Corporate Governance Theory Research Articles

Rethinking Corporate Governance: A Comparison of Agency, Stakeholder, and Cognitive Approaches

This article analyzes three main theories of corporate governance: agency theory, partnership theory and cognitive theory. Agency theory focuses on control mechanisms designed to mitigate conflicts of interest between owners and managers. In response to the limitations of this approach, partnership theory broadens the perspective by taking into account a wider set of stakeholders, while emphasizing the need for ethical and collaborative governance. Cognitive theory, meanwhile, emphasizes the importance of learning and innovation in creating value within organizations. The article provides a comparative analysis of these three theories, identifying their convergences and divergences, as well as their relevance to current governance practices. This reflection shows that these theories, far from being mutually exclusive, offer complementary perspectives for developing more inclusive governance mechanisms, capable of responding to contemporary challenges while integrating the economic, social and cognitive dimensions of organizational performance.

The Influence of Business Ethics and Diversity on ESG Disclosure: Empirical Evidence from Indonesian Firms

This study examines the impact of corporate governance mechanisms, board characteristics, and ethical leadership on Environmental, Social, and Governance (ESG) performance in Indonesian companies. The analysis investigates how board ethics, independence, tenure, ownership structure, and other governance factors influence ESG scores. The findings reveal that board ethics and independence significantly improve ESG performance, supporting the role of ethical leadership and resource dependence theory in shaping corporate sustainability. Additionally, the study highlights the role of institutional ownership in driving ESG outcomes, particularly in emerging markets. Cultural factors, such as board culture, also contribute to the variability in ESG performance, suggesting the importance of aligning corporate governance practices with local values and global sustainability standards. The results have important theoretical implications, extending corporate governance theories to the context of developing economies. Practically, the findings provide insights for policymakers, corporate leaders, and investors to enhance ESG performance through effective governance reforms and ethical leadership. This study offers a significant contribution to the growing literature on ESG in emerging markets and provides a foundation for future research on corporate sustainability in different institutional settings.

Blockchain Espousal in Legal Compliance with Corporate Governance

There is much exhilaration about blockchain technology in practically every business, including financial, and significant investments are being made worldwide. In order to uncover critical criteria for blockchain espousal in corporate governance, we undertook a systematic examination of a sample of 52 articles (10 industrial and 42 academics) through a preliminary research period from 2012 to 2020. We perform textual and empirical research to build a paradigm for decentralised autonomous governance. Additionally, we relate classic corporate governance theories to blockchain espousal using this framework. Our research also focuses on how blockchain technology may be used to improve the way corporations are run, now and in the future, as well as its possible consequences. By doing a systematic study and conducting an analysis of the text, we uncovered other gaps in the earlier academic and industrial literature and common tendencies. In addition, as part of our empirical research, we are compiling a one-of-a-kind blockchain investment database to make future investment projections. In addition, in the course of and after the COVID-19 conference, we researched the many ways blockchain technology may be used to improve corporate governance. According to our findings, previous academic publications prefer to concentrate on regulation and Initial Coin Offerings (ICOs). In contrast, previous publications in the sector have focused on exchanges and cryptocurrencies. Final thoughts on the impact of blockchain technology on corporate governance from the perspectives of behaviour, law & regulatory requirements, ethical considerations and managerial practices.

Fiduciary duty for directors and managers in the light of anti-ESG sentiment: an analysis of Delaware Law

ABSTRACT The global rise in ESG regulations, particularly in Europe, is impacting businesses worldwide. Research grows on a positive correlation between ESG and corporate performance, and 2023 constitutes a turning point marked by a backlash in the U.S. This has prompted a reassessment of sustainability strategies and raised concerns about potential conflicts with the fiduciary duties of directors and portfolio managers. This paper explores the tension between ESG and shareholder primacy under Delaware law, which is home to 66% of Fortune 500 companies. It is a contribution to the theories of shareholder primacy and corporate governance with the most up-to-date evidence, at the intersection of law, economics and finance. Although Delaware courts have not specifically approached the liability extent of directors and asset managers in ESG-related decisions, they have established the elements of the fiduciary duties of care and loyalty, which can be applied to ESG-aligned decisions. This paper highlights guidelines for directors, portfolio managers and fiduciaries when making ESG-aligned decisions, in particular the careful documentation of the process followed in reaching a decision. The paper also calls for more rigour in the field of sustainability.

Behavioural Theory of Corporate Governance in Multi-National Corporations

Behavioural Theory of Corporate Governance in Multi-National Corporations

Project Management theories and Corporate Governance: Towards Effective Management of Small Farming Cooperative Projects

Project management is defined as the process of applying project knowledge, skills, tools and processes to the established tasks of a project to fulfil the objectives of the project. The planning, execution, controlling, monitoring and closure processes are guided by domains of expertise such as integration, scope, budget, schedule, quality, procurement, communication, human resources, stakeholder management and risk management. This paper sought to analyze theories of project management and corporate governance for effective management of small farming cooperatives. The study adopted a conceptual approach to demonstrate the managerial processes of the theories of project management and corporate governance and how they relate to one another. In the process the literature has revealed that project management is seen by organizations as new methods to plan and manage changes. These planned activities, if not properly coordinated using project management skills, may lead to an unsuccessful project. Project success depends on number of factors ranging from project efficiency, impact on the customer, impact on the project team impact and business or organizational success. The Corporate governance (CG) has been increasingly prevalent in organizations in recent years, and its significance is now acknowledged on a global scale. It has even been adopted by countries where regulations governing the use of CG in organizations have yet to be implemented. The reason for CG's universal appeal is that it serves as the cornerstone of an organization’s operational structure. The article concludes with the relevance of these theories towards effective management of small farming cooperatives.

Examination of the interplay between corporate governance theories and sustainable practices in companies: A review study

The objective of this review study is to comprehensively investigate and integrate existing corporate governance theory and its influence on sustainability performance. In light of the growing importance placed on sustainable development goals and ethical business practices, scholars and practitioners must comprehend the impact of corporate governance systems on sustainability results. This study aims to analyze academic publications in order to find patterns and trends in the literature. By doing so, it aims to get insights into how corporate governance theory may promote sustainability actions. This review aims to provide a detailed understanding of the intricate relationship between corporate governance structures and sustainable business practices by analyzing different aspects of corporate governance theories, such as agency theory, stakeholder theory, institutional theory, and legitimacy theory. The results of this study can provide helpful advice to governments, business executives, and investors that aim to improve sustainable performance through the implementation of efficient governance structures. Moreover, this review offers valuable knowledge for scholars and researchers regarding the specific corporate governance theories that are strongly linked to sustainable practices.

АГЕНТСКАЯ ТЕОРИЯ КОРПОРАТИВНОГО УПРАВЛЕНИЯ И РАЗНООБРАЗИЕ СОВЕТОВ ДИРЕКТОРОВ

An analysis of the problem of diversity in the composition of boards of directors is presented in the light of the agency theory of corporate governance. The impact of diversity on the effectiveness of decision-making, control and monitoring, the ratio of the CEO's salary to employees, and the financial performance of the company is considered

Islamic Corporate Governance Based On Sharia Enterprise Theory Grounded In Nubuwwah Morals

The purpose of this paper is to review some writings about corporate governance in Islamic perspective. The author also tried to contribute thoughts to enrich the theory of Islamic corporate governance, namely GCG based shariati enterprise theori based nubuwwah morals. The writing method used is qualitative research with a literature review approach. This research began by exploring scientific studies of Islamic corporate governance and ended by offering a new approach to thinking on GCG theory. Corporate governance mechanisms in Shariati-based Islamic enterprise theori more see corporate control as self-control with the principle of Tawhid carried out by individuals and corporate organizations by sticking to improving the quality of individual and social piety. The concept of moral nubuwwah helps the company always carry out the company's activities by prioritizing humanist, transcendental and teleological character.

STUDY ON THE SUSTAINABLE DEVELOPMENT OF CHINA'S EXPORT MANUFACTURING ENTERPRISES IN THE YANGTZE RIVER ECONOMIC BELT UNDER THE BACKGROUND OF "DOUBLE CARBON"

As a core part of the national economy, manufacturing is the key to achieving sustainable economic development. However, the development of China's manufacturing industry faces many problems, such as poor industrial structure, lack of key core technologies, and serious overcapacity, which seriously affect the quality of China's manufacturing industry. The Yangtze River Economic Belt not only has great strategic significance for coordinating the development of the east, middle and west China, but also a demonstration belt for the sustainable development of manufacturing industries. Amid the Chinese government's "double carbon" implementation in 2020, how to transform and upgrade these export manufacturing enterprises and find a path to sustainable development is a major challenge they will have to face. Therefore, on the basis of combing domestic and foreign literature, taking "quality-sustainable development-sustainable development of manufacturing industry" as the logic line, and combine the theory of sustainable development, environmental Kuznets curve theory, equatorial principle theory, and corporate governance theory. Second, it measures and evaluates the sustainable development of manufacturing industry in the Yangtze River Economic Belt from 2007 to 2019 through quantitative research. Conclusions: When assessing the status, the quality level of sustainable development of manufacturing industry in the Yangtze River Economic Belt has been steadily improving, more than 80% of the provinces and cities in the Yangtze River Economic Belt have high and medium quality. Finally, targeted countermeasures and proposals are put forward.

The impact of board gender diversity on the accrual/real earnings management practice: evidence from an emerging market

This paper examines the impact of gender diversity on financial reporting quality (accrual and real earnings management). We use a sample of 78 Egyptian listed companies over the period 2009–2021. The quality of financial reporting is measured using different models of earnings management (accrual and real earnings management). Accrual earnings management (AEM) is detected through four different models developed by modified Jones model, the Kasznik model, Kothari model, Raman and Shahrur model, while real earnings management (REM) is measured using six different model which are abnormal cash flows from operations (ABCFO), abnormal production costs (ABPROD), abnormal discretionary expenditures (ABDISEXP) and three aggregate proxies (RM1, RM2, RM3). Using the system generalized method of moments, companies with more gender diversity are more effective in reducing accrual earnings manipulation (AEM). The exception is the modified Jones model. Moreover, we find that gender diversity is positively and significantly correlated with financial reporting quality based on proxies of real earnings-based activity, except for RM2. The study found a non-significant and negative relationship between board diversity and RM2 as a proxy for REM. Overall, the empirical results based on accrual and real earnings management models (AEM and REM) support the notion that enterprises with more gender diversity on the board are more effective in controlling earnings manipulation practices. The predictions of corporate governance theories are confirmed. Policy makers should continue to promote and support gender diversity in leadership positions within organizations. This can be achieved through initiatives such as diversity quotas, mentoring programs, and leadership development opportunities for women.

“Et tu, Bruté?”: Do audit committees besmirch investors’ desire for increased disclosures?

AbstractThis paper presents the results of a content analysis of the comment letters submitted in response to the SEC concept release on the enhancements of audit committee disclosures. The comment letters were drafted by investors and a cross‐section of various governance actors or practitioners, such as audit committees, management, legal advisers, and auditors. Hence, the letters provide insights as to how these different groups interpret the proposed revisions and try to adapt them according to their needs and context. The comment letters are analyzed through the framework of the behavioral theory of boards and corporate governance, which arguably better explains the analysis results over the traditional agency theory framework. The theory examines governance actors’ interactions and behavioral processes and asserts that the corporation is a nexus of stakeholders’ coalitions, who render decisions primarily through engaging in political bargaining rather than through evaluating investor needs. Results show that, while investors are urging enhanced disclosures, audit committee respondents are against the suggested improvements. These results are consistent with the behavioral theory of boards and corporate governance but inconsistent with an agency theory perspective.

Konsep Dan Teori Good Corporate Governance Pada PT. Bank Syariah Indonesia

This research discusses the concepts and theories of good corporate governance applied at PT. Indonesian Sharia Bank. This article reviews the importance of implementing the principles of good corporate governance in the sharia banking industry, with a focus on PT. Indonesian Sharia Bank. In this article, the author explains the concepts and theories of good corporate governance and their relevance to PT. Indonesian Sharia Bank. The author also discusses how PT. Bank Syariah Indonesia applies the principles of good corporate governance in its operations. This article also reviews the benefits obtained by PT. Bank Syariah Indonesia through the implementation of good corporate governance. In this research, the author used a descriptive-analytical method by collecting data through literature studies and analysis of PT's corporate governance policies and practices. Indonesian Sharia Bank. The research results show that the implementation of good corporate governance at PT. Bank Syariah Indonesia has had a positive impact on company performance and the trust of shareholders and customers. The conclusion of this article discusses the concepts and theories of good corporate governance and their application at PT. Indonesian Sharia Bank.Implementation of good corporate governance at PT. Bank Syariah Indonesia provides benefits in improving company performance and shareholder and customer trust.

Family business governance: An integrated approach using agency, stewardship, and social capital theories

The governance of family businesses has been a subject of great interest and research in recent years. As these enterprises contribute significantly to global economies, understanding their governance becomes crucial. Indeed, managing the governance of these organizations presents a unique challenge due to a variety of factors. One prominent aspect is their intricate and enduring stakeholder framework, which encompasses family members, senior executives, and controlling boards (Moufdi & Manosuri, 2021). This contribution, which is theoretical in scope, aims to open a debate on the theoretical approaches of corporate governance that researchers must mobilize while highlighting their main strengths and limitations when it comes to understanding the “family business” phenomenon. The results obtained show that the analysis of their governance requires a combination of the contractual view (agency theory being the dominant theory of this current) and the relational view (encompassing stewardship theory and social capital theory) of corporate governance. We believe that the theoretical framework thus adopted provides a multidimensional understanding of family business governance and provides comprehensive insight and significant relevance in understanding the intricacies of this organization’s governance, offering valuable perspectives for researchers interested in this field of investigation.

The impact of CEO education on the investment attractiveness of companies

Subject. The article considers the influence of CEO education on investment attractiveness of companies. Objectives. We focus on assessing the impact of CEO's level of education on company’s investment appeal. Methods. The empirical evidence contains observations on the 103 largest companies by capitalization from three macro regions: Russia, the USA, and Europe, for 2021. To test the stated hypotheses, we employ linear regression and neural network. The latter enables to build more complex (and hidden) dependencies due to multi-stage transformation of variables, and get a better predictive ability of the theoretical model on a test set than a classical linear regression. The outliers in the sample are replaced with typical values, using the k nearest neighbors method. To select the most significant independent variables in the dataset, we use a random forest algorithm that shows which variables should be included in the model. Results. The study confirmed that if Russian CEOs have an MBA degree, technical education and a degree from a prestigious American university, or technical education from European universities, this makes companies more attractive to investors. The findings serve not only as a theoretical basis for development of the agency theory of corporate finance and corporate governance, but also can be applied in practice by company shareholders to select CEOs. Conclusions. The analysis, involving the economic and mathematical methods and machine learning, demonstrated the dependence of the characteristics of CEO education on investment attractiveness of the world's largest corporations. Accordingly, shareholders need to pay special attention to the education of CEO candidates.

Exploring the Influence of Corporate and Shariah Governance on the Profitability of Banks and their Islamic Windows: A Comprehensive Study of Pakistan

The main purpose of our study is to take a look at how it impacts corporate governance and shariah governance on the profitability of conventional banks of Pakistan and their Islamic windows, one more objective of this study is to investigate whether there is any significant difference in the profitability of conventional banks after opening of Islamic windows. Our research study's theoretical basis draws from corporate governance theories, agency theory, resource dependence theory, and Islamic finance principles. By examining the relationships between these independent variables and the dependent variables (ROA and ROE) our study aims to provide insights into the factors influencing the financial performance of Shariah-compliant banks. Our study is based on 10 conventional banks which also provide Islamic windows. For our analysis in the current study, we will use annual data that covers the period from 2013 to 2022. To achieve these objectives we are using a linear regression model and paired sample t-test. Our findings conclude that bank age and board size have a significant positive impact on corporate governance in contrast, board diversity has a significant but negative impact on the ROA of conventional banks on the other hand bank size and board independence do not have any impact on ROA and if we talk about ROE board size and board independence had a helpful important impact on ROE while bank size bank age and board diversity doesn't have any significant impact on ROE of conventional banks of Pakistan. In the case of Shariah governance, only the Shariah board has a significant positive effect on ROA and ROE ratio on the other hand remuneration and charities don’t have any effect on the Islamic windows of conventional banks. We further discover no substantial variation in the ROA & ROE of Pakistani conventional banks following the establishment of Islamic windows. The findings of this study suggest that the government of Pakistan should focus on promoting good corporate governance practices in banks, especially regarding board size, bank age, board diversity, and shariah board because these factors increase the profitability of conventional banks.

Corporate governance transfers: the case of mergers and acquisitions

AbstractWe study changes in corporate governance around mergers and acquisitions by comparing the ex-post corporate governance of the combined firm with the ex-ante weighted average governance of the bidder and target. We find that when the quality of the bidder governance is better than the target before the acquisition, the ex-post corporate governance quality of the combined firm is better than the ex-ante weighted average of each firm. We document post-acquisition improvement in the combined firm’s board independence, audit committee independence, stock compensation, and minority shareholders protection, proposing that these firm-level attributes serve as potential channels to explain better corporate governance quality of the combined firm. The operating performance of the combined firm also improves when the bidder’s pre-deal governance quality is better than the target. Our results support the portability theory of corporate governance, suggesting that poorly governed targets are better off if acquired by better-governed bidders.

Corporate Governance on Natural Resources: Lessons from the Past Years’ Scandal, Fraud, and Corruption

The recognition of corporate governance as one of the solutions to scandal, fraud, and corruption has generated interest among scholars who seek to comprehend the underlying theoretical mechanism of corporate governance practices. Using scientific literature from the Web of Science and news media, this research attempts to probe the conceptual basis for corporate governance in preventing crimes in managing natural resources. Based on the theories of corporate governance, this study reviews the framework and elaborates the challenges of implementing the practices of corporate governance in reducing scandal, fraud, and corruption. Agency and stakeholder theories are mostly used to scrutinize the practice of doing good business. We also evaluate how news media serve as an effective avenue for the public to receive unbiased information. Some major corporate cases reported in news media have indeed provoked scholars to shed light on the role of corporate governance in the presence of the crisis.

THE EFFECT OF CEO’S ATTRIBUTES AND ZAKAT ON THE PERFORMANCE OF ISLAMIC BANKS: A SHORT

The purpose of this commentary is to highlight the main results of the work of Neifar and Aissa (2022), the strong points but also suggestions that should be considered for future research The work of Neifar and Aissa (2022) reveals that CEO duality and education have a positive influence on Islamic bank performance while the foreign CEOs are found to negatively influence performance. The results show that Zakat has a positive impact on the performance of Islamic banks. The paper highlights the best practices theories of corporate governance in order to boost bank performance.

The evolutionary journey of the American corporation and its governance over two centuries

PurposeThis study aims to explore the evolutionary trajectory of American corporations and their governance over the past few centuries, using a multidisciplinary investigative approach. The research focuses on the American business landscape because it has played a pivotal role in shaping the field of corporate governance theory and practice.Design/methodology/approachThe author thoroughly investigates archival records, legal documents, academic publications, reputable databases and pertinent literature to unearth valuable insights into the key events that have influenced the evolutionary path of American corporations and their governance throughout history.FindingsDelving into the evolutionary journey of American corporations and their governance reveals a multifaceted narrative, enhancing our comprehension of the impact of the external socio-economic environment, and the effectiveness and limitations of established corporate governance paradigms in addressing such transformations. This introspection establishes the groundwork for ongoing discussions concerning how corporate governance should adapt to meet the evolving needs and expectations of stakeholders and society as a whole, with a specific focus on the pivotal role that boardrooms could play in this regard.Practical implicationsThe insights gained from this analysis offer practitioners a foundational resource to understand corporate governance in a complex business landscape. Armed with this understanding, practitioners can better align governance strategies with both historical context and contemporary requirements.Social implicationsThe research has significant social implications in the sense that history highlights the importance of the society in influencing corporate governance practices. It specifically emphasizes the need for the board of directors to consider both shareholder value and social responsibility, while also fostering public trust and confidence.Originality/valueMany corporate governance concepts are often used with limited understanding of their initial intent, resulting in their unquestioned adoption. In this paper, the author offers a contextual exploration of historical events that have contributed to the development of these diverse corporate perspectives. To the best of the author’s knowledge, there are exceedingly few, if any, papers that present comparably insightful and multidisciplinary insights into the evolutionary path of corporations and their governance, especially within a dynamic and influential market like that of the USA.