Corporate Governance Variables Research Articles

Pengaruh Corporate Social Responsibility terhadap Kinerja Keuangan Perusahaan dengan Tata Kelola Perusahaan sebagai Variabel Moderasi pada Perusahaan Manufaktur di Indonesia

This study discusses the effect of corporate social responsibility on company financial performance with corporate governance as a moderating variable in manufacturing companies in the consumer good industry sub-sector which are listed on the Indonesia Stock Exchange (IDX) for the 2017-2021 period. The research samples were 29 companies with a total of 145 data. The data analysis technique in this study was using moderated regression analysis (MRA). The results of the study show that corporate social responsibility (CSR) variables have no significant effect on financial performance. Corporate social responsibility (CSR) variable has no significant effect on financial performance which is moderated by corporate governance variables based on foreign ownership, institutional ownership, and managerial ownership. The corporate social responsibility (CSR) variable has a simultaneous or overall effect on financial performance with corporate governance as a moderating variable.

Data-Driven Revolution: Advancing Scientific and Technological Innovation in Chinese A-Share Listed Companies

AbstractThe transformative role of big data technology in fostering scientific and technological innovation, leading to sustainable development and economic growth, has become increasingly crucial in modern business environments. This study utilizes text analysis of annual financial reports from Chinese A-share listed companies to assess the frequency of keywords related to big data application technology. Through panel data regression, the research investigates the significant impact of big data technology on scientific and technological innovation across diverse industries while controlling for relevant financial and corporate governance variables. The findings reveal a positive correlation between big data application technology and scientific and technological innovation, even after accounting for control factors. Moreover, private enterprises emerge as influential contributors to scientific and technological advancement. The study highlights the theoretical implications of integrating big data technology with the real economy to optimize resources effectively, and the policy implications call for targeted strategies to nurture innovation in established and growing enterprises. As future research prospects, this study lays the groundwork for exploring additional dimensions of big data technology’s impact on innovation and its implications for sustainable development in the ever-evolving business landscape.

PENGARUH PAJAK, PROFITABILITAS, DEBT COVENANT, DAN GOOD CORPORATE GOVERNANCE TERHADAP TRANSFER PRICING PADA PERUSAHAAN MANUFAKTUR SEKTOR ANEKA INDUSTRI YANG TERDAFTAR DI BEI TAHUN 2018-2021

This study aims to determine the effect of tax, profitability, debt covenants, and good corporate governance on transfer pricing in manufacturing companies in various industrial sectors listed on the IDX in 2018-2021. This research is a descriptive research with a quantitative approach. The type of data collected is secondary data. The total population used is all manufacturing companies in the various industrial sectors listed on the IDX for 2018-2021, totaling 55 companies with a total sample of 11 companies obtained using the purposive sampling method. The method used in this study consisted of descriptive statistical tests, classical assumption tests, multiple regression analysis, and hypothesis testing with the help of the SPSS version 23 program. The results of this study indicate that testing with the partial test (t test) shows that the variables tax, profitability, and debt covenants have no significant effect on transfer pricing. Meanwhile, the good corporate governance variable has a negative and significant effect on transfer pricing. The ANOVA test (F test) shows that the variables of tax, profitability, debt covenants, and good corporate governance have a significant influence on transfer pricing together. The independent variable explaining the effect of transfer pricing is 10.4% while the remaining 89.6% is influenced by other variables not examined in this study. Such as tunneling incentive variables, bonus mechanisms, foreign ownership, company size, leverage, and intangible assets.

Corporate governance, chief executive officer power and performance of Islamic banking in east africa

This study aims to investigate the relationship between corporate governance variables, CEO power, and the performance of Islamic banking in East Africa. A Hierarchical panel regression model was to test both direct and indirect effect. Panel data was collected from all 10 full-fledged Islamic banking in East Africa and conventional banks with Islamic banking window for 7 years (2013-2020). Empirical results showed that board independence, board financial expertise and board activity positively affect performance of Islamic banking in East Africa. Powerful CEO negatively moderated the effect of board independence and board financial expertise on performance of Islamic banking in East Africa. Based on the findings, board independence, board financial expertise and board activity play a major role on improving performance of Islamic banking. In addition, the study support agency theory perspective that powerful CEO can reduce independence of board directors, hence limiting board activity and board financial expertise positive contribution on performance of Islamic banking. There has been limited studies on corporate governance and performance of Islamic banking in East Africa. This study contributes on board independence, board financial expertise and board activity of Islamic banking literature. The study provided crucial insight on corporate governance variables of Islamic banking in East Africa and their link performance.

Corporate Governance Practices and Capital Structure Decisions: A Two-Sector Comparative Analysis

Globally, many corporate failures and scandals can be attributed to inherent poor corporate governance practices and inappropriate mix of capital structure within the organization, which has led to poor performance. Meanwhile, the capital structure with the optimum balance of debt and equity is a crucial decision made by the Board of Directors to make companies successful. Specifically, the study determines the strength and direction of the relationship between board characteristics and the leverage ratio of selected consumer and industrial sectors in Nigeria. Secondary data were utilized for the study and sourced from the annual financial reports of the sampled thirteen consumer and industrial goods companies for the period of nine years between 2012 to 2020. The data were analyzed using both descriptive and inferential statistics to achieve the study objectives. Pairwise correlation and the granger causality test were used to determine the strength and direction of the relationship between board characteristics and the leverage ratio of selected companies in Nigeria. Findings revealed that both board independence (BIND) and board gender diversity (BGD) have a positive relationship with leverage (LEVR) while other variables are negatively correlated with it for both companies. Further findings revealed that only corporate governance variables that have a significant impact on consumer goods firms’ leverage also have a causal relationship with it whereas for industrial goods both the board size (BDSZ) and CEO pay slice (CEPS) have a uni-directional relationship that runs from leverage. It was concluded that the relationship between corporate governance practices and leverage can be sector-sensitive. It is therefore recommended that manufacturing companies in the country should put in place strict evaluation mechanisms to identify the most appropriate board characteristics that will help to select an optimum balance of capital structure at all time

The impact of CEO power and ethical corporate citizenship on firms’ outcomes

This paper examines whether ethical corporate citizenship moderates the effect of CEO power on financial leverage, cost of debt, dividend payout, and firm value. Results show that powerful CEOs who lead WMECs are likely to borrow more money at cheaper cost of debt, and pay higher dividends compared to powerful CEOs who lead non-WMECs. CEO power is not linearly related to Tobin’s q measure of firm value. Results do not change if we include corporate governance variables on the dual role of CEO and chairperson, CEO’s tenure, and percent of shares owned by the CEO. Our findings provide important policy implications for firms disclosures on ESG activities beyond a mere compliance exercise to an effective monitoring and enforcement process that protects investors in the capital markets, similar to WMECs annually re-certified by Ethisphere.

The impact of corporate governance mechanisms on corporate failure: an empirical evidence from Palestine Exchange

PurposeThe purpose of this research is to examine the impact of governance mechanisms on corporate failure.Design/methodology/approachThis study used a hypothesis-testing research design to collect data from the annual reports of 35 companies listed on Palestine Exchange from 2010 to 2019. Descriptive and inferential statistics were employed, along with correlation analysis to evaluate linear relationships between variables. The variance inflation factor was used to test multicollinearity, and binary logistic regression was utilized to develop the research model.FindingsThere is a significant positive relationship between board of directors' independency, institutional ownership and the quality of external audit, and corporate failure reduction. No significant relationship has been found among corporate governance variables such as board size, board meetings' frequency, board members' remuneration and audit committee existence, and corporate failure reduction.Research limitations/implicationsSeveral empirical research studies have developed models to predict corporate failure using accounting and financial data. However, limited research has empirically investigated the impact of the different mechanisms of governance on corporate failure prediction.Practical implicationsThe research highlighted the significance of companies' commitment to governance principles and their impact on predicting failure. The study suggests that decision-makers and managers can adopt different governance mechanisms to support corporate success and avoid those that may lead to negative consequences and failure.Originality/valueThis research is the first in Palestine to use a comprehensive list of corporate governance mechanisms to predict the failure of companies listed on the Palestine Stock Exchange between 2010 and 2019.

Risk Management Governance and Sustainable Financial Performance

Purpose: The paper analyzes the efficacy of risk management governance, which takes the form of a dedicated risk governance committee and the executive board with the CRO. It illustrates which aspects of risk management and governance are crucial for the banks' financial performance. It also emphasizes financial sustainability through risk management and governance. Design/Methodology/Approach: A quantitative research approach is employed with secondary data from published and reliable sources. Regression analysis is employed for estimating the impact, and a t-test is performed for estimating the difference. Findings: It concludes that the financial performance measured using returns ratio significantly differs among the banks with the executive board having a CRO and the executive board having an absence of a CRO. The financial performance variable taken as a function of the bank's corporate governance variables assumes a positive and significant impact. It infers that risk governance can lead to sustainable financial performance. Research Limitations and Implications: This study contributes to the risk governance structure of banks. The future work should consider different samples and extended risk-based variables for more implications. Originality: The banks performance with a risk management approach in South Asian economies after the global crisis is a valuable addition to the corporate governance of banks in the studied countries. The comparative analysis of banks with and without the role of the CRO is a unique contribution in the provided setting.

The Effect of Profitability, Leverage, Corporate Social Responsibility and Firm Size on Company Value with Good Corporate Governance as a Moderating Variable in Technology Companies Listed on the Bei in 2019-2022

This study aims to obtain empirical evidence of the influence of Profitability, Leverage, Corporate Social Responsibility and Firm Size on Company Value with Good Corporate Governance as a moderating variable. The population in this study are technology sector companies listed on the IDX in 2019-2022. The sample in this study were 11 companies for 4 years, so the total sample was 44. The data analysis technique used was Moderate Regression Analysis (MRA) with a significance level of 5%. The results showed that the variable profitability and firm size had an effect on firm value, while leverage and corporate social responsibility had no effect on firm value. Good corporate governance variables can moderate profitability and firm size on firm value, but cannot moderate leverage and corporate social responsibility variables on firm value

THE INFLUENCE OF CORPORATE GOVERNANCE AND AUDIT QUALITY ON TRUSTED FINANCIAL STATEMENTS THROUGH FINANCIAL DISTRESS IN BUMN HOLDINGS IN INDONESIA

This study aims to analyze the effect of corporate governance and audit quality on trusted financial reports through financial distress. The analytical tool used in this study is the Structual Equation Model (SEM) with Partial Least Square (PLS), while the sample used in this study is 68 BUMN Holding business units in Indonesia. The research respondents were auditors who had experience in auditing BUMN Holdings. The results of the study show that corporate governance has a positive effect in encouraging the creation of trusted financial reports. Corporate governance has no significant effect in encouraging the creation of BUMN Holding financial distress in Indonesia. Audit quality has a positive effect in encouraging the creation of trusted financial reports. Audit quality has a positive effect on financial distress. Financial distress has a negative effect on trusted financial reports. This research provides insight into the field of financial risk management research. The insignificant relationship between corporate governance and financial distress is an important finding, because most previous studies have concluded that corporate governance variables have a direct effect on financial distress, both positive and negative. Given the complexity of the relationship between corporate governance and financial distress, more in-depth further research can be conducted to explain in more detail why this relationship is not significant. Qualitative approaches such as case studies, interviews or comparative analysis can be used to gain deeper insight into the context and mechanisms underlying these findings

THE EFFECT OF CORPORATE GOVERNANCE ON EARNINGS MANAGEMENT IN NIGERIA’S FINANCIAL INSTITUTIONS: MODERATING ROLE OF CEO COMPETENCY

The purpose of this paper is to examine the moderating effect of CEO competency on the relationship between corporate governance (CG) and earnings management (EM) of Nigerian financial firms. The sample covered 37 financial firms listed in the Nigeria Stock Exchange (NSE) from 2010 to 2019. This study adopted a panel regression estimator to analyse the testable hypotheses. It was found that CEO competency only moderated the relationship between audit committee and EM but not on the other CG variables. This finding implied that CEO competency was important when accounting oversight was in balance with EM. While the agency hypothesis on CG was supported, the study upheld the idea that CEO competency undermined EM. As a result, the study advocates for broader CEO oversight and resource measures, including CEO remuneration and CEO social capital, to lessen the impact of CG in the EM of financial institutions. The effect of the Covid-19 crisis on the link between CG and EM should be the subject of future studies. Future research should examine how the Covid-19 issue affects the CG mechanism’s ability to reduce EM and determine whether the effect is positive or negative.

Corporate social responsibility, brand value and corporate governance: new evidence from a 3SLS model

Purpose Taking a dynamic endogenous perspective, this study aims to examine neglected endogeneity issues in the relationship between corporate social responsibility (CSR) and brand value and the relationship’s moderation by corporate governance. Design/methodology/approach The study uses the three-stage least squares (3SLS) method on 990 samples of the 110 most valuable listed companies published by the World Brand Lab for 2013–2021 to empirically test the two-way interactive endogenous relationship between CSR and brand value. Findings The findings reveal that increasing investment in CSR increases brand value in the current period, which prompts companies to reduce investment in social responsibility, resulting in a decline in future brand value. Concerning the moderating effect of corporate governance variables, the size of the board of directors and the board’s proportion of independent directors positively regulate the relationship between CSR and brand value. By contrast, the proportion of executive shareholdings has a negative impact. Originality/value This study’s findings complement previous studies on endogeneity in the relationship between CSR and brand value, and enrich the literature on corporate governance, CSR and brand value as a whole. In addition, the study uses the 3SLS method, which avoids endogeneity problems and eliminates the one-sidedness of the subjective selection of instrumental variables.

Firms’ characteristics, corporate governance, and the adoption of sustainability reporting: evidence from Gulf Cooperation Council countries

PurposeThe purpose of the study is to investigate the factors that influence the adoption of new sustainability reporting (SDG) and external assurance (EXTA) practices. This study also examines the relationship between sustainability reporting activity and corporate economic performance for a sample of 99 companies in Gulf Cooperation Council (GCC) countries that addressed SDGs in their sustainability reports published in 2019.Design/methodology/approachUsing a two-stage analysis, this study examines how firms’ characteristics and corporate governance variables affect SDG and economic performance, as well as the firm’s decision to adopt EXTA statements for a sample of companies in that addressed SDGs in their sustainability reports published in 2019. The authors collected data from the Global Reporting Initiative’s (GRI) Sustainability Disclosure database and the Bureau van Dijk for Orbis database.FindingsThe results show that the variables firm size, profitability, big 4 auditors and government ownership significantly affect SDG and economic performance. The results also reveal that firms operating in the manufacturing sector are positively correlated with SDG and the firm’s decision to adopt EXTA statements. Furthermore, the results indicate that board independence positively affects SDGs and EXTA.Research limitations/implicationsThe results can be particularly relevant and timely in helping large GCC companies promote their engagement to sustainable development practices by adopting more sustainable long-term strategies and policies. The findings could also guide managers in the strategic direction to identify firms’ characteristics and corporate governance features essential to promote sustainability reporting, an increasingly important performance indicator for investors and to enhance their confidence in the capital market. The results may also have practical implications to policymakers and other regulators in GCC countries to define effective frameworks that promote sustainable development reports and the use of EXTA.Originality/valueThe results make significant contributions by providing new insights to the existing literature on sustainability reporting in emerging markets by examining a unique perspective on the influence of firms’ characteristics and corporate governance features on the adoption of new sustainability reporting practices. The authors further add to the previous literature on the relationship between a firm’s economic performance and sustainable reporting by providing evidence from large companies in GCC countries, which might benefit from the adoption of multiple conceptual lenses, in this case, legitimacy and stakeholder theories. Lastly, through the empirical findings, this study provides economic validity to the 2018 joint initiative of the GRI and the United Nations Global Compact to strengthen corporate actions to achieve the United Nations SDGs.

Good Corporate Governance in moderating Intellectual Capital and Voluntary Reporting on Company Performance

Abstract Main Purpose - This study aims to examine and analyze the relationship between Intellectual Capital and Voluntary Reporting on company performance moderated by good corporate governanceMethod - The approach in this study is a quantitative approach using explanatory research. Research data were analyzed using multiple linear regression and MRA with the study population, namely manufacturing companies listed on the IDX in 2020 and 2021Main Findings - Intellectual Capital, Voluntary Reporting, and Good corporate governance are important instruments to provide an overview of the company's condition to investors, thereby attracting interest to invest in companies that affect the capital that the company will obtain to increase company profits. Companies that are managed with good operational management can increase the value of their company's performance. One that can increase the value of the company is by managing the resources owned by the company and presenting this information to stakeholders.Theory and Practical Implications - The results of this study provide empirical evidence that company performance increases when the value of intellectual capital increases. Therefore, the higher the intellectual capital in the company, the greater the value of the company's performance. Intellectual capital can be a strategic resource for companies in creating and increasing company profits obtained from investors' investment returns, thus being able to improve company performance.Novelty - The development in this study is the existence of a moderating variable of good corporate governance, where in previous research it was explained that good corporate governance is one of the key factors in a company because of both asset structure, financial structure, and policies and strategic steps that were decided to address pressure from the company's external condition is determined by the components of good corporate governance.

Corporate Governance and Financial Statement Fraud during the COVID-19: Study of Companies under Special Monitoring in Indonesia

The COVID-19 pandemic had a wide-ranging impact, resulting in a global recession due to weakened purchasing power. This circumstance necessitates business organizations adapting to developments and being more conscious of the risk of financial statement fraud. The intention of this research is to investigate the way corporate governance affected financial statement fraud during the COVID-19 pandemic. To acquire empirical data for examining corporate governance variables on financial statement fraud, the research was examined using quantitative methods. The study takes advantage of secondary data acquired from annual reports of companies under special monitoring listed on the Indonesia Stock Exchange of 2020–2021. The logistic regression method was used to evaluate 134 data sets, and financial statement fraud was measured using the Z-Score and F-Score models. The results indicate that when using the Z-score, only the board size has a negative effect on financial statement fraud during the COVID-19 pandemic. Meanwhile, using the F-Score, the corporate governance variables studied are not proven to have an influence on financial statement fraud during the COVID-19 pandemic.

Does intellectual capital drive bank's performance in Bangladesh? Evidence from static and dynamic approach

This paper investigates the relationship between measures of intellectual capital efficiency and the performance of the listed banks in Bangladesh. We have collected data from the listed bank's published annual reports for seven years (2015–2021). We have primarily used standard panel data analysis techniques to assess the static relationships. In addition, to the static models, we have also checked the dynamic models for robustness in the context of Bangladesh. Following the RBV (Resource Based theory), we have found that the MVAIC (Modified Value-Added Intellectual Coefficient) significantly and positively determines firm performance in both static and dynamic methods. However, various components of MVAIC show differing relationships, which indicates that the two-step system GMM (Generalized Method of Moments) is superior to static models. The moderating role of MEETING (Company Meetings) is significant with respect to MVAIC. In addition, the moderating role of corporate governance variables at the component level remained the same in both methods. Our further analysis of the association with respect to the before and during pandemic periods suggests that the relationship remains the same irrespective of the period under study. Future research can use this paper to understand the significance of dynamic modeling while studying IC (Intellectual Capital) in an emerging economy context. This is among a few studies that have applied both static and dynamic models to assess the relationship between IC and firm performance in the context of emerging economies. Policymakers and bank managers in Bangladesh could use the findings of this study to realize that IC is much more valuable than other available tangible assets in creating a sustainable competitive advantage.

Does intellectual capital in Islamic banks outperform conventional banks? Evidence from GCC countries

PurposeThis study explores, first, the performance effect (accounting- and market-based performance) of intellectual capital (IC), measured using the value-added intellectual coefficient (VAIC) and its modified version (MVAIC), on Islamic and conventional listed banks in Gulf Cooperation Council (GCC) countries and, second, whether Islamic banks outperform conventional banks in utilising IC.Design/methodology/approachUsing resource-based view theory and literature reviews, regression analyses are conducted on data for the period 2012–2019 on 26 Islamic and 42 conventional banks. For hypothesis testing, the generalised method of moments panel data regression analysis is applied after addressing endogeneity issues.FindingsResults, after controlling for corporate governance, indicate that the performance effects of IC (VAIC and MVAIC) on both bank types largely converge and Islamic banks do not outperform conventional banks in IC use. IC has a stronger effect on accounting performance measures for conventional banks than for Islamic banks, but IC has some effect on market performance measures for Islamic banks alone. Corporate governance variables do not play a significant role in the presence of VAIC and MVAIC although there are differences in corporate governance between the two bank types.Originality/valueThis study bridges the gap in GCC banking sector literature on the association between IC efficiency and performance measures of Islamic and conventional banks, from a comparative perspective. It enhances understanding, about the IC–financial performance nexus, of policymakers, regulators, bank managers and other stakeholders interested in the influence of different business models, financing/investment methods and governance structure on the performance of both bank types.

Business Intelligence, Corporate Governance and Economic Performance: Evidence from Transcorp Conglomerate for the period 2012 - 2021

Investment in business intelligence keeps soaring as businesses strive to achieve timely data-driven decisions. This empirical study desired to quantitatively establish if the huge investment in business intelligence translates to increased profitability; and if its interaction with corporate governance variables like board emoluments and meetings lead to significant increase in profitability. Anchoring on economic theory with secondary data from Transcorp Conglomerate from 2012 – 2021, the research established that: excessive investment in business intelligence leads to significant decrease in profitability; high board emoluments and increased number of meetings have significant negative effects on profitability; bank size have significant positive effect on profitability; the interactions of business intelligence and board emoluments as well as the interactions of business intelligence and board meetings have significant positive effects on profitability; and the interaction of business intelligence, board emoluments and board meetings has significant negative effect on profitability. The study established the relevance of economic theory on business intelligence and governance study; and recommends that firms in general should optimise

Does Corporate Governance Impact Risk Disclosure? An Empirical Analysis in the Indian Context

This study aims at identifying the determinants of corporate governance that impact corporate risk disclosure in India’s top non-financial listed companies based on market capitalisation. The analysis of the study is based on risk disclosure practices of the leading non-financial listed companies using annual reports as well as risk disclosure practices in the presence of various regulations. The risk exposure is measured using manual content analysis while the impact is analysed using multiple regression. The empirical findings reveal that the corporate risk disclosure level has improved significantly. The major corporate governance variables namely board size and ownership are insignificant to risk disclosure whereas audit committee meetings and role duality are somewhat significant. Firms having bigger size plays a major role in risk disclosure practices of companies, on the other hand, liquidity and growth of the firm do not influence risk disclosure practice. Due to the constant fallouts of companies, this paper tries to analyse the role of corporate governance practices in minimising companies’ risk exposure. The results of the study help analyse the failures in corporate governance practices that lead to companies’ poor disclosure policies.

Automated text analyses of sustainability & integrated reporting. A literature review of empirical-quantitative research

PurposeThis study aims to focus on automated text analyses (ATAs) of sustainability and integrated reporting as a recent approach in empirical–quantitative research.Design/methodology/approachBased on legitimacy theory, the author conducts a structured literature review and includes 38 quantitative peer-reviewed empirical (archival) studies on specific determinants and consequences of sustainability and integrated reporting. The paper makes a clear distinction between analyses of reports due to readability, tone, similarity and specific topics. In line with prior studies, it is assumed that more readable reports with less tone and similarity relate to increased reporting quality.FindingsIn line with legitimacy theory, there are empirical indications that specific corporate governance variables, other firm characteristics and regulatory issues have a main impact on the quality of sustainability and integrated reporting. Furthermore, increased reporting quality leads to positive market reactions in line with the business case argument.Research limitations/implicationsThe author deduces useful recommendations for future research to motivate researchers to include ATA of sustainability and integrated reports. Among others, future research should recognize sustainable and behavioral corporate governance determinants and analyze other stakeholders’ reactions.Practical implicationsAs both stakeholders’ demands on sustainability and integrated reporting have increased since the financial crisis of 2008–2009, firms should increase the quality of reporting processes.Originality/valueThis analysis makes major contributions to prior research by including both sustainability and integrated reporting, based on ATA. ATAs play a prominent role in recent empirical research to evaluate possible drivers and consequences of sustainability and integrated reports. ATA may contribute to increased validity of empirical–quantitative research in comparison to classical manual content analyses, especially due to future CSR washing analyses.