Corporate Governance Practices Of Firms Research Articles

The corporate governance lifecycle in emerging markets – the case of the Republic of Korea

PurposeThis paper aims to examine the impact of the corporate lifecycle on the corporate governance practices of firms in the Republic of Korea.Design/methodology/approachThe authors use five corporate lifecycle measures and corporate governance scores from Black et al. (2012) to estimate governance-prediction models inclusive of corporate lifecycles measures for a sample of 497 Republic of Korea firms over the 1998–2004 period.FindingsThe authors find little evidence which points to a corporate governance lifecycle for firms in the Republic of Korea. The findings suggest that factors other than firm lifecycle best explain the corporate governance practices of firms in Korea.Originality/valueUsing a battery of lifecycle measures and corporate governance indexes and subindexes, the authors believe this paper represents the most rigorous study yet to study the corporate governance lifecycle in an emerging market economy, namely, the Republic of Korea.

Foreign Investors and Governance Quality in Extreme Institutional Environments

We draw on practice transfer theory to advance the corporate governance mobility literature by developing a framework that uncovers how foreign institutional investors (FIIs) transfer and improve on corporate governance practices of firms in challenging institutional environments. Using hand-collected data for 85 listed Nigerian firms covering 2011-2016 period, we show that FIIs bypass information disadvantage, weak governance enforcement institutions in extreme institutional environments by transferring good governance standards to firms in the host country of investment. More so, we show that the severity of FIIs transfer and enhancement of corporate governance quality of firms in challenging institutional environments is positively moderated by their legal origin. Specifically, FIIs from common law countries significantly enhance the ability of these investors to transfer and improve on the CG practices of firms in challenging emerging economies. On the other hand, high cultural distance between FIIs country of origin and the investment country negatively moderate this relationship. Our results are robust to the choice of estimation method, sample selection, and control for other factors that influence corporate governance practices. We also highlight theoretical and practical implications of the study.

Corporate Governance Practices in the Context of the Pandemic Crisis

What is the impact of the COVID-19 crisis on the corporate governance practices of firms? In this paper, first, we discuss the impact of COVID-19, then analyse how corporate governance practises have been affected and conclude with recommendations of policies to be adapted by firms in principle to cope with pandemics of this magnitude. The pandemic crisis triggered unprecedented changes in the manner the firms are governed and managed. This discussion suggests that pandemics have an impact on the governance of firms and how going forward, firms should be prepared to face any eventualities by paying attention to business continuity plans in the event of natural disasters and pandemics. Overall, this paper provides some of the initial insights on how COVID-19 pandemic has given rise to both opportunities and challenges for firms. This article recommends a corporate governance policy focussing on sustainability, well-being and IT infrastructure of coping with any future challenges arising from the aftermath of the pandemic crisis.

The Impact of Corporate Governance Mechanisms on Earnings Management: A Case of Indian Stock Exchange Listed Companies

The present study contributes to literature by investigating the impact of corporate governance practices on earnings management. To achieve the objectives of this study, we analysed a sample of 50 large capitalization companies from 10 different sectors viz. automotive, oil and gas, pharmaceuticals, cement/construction, chemical, real estate/ retail, food and beverage, technology, engineering and metals and mining listed on BSE for the period 2005–06 to 2015–16. Corporate governance has been quantified through its different attributes, i.e., board size, board committee meeting frequency, board independence, role duality (CEO/chairman), audit committee meeting frequency and audit committee independence. Earnings management is measured by discretionary accruals calculated using modified Jones model developed by Dechow, Sloan and Sweeney (1995). Empirical findings of overall analysis reveal that board size and earnings management are negatively associated whereas board meeting frequency is positively associated with earnings management. In the sector-wise analysis, impact of corporate governance in constraining earnings management was found to be relatively higher and consistent in Oil and Gas sector and Technology sector as compared to other sectors. The findings of the study have important policy implications as they encourage adopting corporate governance practices in firms in order to mitigate earnings management.

The role of corporate governance in foreign investments

This article examines whether and how the corporate governance practices of firms affect foreign investors’ decisions to invest in their firms. Using a comprehensive data set of foreign equity holdings of mutual funds from 37 countries worldwide, we find that fund managers tend to tilt their portfolio weights towards firms with strong governance systems. Particularly, they invest more in foreign firms with good board characteristics and independent auditors. This result suggests that mutual funds, facing informational disadvantage in their foreign investments, prefer firms with better governance systems as a substitute for their own costly information acquisition and monitoring activities. Furthermore, firms with better governance structures attract more foreign investments irrespective of their country-level investor protection environments.

Cultural Dimensions, Ethical Sensitivity, and Corporate Governance

The economic globalization process has integrated different competitive markets and pushes firms in different countries to improve their managerial and operational efficiencies. Given the recent empirical evidence for the benefits to firms and stakeholders of good corporate governance (CG) practice, it is expected that good CG practice would be a common strategy for firms in different countries to meet the increasingly intense competition; however, this is not the case. This study examines the differences in CG practices in firms across different countries using the concept of ethical sensitivity. Through the regression analysis of 271 firms in 12 countries and regions, it is found that Hofstede’s cultural dimensions can explain the differences in CG practices. Furthermore, the results demonstrate the influence of culture on ethical sensitivity, which eventually determines the CG practices in different regions.

Web 2.0 and the new directions in Corporate Governance practice

This paper provides a world view on how the advent of Web 2.0 technology would distribute, democratise and pull in the wisdom of stakeholder mass and crowd, in better managing the Corporate Governance (CG) of firms. The author uses reasoning and analysis to generate the futuristic perspective of the effect of Web 2.0 on CG practices of firms. The author provides the view that because of web 2.0 more stakeholders both in number and in type would use the web to provide critical reviews regarding the Board of Director's (BoD) CG performance.