Corporate Governance Practices Research Articles

Corporate Governance Dynamics and Financial Performance: Analysis of Listed Commercial Banks in the Ghanaian Context"

This study aims to determine the effect of corporate governance on the financial performance of 14 listed commercial banks in Ghana. The research employs a panel data set from 2008 to 2020 to examine how board size, ownership structure, board independence, capital adequacy ratio, audit committee effectiveness, board gender diversity, and overall corporate governance score affect ROA and ROE for banks. These relationships are analyzed using Ordinary Least Squares (OLS) regression within the framework of panel data analysis. Results indicate that ROA is positively related to board size, board independence, audit committee, and Board gender diversity. Also, ROE is positively influenced by companies’ ownership structure, capital adequacy ratio, audit committee effectiveness, and overall corporate employment governance rating. However, there is a significant negative correlation between ROE and women’s representation or board gender diversity. Also, another key finding is that both Return on Assets (ROA) and Return on Equity (ROE) are significantly affected by debt and debt-to-equity ratios. This indicates that banks borrowing more have reduced profitability, underlining the need for a well-managed capital structure and no over-reliance on loans. This study contributes to the understanding of the relationship between corporate governance and performance in the banking sector of Ghana, emphasizing that high-quality governance systems can improve and enhance financial performance. The insight gained from this analysis shows that Banks should aim towards good corporate governance practices such as; maintaining proper board size, promoting greater board independence, ensuring efficient audit procedures, and encouraging more gender diversity to enhance profitability. The outcomes also emphasized a well-built base of capital and concentrated ownership, enabling better financial results.The outcomes of this research are useful to Ghanaian policymakers, regulators, and bank executives who view the need for strong corporate governance environments to buttress the stability and growth of the banking sector.

The Influence of Ownership Structure, Board Composition and Financing Decisions on the Performance of Manufacturing Companies in the Consumer Goods Sector

This research aims to investigate the impact of ownership structure, board size, proportion of independent directors, funding decisions, company size, and dividend policy on the performance of consumer goods manufacturing companies. Purposive sampling was employed for data collection. Results indicate that ownership structure and board size positively and significantly influence company performance, as measured by Tobin's Q and ROA. However, the proportion of independent directors, funding decisions, company size, and dividend policy do not exhibit significant effects. Consequently, effective management of ownership structure and board size is crucial for enhancing company performance in the consumer goods manufacturing sector. These findings provide valuable insights for companies to improve their performance and corporate governance practices, fostering stability and sustainability in alignment with economic trends.

Enhancing Capital Market Efficiency: The Reducing Role of Data Assets Disclosure on Stock Price Synchronicity

In the burgeoning digital economy, data assets have emerged as a pivotal factor of production, embodying a critical source of competitive advantage and core assets for companies. This study investigates the influence of data assets disclosure on the efficiency of capital market pricing, particularly through the lens of stock price synchronicity among Shanghai and Shenzhen A-share listed companies from 2013 to 2021. The analysis reveals that transparent data assets information significantly diminishes stock price synchronicity. The reduction is more pronounced when the disclosed data assets information is highly verifiable and comprehensible. Mechanistic exploration suggests that this effect primarily arises from diminished information asymmetry, enhanced long-term investments by institutional investors, and eased financing constraints. Notably, the impact is more substantial in non-high-tech companies and those with superior information disclosure ratings. After rigorous robustness checks and endogeneity considerations, our findings persist, highlighting the critical function of data assets disclosure in reducing stock price synchronicity and offering actionable insights for refining corporate information disclosure and governance practices.

Interlocking directorships and firm performance: the role of board diversity

PurposeThis study aims to examine the impact of interlocking directorships on firm performance in Turkey, with a specific focus on the moderating role of board diversity.Design/methodology/approachUsing a panel dataset comprising the top 100 firms listed on Borsa Istanbul from 2014 to 2018, this study employs regression analysis to investigate the relationship between interlocking directorships, board diversity, and firm performance. It firm-level financial data and directorship information to assess the effects of interlocking directorships on firm performance while also considering the moderating influence of board diversity.FindingsThe findings of this study reveal several important insights. First, the results confirm the “busyness hypothesis” as an increase in the number of interlocks per director negatively impacts firm performance, indicating reduced monitoring effectiveness. However, the study also demonstrates that board diversity plays a significant moderating role. Specifically, board diversity positively influences the relationship between interlocking directorships and firm performance, suggesting that a diverse board can mitigate the negative effects of interlocks and enhance overall firm performance.Originality/valueThis study contributes to the existing literature in several ways. First, this study extends our understanding of the relationship between interlocking directorships and firm performance, considering contingency factors in the Turkish market. Second, our findings imply that board diversity mitigates the negative impact of busy interlocking directorates and improves firm performance, which provides invaluable directions to firms in setting their boards. Moreover, this research enhances corporate governance practices in Turkey and beyond in other emerging markets with similar corporate governance mechanisms by identifying the importance of board diversity and its moderating influence.

The Effect of The Application of Good Corporate Governance (GCG) Principles on Job Satisfaction and Employee Performance

The application of good corporate governance principles is vital in all companies, particularly in the banking sector. This study examines the impact of good corporate governance on job satisfaction and employee performance, as well as the relationship between job satisfaction and employee performance. Public trust in state-owned banks is higher than that of private banks, making BNI an interesting case study. BNI, as the only state-owned bank operating globally, is known for its good corporate governance practices, as evidenced by its high CGPI score. This study focuses on permanent employees of BNI's Regional Office 15 in East Jatinegara, Jakarta. A survey was conducted among 125 respondents using SEM PLS. The results show that good corporate governance principles positively affect job satisfaction and employee performance, but job satisfaction does not directly impact employee performance. This research contributes to managerial implications, suggesting that companies can redesign positions, promotions, salaries, or rewards to enhance job satisfaction among employees. The findings of this study are expected to provide insights for managers to improve employee satisfaction and performance by implementing good corporate governance practices.

Board Gender Diversity, Governance, and Firm Value: An International Evidence

Using firms across 95 countries, the paper finds that a higher percentage of females on the boards is associated with better corporate governance practices concerning the proportion of independent directors, governance disclosure, employee Corporate Social Responsibility (CSR) training, existence of a CSR committee, and board age diversity. Propensity score matching finds that a higher representation of females on the boards can improve board independence, disclosure, CSR training, and firm value. Based on instrumental variable analysis, the findings show that more female directors positively and significantly affect the board age diversity, independent directors, governance disclosure (with GDI annual), and market value.

The Big Bank Scam: Failure of Corporate Governance

The case deliberates the series of events exposing serious shortcomings in corporate governance and risk management practices of one of India’s oldest and most venerable financial institutions but also cast a glaring spotlight on various unfathomable issues of corporate governance such as weak institutionalisation of whistleblowing mechanism, ethical lapses and regulatory oversight within the banking sector. The case provides an opportunity to understand the key components of corporate governance structure and consequences of poor corporate governance. The case highlights the responsibility of the board of directors and audit committee and discusses the changes required in the corporate governance structure necessary to ensure that such incidents do not take place. The case attempts to unearth the weaknesses in the bank’s internal processes that led to a scam of this magnitude and why it remained ongoing and undetected for several years. We found that there is a need for banks to leverage the latest advancements in technology to upgrade their internal functions and processes and make them more accountable and transparent. Further, it also opens the debate on whether public sector banks and other financial institutions should be guided solely by the profit maximisation motive, or they also meet their social obligations.

Critical Perspectives of Organisational Behaviour towards Stakeholders through the Application of Corporate Governance Principles

Corporate governance is gaining interest not only from investors but companies that want to operate in international markets, prompting a more thorough analysis of the field to prioritise stakeholder interests alongside shareholder value. By adopting a holistic approach that considers stakeholders’ diverse needs and expectations, companies can build resilience, foster trust, and create sustainable value for all stakeholders, ensuring long-term success and societal impact. This paper analyses corporate governance principles applied at the international, European, and national levels, emphasising the importance of the field for the stakeholders. The practical approach of the paper analyses the application and compliance of the corporate governance code of 18 companies in the field of financial intermediation and insurance, which are listed on the Bucharest Stock Exchange, underlining the crucial role of transparency of operations in instilling confidence and reassurance in stakeholders. The conclusions present proposals for measures to improve corporate governance practices at the level of companies.

THE ROLE OF ETHICAL PRACTICES IN ACCOUNTING: A REVIEW OF CORPORATE GOVERNANCE AND COMPLIANCE TRENDS

This comprehensive review delves into the pivotal role of ethical practices in accounting, specifically focusing on corporate governance and compliance trends. Ethical considerations in accounting are not merely regulatory checkboxes but constitute the moral compass guiding financial professionals towards transparency, integrity, and accountability. The review provides a glimpse into the core themes explored in this review. The contemporary business landscape is marked by increased scrutiny of ethical practices within accounting frameworks. This review navigates the intricate interplay between ethical considerations, corporate governance structures, and compliance trends that collectively shape the ethical fabric of financial reporting. Examining corporate governance practices reveals their intrinsic link to ethical conduct in accounting. Effective governance structures serve as bulwarks against financial improprieties, fostering a culture of responsibility and ethical decision-making. The review scrutinizes evolving corporate governance models, their impact on financial transparency, and the role they play in mitigating risks associated with unethical accounting practices. Compliance trends, both globally and regionally, are explored to understand the ever-evolving regulatory landscape. Stringent compliance requirements act as safeguards, ensuring adherence to ethical standards. This review investigates how organizations navigate the complex web of regulatory frameworks, emphasizing the importance of proactive compliance measures in upholding ethical standards and fortifying the trust of stakeholders. Ethical considerations are not confined to regulatory frameworks; they permeate the organizational ethos, influencing decision-making at every level. The review delves into case studies and real-world examples to illustrate the tangible consequences of ethical lapses, emphasizing the need for a robust ethical foundation in accounting practices.  In conclusion, the review underscores the indispensable role of ethical practices in accounting, illuminating the symbiotic relationship between corporate governance, compliance trends, and ethical conduct. As businesses navigate an era of increased accountability, understanding and embracing ethical imperatives in accounting emerge not only as legal mandates but as essential components for sustaining trust, fostering transparency, and fortifying the integrity of financial reporting practices. Keywords:  Ethical Practices, Accounting, Corporate, Governance, Compliance.

Climate change disclosure and firm value in a frontier market: Exploring the determinants

AbstractWe examine the factors that influence climate change disclosure and its effects on firm value in the context of Sri Lanka. By leveraging data spanning 1031 firm‐year observations from 2017 to 2022, an innovative machine‐learning technique is employed to quantify the level of climate change disclosure within annual corporate reports. Our findings indicate that factors such as firm size, size of the board of directors, the presence of independent and non‐executive directors on the board, and gender diversity of the board positively impact the extent of climate change disclosure. Notably, CEO duality, where the CEO and chairman roles are held by the same individual, demonstrates a negative relationship with climate change disclosure, suggesting that distinct roles can enhance transparency. This underscores the significant role of robust corporate governance practices in promoting environmental transparency and accountability. Additionally, the paper further assesses the implications of climate change disclosure on firm value, revealing that enhanced transparency in climate change disclosure positively impacts firm value.

Lead Independent Directors and Internal Information Environment

ABSTRACTResearch Question/IssueThis study explores the relationship between the presence of a lead independent director (LID) and firms' internal information environment. LIDs are elected independent members of the board who perform key duties for the independent directors and the board, including reviewing and approving board meeting agendas, chairing non‐executive board meetings, and acting as a liaison between the CEO and other independent directors. We hypothesize that LID presence lowers information barriers between the CEO and the rest of the board members, enabling more rapid information acquisition and integration and enhancing the internal information environment of the firm.Research Findings/InsightsUsing a sample of US publicly listed companies from 2001 to 2019, we document that LID presence on the board is positively associated with proxies of internal information quality that reflect better information acquisition and information integration: accuracy and precision of management earnings forecasts, speed of earnings announcement, and absence of material weaknesses in internal controls. These results are robust to alternative model specifications, including entropy balancing, Heckman two‐step correction for self‐selection bias, firm fixed effects, and placebo tests. Further analyses suggest that LIDs with financial expertise and audit committee memberships are more effective in positively influencing internal information quality. We also show that LID presence is positively associated with several proxies of external information quality.Theoretical/Academic ImplicationsWe build on agency theory to argue that LIDs improve internal information quality by reinforcing the information quality benefits of unified leadership while mitigating potential compromises in information quality arising from entrenchment. Similarly, we use arguments emanating from the novel strategic leadership systems theory to posit that a LID appointment facilitates the tasks of the CEO and the board, enhancing the effectiveness of both groups in their respective roles: the CEO in making operating and investment decisions and the board in strengthening oversight while bringing cohesion in their shared role of strategy visioning and implementation.Practitioner/Policy ImplicationsOur findings suggest that there is scope for shareholders to consider LID appointments as an addition to their firms' corporate governance structures to enhance the internal information environment and decision‐making efficiency. Policymakers can also encourage LID appointments on the board when promoting best practices in corporate governance through regulatory guidelines.

Corporate Governance Mechanisms and Financial Performance: An Analysis of Listed Companies in Brazil

Purpose: The aim of the study was to investigate the corporate governance mechanisms and financial performance: an analysis of listed companies in Brazil.
 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 analysis of listed companies in Brazil found that strong corporate governance practices are associated with improved financial performance. Factors such as board independence, transparency, and shareholder rights positively influence profitability, liquidity, and market valuation. This highlights the vital role of effective corporate governance mechanisms in fostering investor confidence and driving sustainable financial success in Brazil.
 Unique Contribution to Theory, Practice and Policy: Agency theory, stakeholder theory & resource dependency theory may be used to anchor future studies on the corporate governance mechanisms and financial performance: an analysis of listed companies in Brazil. By emphasizing the pivotal role of board independence, transparency, and shareholder engagement, the study provides tangible guidance on governance practices that can be effectively implemented to bolster financial performance. Policymakers tasked with overseeing the corporate governance landscape in Brazil

Improving the sustainability of banks using insightful corporate governance practices: a qualitative inquiry in an emerging economy

Purpose In the past few years, researchers across the world have been attracted to corporate governance (CG) and sustainability studies in the banking space. However, inconsistencies remain, which have created a lack of alignment in existing research. To address this problem, this paper aims to re-examines the CG–bank sustainability relationship using a qualitative design, which has been underused in the field, to generate in-depth, useful and novel analysis and insights that may hide behind the numbers. Design/methodology/approach A qualitative inquiry was conducted using key informants in Ghana’s banking industry. This study made use of purposive and snowball sampling techniques, an interview guide and the thematic approach to qualitative data analysis. Findings Firstly, this research finds that while larger boards do not promote bank sustainability, those who are independent and have diversified expertise and experiences do. Secondly, CEO duality can boost bank sustainability only if the CEO is actively engaged and performing. Thirdly, this study finds that foreign-owned and managed banks make more profits only if they have good knowledge of the local market. Research limitations/implications This research makes the call that upcoming researchers should replicate this research in other banking settings worldwide to validate the results. Practical implications Practical lessons for local and foreign-owned banks and their shareholders are discussed to advance the United Nations’ Sustainable Development Goal 8. Originality/value This research shares novel insights that offer clarity to the literature and move the CG and sustainability fields forward.

The Liability of Company Board Members: A Comparative Study on Civil, Criminal, and Disciplinary Aspects

This study emphasizes the importance of corporate governance practices in providing strategic guidance for the direction and management of a company. It highlights the need for effective oversight of executive management by the board of directors and underscores the significance of holding the board of directors accountable to both the company and its shareholders. According to general principles, board members can be held responsible if they violate the law or the company's bylaws, whether their actions result in harm to the company and its shareholders or third parties. Board members may face various forms of responsibility, including civil, criminal, and disciplinary liability, depending on the circumstances. Any clause that attempts to exempt board members from liability for their actions is considered invalid, and they can only be absolved from responsibility in cases of force majeure, the fault of the aggrieved party, or actions by third parties. Therefore, this study discusses the multifaceted responsibilities of board members, encompassing civil, criminal, and disciplinary aspects.

The Impact of The Computerized Accounting Information System in Reducing Financial Risks in Jordanian Commercial Banks

Purpose: The purpose of this study was to assess the impact of computerized accounting information systems (CAIS) on reducing financial risks within Jordanian commercial banks listed on the Amman Stock Exchange. This involved examining the components, characteristics, and benefits of CAIS in this context.   Methods: The study employed a questionnaire-based approach to gather information, distributing 75 questionnaires among financial managers and internal auditors within Jordanian commercial banks. A total of 64 questionnaires were retrieved and analyzed to draw conclusions.   Results and Discussion: The analysis revealed a significant impact of various variables related to computerized information systems in mitigating financial risks within the sampled banks. This finding underscores the importance of CAIS in enhancing risk management practices within the banking sector. Notably, the study highlights the necessity of corporate governance implementation and the preparation of specialized reports to enhance financial risk disclosure processes.   Implications of the Research: The findings of this research have several implications for both academia and practice. Firstly, they emphasize the crucial role of CAIS in reducing financial risks within commercial banks. Secondly, they underscore the importance of implementing robust corporate governance mechanisms to strengthen risk management frameworks. Additionally, the study suggests the need for further research to explore the impact of accounting information systems on different types of risks and their consequent effects on financial performance.   Originality/Value: This study contributes to the existing literature by providing insights into the specific context of Jordanian commercial banks and their utilization of CAIS for managing financial risks. By identifying the components, characteristics, and benefits of CAIS in this setting, the research adds valuable knowledge to the field of accounting and finance. Moreover, its recommendations for enhanced corporate governance practices and specialized reporting can inform practical strategies for risk management in banking institutions.

Effect of Corporate Governance Practices on the Performance of an Established Medium-Sized Enterprise in the Mining Industry in South Africa

It is evident that SMEs have formed a significant part of the broader South African mining industry, faced their fair share of constraints and challenges, and often experienced a high failure rate. In light of this, the research objective of this study is to identify the CG practices followed by an established medium-sized enterprise in the mining industry. The study explored ethical culture, good performance, effective control, and legitimacy as CG outcomes in this particular SME, aiming to determine whether these practices have effectively addressed the challenges faced by SMEs. The study employed a qualitative research approach with two stages. First, a review of previous research regarding SME challenges. Second, a case study research design with a single medium-sized enterprise mine in the North-West province will be used as the unit of analysis. Data were collected using MS Teams, telephonic, and semi-structured interviews. The transcribed interviews were analyzed using Microsoft Excel. The SME demonstrated a strong ethical culture, achieved good performance through regular performance reporting and evaluation of the company’s core purpose, aligned to the effective control theme since the SME has a unique governing body and addresses the challenges of their size by implementing a governance structure and delegating authority and holds regular meetings with internal and external stakeholders to maintain a good relationship with stakeholders in order to fulfill the legitimacy theme. The study, therefore, concluded that CG outcomes are well understood and practiced by SMEs in the mining industry, affirming the effectiveness of these practices in addressing the challenges faced by SMEs.

Effect of internal audit, internal control, and audit quality on fraud prevention: Evidence from the public sector in Indonesia

Fraud prevention entails developing and implementing risk management strategies, particularly regarding fraud, and establishing internal controls and transparent corporate governance practices to eliminate fraudulent activities. This study aims to examine the effect of internal auditors, internal control, and audit quality on preventing fraud at the Inspectorate of North Sumatra Province, Indonesia. The sample included 61 government internal auditors of the Inspectorate of North Sumatra Province, Indonesia. The data collection process was carried out by administering questionnaires using Google Forms. Additionally, this investigation assessed the constructs under scrutiny using a five-point Likert and the partial least square (PLS) approach. The results showed that internal audit has a positive and significant effect on fraud prevention (p < 0.05), internal control has a positive and significant effect on fraud prevention (p < 0.05), and audit quality has no effect on fraud prevention at the Inspectorate of North Sumatra Province, Indonesia (p > 0.05). The Inspectorate of North Sumatra Province, Indonesia, should conduct internal audits, implement an internal control system, and pay attention to the quality of audits to make them more effective as a basis for quality decision-making and fraud minimization.

The Choice of Values Behind Corporate Law: A Critique of Shareholder Primacy and a Response to China's Proposal

The theory of shareholder primacy, as an important value judgment in the U.S. corporate law on corporate governance model, has influenced the shaping of legal rules of corporate governance in different countries and regions of the world, as well as the revision of China's corporate law. The theoretical lineage of shareholder-centrism has its own peculiar soil of existence and should not be regarded as a universal value behind the norms of corporate law. Even in the U.S., shareholder primacy is highly controversial, and the direction it advocates is contradictory to the reality of corporate governance practices. China has not been affected by the shareholder primacy debate in the current revision of its corporate law, but has adopted a corporate power allocation model with Chinese characteristics, so as to achieve a balance between the efficiency of corporate governance and the protection of shareholders' interests.

Corporate Governance Practices of Commercial Banks: An Investigation in Select Public Sector Banks in India

Corporate Governance Practices of Commercial Banks: An Investigation in Select Public Sector Banks in India

Corporate governance and Indonesian state-owned companies’ performance: Agency and institutional perspectives

The purpose of this study is to investigate the relationship between corporate governance practices and Indonesia’s SOEs' performance. State-owned enterprises (SOEs) are often criticized for underperformance and political manipulation, raising doubts about the efficiency of implemented corporate governance mechanisms. Additionally, this research examines the moderating role of board diversity on the relationship between good corporate governance (GCG) and performance. This study adopted a quantitative method to analyze secondary data from SOE’s financial statements from 2012 to 2019. The key independent variable is the GCG score, while return on assets is the dependent variable. The regression model incorporates managerial diversion variables and control variables. Surprisingly, the results found that corporate governance practices adversely affect the performance of Indonesian SOEs, particularly when board members have political affiliations. Institutional theory explains the negative relationship between the implementation of GCG and the performance of state-owned companies from coercive and mimetic perspectives. The phenomenon often happens in a developing country when a new system is adopted without fully understanding its mission. Additionally, the significant role of the Board of Commissioners' political connection as a moderating variable supports the conjecture of the managerial diversion perspective. This research contributes empirical insights for SOE stakeholders about corporate governance implementation and the performance of Indonesia's SOEs from the perspective of an emerging economy. The paper contributes novel views to agency and institutional theory for developing countries.