, and evaluation of inward control frameworks. In 1979, the Securities and Exchange Commission of the United States of America ordered the announcing of interior monetary controls. The Treadway Commission was established in 1985 in light of a progression of high-profile organization disappointments in the United States, most prominently the Savings and Loan fiasco. Its significant occupation was to learn the essential reasons of monetary report distortion and to give suggestions for alleviating such deception.

Corporate governance in India: A comprehensive overview

Corporate governance in India: A comprehensive overview