Manager Government Research Articles

Board Independence And Financial Distress: Insights From India

Resource Dependency Theory (RDT) posits that organizations depend on external resources to navigate uncertainty and sustain growth, with independent directors in corporate governance acting as key intermediaries, providing expertise, external networks, and strategic oversight. This study employs Panel [Random Effect (RE)] regression to analyze the impact of independent directors on the financial distress likelihood of 20 manufacturing companies listed on the NSE over the period 2019–2024. The findings reveal that firms with a higher number of independent directors exhibit a significantly higher risk of financial distress, reinforcing the notion that these directors aggravate financial vulnerabilities and enhance organizational instability. Background: Corporate frauds like the Satyam and Nirav Modi-PNB scandals highlight the severe consequences of deceptive practices, undermining financial markets and stakeholder trust. These incidents exposed vulnerabilities in governance and risk management, prompting regulatory reforms in India. Weak corporate governance facilitates fraud by allowing insufficient oversight and accountability. Recent reforms under the Companies Act, 2013, and SEBI's regulations aim to enhance transparency and reduce fraud risks. Strong corporate governance would be critical for financial stability, investor confidence, and achieving the "2047 Viksit Bharat" vision. Research explores how independent directors influence the likelihood of financial distress. Materials and Methods: This study investigates financial distress in manufacturing firms listed on the National Stock Exchange (NSE) through a panel data methodology. A random sample of 20 firms was selected to ensure representativeness, covering the period from 2019 to 2024, with banks and financial institutions excluded due to their distinct financial characteristics. Financial distress was assessed using the Altman Z-score, a widely recognized metric for evaluating financial distress. The independent variable in the study is Board Independence, i.e., the total number of independent directors on the Board. The control variables include Profitability, Leverage, and Activity. Panel data estimation techniques were used to address issues of endogeneity and heteroscedasticity. The Hausman test was conducted to determine whether to retain fixed or random effects for the analysis. Results: The Hausman test showed a p-value of 0.0.78 (greater than 0.05) which revealed that that random effect model is appropriate for the analysis. The analysis reveals a negative relationship between board independence and financial distress, indicating that an increase in the number of independent directors is associated with a higher likelihood of financial distress at 5% level of significance. Leverage significantly increases the likelihood of financial distress, while increased operational activity decreases it; Net Profit Margin is statistically insignificant. Conclusion: This finding challenges the conventional understanding of board independence, which is generally seen as a mechanism to enhance corporate governance by providing unbiased oversight, strategic guidance, and external resources

Does environmental regulation truly enhance corporate green environmental investment? Evidence from the supervision of independent directors in listed companies.

With the increasingly prominent environmental issues in China, the government and citizens alike have intensified their focus on corporate investments in green environmental protection. Nevertheless, as government regulations become more stringent, there is substantial debate over whether environmental regulatory policies can consistently encourage listed companies to increase green environmental investments. Simultaneously, independent board supervision plays a crucial role in promoting the compliance and sustainability of listed companies regarding environmental protection. This paper selected a sample of 246 Chinese listed companies from 2010 to 2019, and used a fixed effects model to examine the impact of environmental regulation on the environmental investment of listed companies in China. Moreover, we used a mediation effect model to analyze the role of independent director supervision in influencing the relationship between environmental regulation and companies' green environmental investment. Additionally, we discuss the heterogeneous impact of environmental regulations on corporate environmental investments. Our findings are as follows: first, during the sample period, the tightening of environmental regulations significantly reduces the growth of environmental investment among the studied firms. As government environmental regulatory policies gradually intensify, the negative impact on environmental investments by listed companies becomes increasingly evident. Second, independent directors help alleviate the adverse impacts of environmental regulations on the environmental investment levels of listed companies. This suggests that the inclusion of independent directors in board governance plays a role in assessing government environmental regulatory policies and overseeing corporate decisions related to environmental investment. Lastly, the heterogeneity analysis indicates that environmental regulation significantly negatively impacts the environmental investment of listed companies in pollution-intensive industries and those located in the western regions. Furthermore, environmental regulatory policies impose greater constraints on the environmental investments of small-sized listed companies compared to their large-sized counterparts.

BREAKING BARRIERS: FEMALE DIRECTORS, EARNINGS MANAGEMENT, AND THE INFLUENCE OF EDUCATION AND SUSTAINABILITY REPORTING

<p><strong>Background</strong>: The role of women directors in corporate governance has received increasing attention, especially regarding their impact on earnings management. Recognizing this role is critical as companies need to increase transparency and accountability in their financial practices, while recognizing the role of sustainability.</p><p><strong>Objective</strong>: These studies aim to find out, whether female participation in the board of directors can reduce earnings management practices, by adopting different types of measurements for the female variable.</p><p><strong>Research Method</strong>: The applied methods are purposive sampling where 49 samples collected from Indonesia Stock Exchange (IDX) that consistently publishing financial and sustainability report with a timeframe of 2018-2022. Implementing data panel regression method using Stata application.</p><p><strong>Result</strong>: The result indicate that, three female director can reduce earnings management, while independent commissioner and GRI disclosure are positively related to earnings management.</p><p><strong>Originality/Novelty of Research:</strong> This studies use different kind of measurements towards female director variables, to proving applied theory are still relevant and to resolve the limitation of previous studies to find the critical effect of female directors participation to decreasing earnings management in Indonesia.</p><p> </p>

Legal Regulation of Artificial Intelligence Directors under the Background of the Revision of China's New Company Law

With the rapid development of technology, artificial intelligence technology has gradually been valued by the public and applied in various industries. At the level of business and corporate governance, there are also examples of AI directors participating in corporate governance internationally, providing us with space to explore the application of AI directors in Chinese corporate governance and decision-making. In December 2023, China promulgated a newly revised Company Law, and this article aims to explore how China responds to the issue of artificial intelligence directors in the context of the new Company Law. Specifically, it manifests as the authorization of artificial intelligence directors as auxiliary functions, the expansion and modification of the obligations of natural person directors, and the issue of responsibility assumption caused by artificial intelligence directors.

Pengaruh Kinerja Keuangan Pemerintah Daerah Terhadap Alokasi Belanja Modal

This study was conducted in western Indonesian cities during 2020-2022. This study aims to determine how the influence of local government financial performance on capital expenditure in western Indonesian cities both simultaneously and partially as seen from the fiscal decentralization ratio, effectiveness ratio, and efficiency ratio. This study uses a quantitative and descriptive analysis approach. The population of this study was 64 in western Indonesian cities using nonprobability sampling technique, so the sample included 192 financial statements from 3 years of observations. As well as technical documentation collects data through the regional government director’s balance sheet website. The analytical method in this study is panel data regression. The results testing with panel data regression using the Fixed Effect Model (FEM) show that financial performance simultaneously influences capital expenditure in western Indonesian cities during 2020-2022. Figure F > F table result obtained (2.853526 > 2,65), significance (0,000000 < 0,05). From the partial test results fiscal decentralization ratio has an negative effect and significance on capital expenditure allocation, effectiveness ratio has an positive effect and significance on capital expenditure allocation, and efficiency ratio has an positive effect and significance on capital expenditure Allocation in western Indonesian cities during 2020-2022.

The Role of Independent Directors in Ensuring Good Corporate Governance

For a long time, independent directors have been playing an important supervisory role in the operation and management of the company, protecting the interests of the owners of the enterprise and maintaining the balance of interests between the management of the company and the shareholders. The research in this paper aims to explore the positive role and problems of independent directors in good corporate governance, such as the positive role of independent directors in constraining and supervising directors, protecting the interests of small and medium-sized shareholders, and some problems such as the independence of independent directors being questioned. Through the establishment of some British committees, the independent directors have conducted in-depth studies to verify the problems of independent directors, published some insightful reports and comments, and put forward some suggestions for improvement. These debates have affirmed the supervisory function played by independent directors on the one hand, and pointed out the existing problems on the other, but it is undeniable that the existence of these problems can not erase the positive role played by independent directors in good corporate governance and their developmental future. Therefore, continuous improvement of independent directors to highlight their advantages in good corporate governance is the direction for independent directors to move forward in the new era.

Do Independent Directors Affect Real Earnings Management Practices? The Case of Indonesian Two-Tier Board System

The question regarding the role of independent directors in corporate governance in general and in limiting real earnings management practices in particular has long been debated. This study, therefore, attempts to address this question by investigating the influence of independent directors on real earnings management (REM) from the perspective of Indonesian two-tier board system.

Pengaruh Pertumbuhan Ekonomi, Pendapatan Asli Daerah Dana Alokasi Umum Dan Dana Alokasi Khusus Terhadap Belanja Modal Pada Kabupaten/Kota Di Sumatera Utara

This study was conducted in districts/cities in North Sumatra province during 2018-2021. This study aims to examine and analyze the effects of economic growth, regional income, general pension funds and private pension funds on investment spending. The approaches used in this study are quantitative and descriptive. The population of this study was 33 counties/cities in North Sumatra using this technique, so the sample included 132 financial statements from 4 years of observations. As well as technical documentation collects data through the regional government director's balance sheet website. The analytical method in this study is multiple linear regression. Therefore, the results of this study are positive effects of economic growth, regional initial income, general allocation fund, special allocation fund, together or not, on capital expenditure in the region. areas. Counties/Cities in North Sumatra for the period 2018-2021. Figure F > F Table results obtained (7.316 > 2.50), significance value 0.000 < 0.005. From the partial test results, economic growth, regional initial income, general allocation, and special allocation funds have a significant impact on district/city spending. Capital expenditure in North Sumatra

Independent directors’ information acquisition and corporate innovation: Evidence from corporate site visits

This study investigates how independent directors’ information acquisition affects corporate innovation. Exploiting a unique dataset from the Chinese market, we document that firms patent more and have more high-quality technical patents after independent directors conduct corporate site visits. The positive relation is more pronounced for firms with stronger external governance, higher information acquisition cost, greater advisory needs, and more independent directors having innovation backgrounds. The results are robust when we address the endogeneity concerns, use alternative measures of patent output, and examine citations. Our findings suggest that independent directors’ advisory function is more effective when they have better access to firm-specific information, and provide new evidence on the relation between information asymmetry and the effectiveness of independent directors in corporate governance.

Corporate Social Responsibility Disclosure and Performance in China: Does the Background of Foreign Women Directors Matter?

In the context of economic advancement, developing economy firms are witnessing a growing influx of directors with foreign backgrounds who are joining their corporate boards. Giving the significance of this emerging labor market trend for board members and the particular value of women directors in corporate governance, this study delves into the impact of women directors’ foreign backgrounds on a firm’s corporate social responsibility (CSR) disclosure and performance. Using a dataset of listed firms on Shanghai and Shenzhen stock exchanges from 2010 to 2019, we find that the foreign education and the work experience of women directors improve firm CSR disclosure and performance. Corporate boards with a higher proportion of women directors with foreign education experience tend to disclose more CSR information. And women directors with foreign work experience have a more pronounced impact on enhanced CSR performance. This study provides new insights into integrating stakeholder, social role, and neo-institutional theories to advance the understanding of CSR engagement in emerging economies.

Do Government Policies and Socioeconomic Conditions Affect Income Inequality?

The problem that is often faced by developing countries is high-income inequality among the population. On the other hand, the development of digital technology occurs very quickly and encourages the community to play a more active role in economic activities. This condition needs to be further explored, especially considering its relation to income inequality in Indonesia. This study aims to determine the effect of government policies and socioeconomic conditions on income inequality in Indonesia in the 2019-2021 period by analyzing secondary data in 34 provinces in Indonesia. The analytical method uses panel data regression with the selected model of the fixed effect model. The data was taken from the Central Bureau of Statistics, each provincial government's Directorate General of Finance, and the Ministry of Manpower of the Republic of Indonesia. The results showed that the number of poor people significantly positively affected income inequality and regional minimum wages, and the information and communication technology development index negatively affected income inequality. In contrast, the human development index and social assistance spending had no impact on income inequality. The government must improve poverty alleviation programs to reduce the income inequality gap while expanding the accessibility of Information and Communication Technology (ICT) to provide a better quality of life for the people. This study enriches previous research on the effect of socioeconomic conditions on income inequality by adding the newly developed ICT development index variable

Venereal Diseases Treatment for Merauke’s Marind (Marind-Anim) Tribe in the Dutch Colonial Period

This article provides some proofs that influenced the increasing number ofMarind-Anim people who suffering from venereal diseases. It also providesfactual efforts that had been done by the colonial government as well as Catholicmissionaries in Merauke to overcome this problem. This study applies historicalmethods with four stages: heuristics, verification (internal and external criticism),interpretation/explanation and historiography. Primary sources obtained fromNational Archives of the Republic of Indonesia i.e., Memorie van Overgave van hetBestuur over de Afdeeling Zuid Nieuw Guinea; letter of the Minister of Colonies to theGovernor General of the Dutch East Indies; Report of Assistant Resident ZuidAfdeeling Nieuw Guinea to the Director of Government; and official printed sources,e.g., Volkstelling 1930. Michel Foucault's power relations theory is used to analyzethe causes of venereal disease in the Marind Tribe. The results shows that the causeof the increasing number patients who had venereal disease in the Marind tribe,Merauke, was related to their traditional understanding which legalized free sexand deviant sexual activities in the Marind tribe. The imbalanced power relationsbetween men and their wives and between men and adolescence men causingvenereal diseases and sexual perversions in the Marind Tribe. The strategyimplemented by the colonial government was to involve Catholic missionarieswho were trusted to overcome the disease by building a housing model that canonly be occupied by nuclear families who are not infected with venereal diseases.The colonial government demolished men’s houses because there werepossibilities of homosexual intercourses which become one of the causes ofvenereal disease among the Marind Tribe. In addition, the government requiredthe cenderawasih bird hunterers to have their genital health checked as a huntingpermit. The government built hospitals and clinics and invented doctors whospecialize in venereal disease to treat the patients. These strategies has succeededin treating and eradicating venereal diseases among the Marind Tribe.

A Study of the Role of the Board of Directors in Corporate Governance Based on UK Listed Companies

Companies are directed and controlled by corporate governance. It acts on the company internally and externally. The board of directors is responsible for the governance of the company; that is to say, the board of directors is the brain of the company, while corporate governance is the blood distributed throughout the company, which not only supplies blood to the whole, but also reflects the situation. Therefore, with regard to the role of the board of directors in corporate governance, this paper objectively analyzes the importance of the board of directors in corporate governance from theory to practice and from the internal composition of the board of directors to the impact of the board’s actions on the enterprise as a whole based on United Kingdom (UK) listed companies.

Collaboration and horizon scanning at the annual BVA workshop

BVA Officers recently met with colleagues from specialist divisions, affiliate organisations and affinity groups to share ideas and explore opportunities for joint working. Amelia Findon, BVA director of policy and governance, rounds up proceedings.

The Board Structure and Performance in IPO Firms: Evidence from Stakeholder-Oriented Corporate Governance

This study investigates the internal mechanisms as an important factor for shareholders and stakeholders in initial public offering (IPO) firms with stakeholder-oriented corporate governance. Over the period of 2009–2016, we examine the role of independent directors in Japanese stakeholder-oriented corporate governance. According to previous research, the monitoring role of independent directors is strengthened in countries with a market-based financial system. Our empirical analyses show that independent directors do not effectively mitigate conflicts among shareholders such as IPO underpricing in a stakeholder-oriented corporate governance framework. Alternatively, accounting expertise may contribute to mitigating IPO underpricing in accordance with U.S. corporations. The participation of bank-affiliated directors in IPO firms further contributes to the mitigation of underpricing. Accordingly, these findings imply that bank ties through Horizontal Keiretsu’s bank-appointed directors are critical for mitigating conflicts among shareholders in IPO firms. These results imply that stakeholder-oriented corporate governance systems contribute to reducing conflicts among stakeholders.

The Impacts of the Board of Directors in a Company

It is acknowledged that the existence of the board of directors is essential. The board of directors is a group jointly appointed by all members of the company. It is responsible for supervising and managing the work of senior managers in the management of the company, to protect and realize the interests of shareholders. Therefore, the role of the board of directors deserves to be investigated. This paper will analyze several examples of board governance of UK listed companies, and use a small amount of data analysis to illustrate the positive and negative role of the board of directors in corporate governance.

Determinants of intention to use e-government services: An integrated marketing relation view

The E-government development index (2020) for the southern Asian region is below the world average, with Pakistan placing seventh out of eight nations. Although Pakistan's government developed the Electronic Government Directorate (EGD) in 2005, the country's adoption rate of e-government services is extremely low. This research aimed to expand the decomposed theory of planned behavior (DTPB), which is based on the Unified Model of electronic government adoption (UMEGA), to more comprehensively understand the determinants of e-government adoption behaviour among 396 citizens in Pakistan. The extension is implemented by adding the impact of relational bonds (economic, social and structural) on trust. The findings show that the following four factors have a significant effect on citizens intention to adopt e-government services: (a) attitude, (b) subjective norm, (c) perceived behaviour control (d) trust. These four factors are predicted by effort expectancy and performance expectancy, mass media influence and family influence, self-efficacy, economic, structural and social bonds, respectively. Furthermore, this research validates the applicability of the DTPB model and demonstrates that the extended DTPB model, which is based on the UMEGA model, has excellent predictive power in understanding citizens intention to adopt e-government services. Based on these findings, implications for policymakers and recommendations for further future research are offered.

Directors in Artificial Intelligence-Based Corporate Governance – An Australian Perspective

Directors in Artificial Intelligence-Based Corporate Governance – An Australian Perspective

Lay out clear roles when it comes to performance evaluations

Recent research from BoardSource highlights the importance of understanding the roles and responsibilities of boards versus executive directors in organizational governance. One area where this is especially important is in the human resources arena—managing the nonprofit's staff. If boards misunderstand their responsibilities here, experts say, it can cause friction with the ED, undermine their authority and lead to confusion among staff as to who, ultimately, they report to.

Are social connections of independent directors all the same? Evidence from corporate monitoring

PurposeStudies on corporate boards examine how social ties between the CEO and independent board members affect the effectiveness of board monitoring. Much evidence suggests that social connections between the CEO and independent directors are associated with inadequate monitoring and lower firm value (Hwang and Kim, 2009; Fracassi and Tate, 2012). In this study, the authors note that social connections of the independent directors are of different nature and thus should not be treated as a homogeneous group; that is, the nature of connections among directors can be quite different from that between the CEO and directors, which is the primary focus of previous studies.Design/methodology/approachThe authors classify independent directors into four mutually exclusive groups based on their social connections to the CEO and other independent board members and examine what role each type of connection plays in corporate monitoring using panel data and cross-sectional fixed effect regressions.FindingsThe authors find that Only_CEO%, the proportion of independent directors who are connected only to the CEO, is negatively associated with monitoring intensity. Specifically, firms with higher Only_CEO% have larger CEO compensation, lower likelihood of dismissing the CEO, more co-opted board and worse firm performance. In contrast, No_CEO_Ind%, the proportion of independent directors who have no connection to either the CEO or other independent directors is associated with more effective monitoring. These findings suggest that independent directors with different degrees of social connections exhibit different monitoring qualities.Practical implicationsWhen more independent directors, who are connected exclusively to the CEO, are on the board, they consistently deliver low monitoring quality. However, when more independent directors with no connections to either the CEO or any independent directors are on the board, they enhance monitoring quality. These findings can be used to construct board structures with more effective monitoring ability.Originality/valueThis paper extends the literature on social networks in corporate finance. The authors show that independent directors with exclusive connections to other independent directors do not have a significant effect on board monitoring, but those truly independent directors are associated with better monitoring quality. These findings suggest that different types of social connections of independent directors play a different role in board monitoring and help extend our understanding of the function of social connections of independent directors in corporate governance.