CEO Duality Research Articles

Audit and financial communication quality: the moderating role of internal governance mechanisms

PurposeThis study aims to examine the effect of audit quality (auditor expertise and discretionary accruals) on financial communication quality and to distinguish the moderating role of corporate governance mechanisms (board size, CEO duality, board gender diversity and block ownership) on this relationship.Design/methodology/approachLinear regression is used to analyze the annual reports of 150 nonfinancial firms that belong to the CAC All-tradable index for the period 2015–2023.FindingsThe empirical results show that auditor expertise has a positive and significant effect on financial communication quality. Furthermore, board size reinforces the negative effect of discretionary accruals on financial communication quality. However, CEO duality and block ownership attenuate the positive effect of auditor expertise on the dependent variable.Research limitations/implicationsOur research covers three areas of research, i.e. audit quality, corporate governance and financial communication research. It presents the moderator role of some governance mechanisms on the relation between audit and financial communication quality. Furthermore, it aims to identify best practices in the governance system that attempt to facilitate and improve the positive impact of audit quality on the quality of financial communication, which increases stakeholder confidence in the firm. We caution readers from generalizing the findings of this study, as our study is based on a well-developed sample. Also, it is limited only to annual reports to measure the financial communication index without looking at other information transmission channels.Originality/valueThis study investigates the moderating role of internal governance mechanisms in the relationship between audit quality and financial communication quality in the French context.

The Influence of the Background and Characteristics of the Chief Executive Officer on Company Performance

This study aims to analyze the influence of CEO background and characteristics on company performance. Purposive sampling is the method of sampling that is employed, using information gathered from 83 financial firms that were listed between 2020 and 2022 on the Indonesia Stock Exchange. According to data analysis using multiple regression, the background characteristics of the CEO including gender, tenure, education, and experience significantly improve the performance of the business. As for CEO characteristics, duality, citizenship, stock ownership, and turnover also significantly improve business performance. These results demonstrate that according to agency theory, CEO characteristics, and background are crucial in reducing agency conflicts and enhancing company performance. CEOs with sufficient educational background, experience, and tenure are typically more successful in reaching judgments that are in line with the objectives of shareholders. Characteristics such as duality, citizenship, and stock ownership by the CEO provide greater motivation to enhance company value, while strategic turnover can bring the necessary innovation and change.

The Effect of Board Size, Board Independence and CEO Duality on Firm Value with Financial Performance as A Mediating Variable

This study aims to determine the effect of board size, independent commissioners, CEO duality on firm value with company performance as a mediating variable for corporate governance variables. The number of samples used in this study were 44 companies listed on the Indonesia Stock Exchange in 2019 - 2022 in the manufacturing sector. The analysis method used is multiple linear regression using Eviews 10 to process data. Data collection is taken through the Indonesia Stock Exchange website or the company's official website. The results of this study can show the effect of board size, independent commissioners, CEO duality, performance on firm value mediated by company performance.

KAJIAN FRAUD HEXAGON DALAM MENDETEKSI FRAUDULENT FINANCIAL REPORTING PADA PERUSAHAAN MANUFAKTUR SEKTOR MAKANAN DAN MINUMAN DI BEI (2020-2022)

This study aims to determine the effect of fraud hexagon on fraudulent financial reporting. The sample of this study were 52 food and beverage sector manufacturing companies listed on the Indonesia Stock Exchange during the period 2020 - 2022. The sampling technique used was non-problability sampling technique using purposive sampling method and data testing was carried out using SPSS 25. The data analysis techniques used include descriptive statistical analysis, pooling test, classical assumption test, and hypothesis testing. The results showed that the total accrual ratio had a positive effect on fraudulent financial reporting, while financial targets, change in director, political connection, ineffective monitoring and CEO duality had no effect on fraudulent financial reporting.

PENDETEKSIAN FRAUDULENT FINANCIAL REPORTING DI LINGKUNGAN BUMN: PERSPEKTIF FRAUD HEXAGON THEORY

This study aims to analyze the influence of variables such as financial stability, financial targets, external pressure, ineffective monitoring, audit fees, change in director, change in auditor, total accruals, and CEO duality on the risk of fraudulent financial reporting in state-owned enterprises (SOEs). The study is grounded in agency theory, stakeholder theory, and the GONE theory. The research sample consists of 19 SOEs listed on the Indonesia Stock Exchange during the period 2017-2022, with a total of 114 observations. The sampling method used purposive sampling technique, and data analysis was conducted using logistic regression method with SPSS software version 27. The research findings that financial stability and financial targets have a significant positive impact on fraudulent financial reporting, while other variables do not have a significant influence.

CEO duality in family firms: implications for earnings management and firm performance in Thai market

PurposeAs the debate over CEO duality’s impact on firm performance is still ongoing, the purpose of this study is to redefine CEO duality in Thai family firms and examine its impact on the relationship between earnings management and firm performance.Design/methodology/approachThis study uses a sample of 1,360 firm-year observations from listed firms on the Stock Exchange of Thailand. A fixed effect regression is used to obtain the empirical results. The results of this study are further validated using two-stage least squares estimation, subsample regression and an alternative measure of family firms.FindingsThis study finds that firms with CEO duality are more likely to engage in REM, supporting Agency Theory. However, family-controlled firms with CEO duality engage less in REM in pursuit of firm performance. This study’s findings highlight the potential benefits of CEO duality in family firms as a mechanism to support Socioemotional Wealth of the controlling family. Therefore, the mandatory ban on CEO duality may have unintended consequences for family firms.Originality/valueThis paper provides further evidence on the impact of CEO duality on the relationship between earnings management and firm performance in Thailand’s family-dominated stock market. A new definition of CEO duality is proposed, including firms where the CEO is related to the chair of the board. This boarder definition provides more comprehensive measurement compared to the traditional definition which may fail to capture the full scope of influence exerted by controlling family, as they may obscure CEO duality by appointing individuals with kinship ties to the CEO as the chair of the board.

Corporate Governance and Accounting Conservatism: Exploring the Linkages and Implications

This study examined the correlation between the corporate governance mechanism and accounting conservatism during the COVID-19 pandemic. In this paper, we employed regression analysis to examine the relationship between several aspects of corporate governance and accounting conservatism, including board independence, audit committee independence, CEO duality, multiple directorships, ownership concentration, and board metric. This study investigates how the COVID-19 pandemic and the adjustments to the Malaysian Code on Corporate Governance (MCCG) 2017 affect the performance and earnings quality of Main Board companies listed on Bursa Malaysia in 2020. Financial and governance data were collected from annual reports and Refinitiv DataStream using a quantitative approach. The first proxy for earnings quality was accounting conservatism, measured by the Khan and Watts (2009) model. Using regression analysis, the study explained how corporate governance mechanisms prevailed over conservatism during the pandemic and how it impacted accounting practice and decision making under increased uncertainty. This study revealed that conventional governance mechanisms for example, board independence, audit committee independence and CEO duality do not affect accounting conservatism. However, board metric, which measures the dispersion and the experience of the board, is positively and significantly related to accounting conservatism. Moreover, the results of this study suggest that the size and profitability of the firms increase the likelihood of using conservative accounting policies. The findings of the study indicate that during crisis period, organizations more extensive governance structures and diverse knowledge are in a vantage position to apply accounting conservatism, which is crucial for ensuring the reliability and credibility of financial reports.

The influence of CEO overconfidence, female director, and CEO duality on the financial performance of industrial sector companies: A strategic outlook

The influence of CEO overconfidence, female director, and CEO duality on the financial performance of industrial sector companies: A strategic outlook

Does CEO Duality Matter When It Comes to Innovation A Review of Empirical Literature and Emerging Perspectives for Future Research

Does CEO Duality Matter When It Comes to Innovation A Review of Empirical Literature and Emerging Perspectives for Future Research

EXAMINING BOARD CHARACTERISTICS AND INTEGRATED REPORTING QUALITY: INSIGHT FROM ESG-FOCUSED FIRMS IN INDONESIA

This research aims to look at Indonesian firms and see whether there's a connection between board traits and the quality of their integrated reporting. This study analyzes 52 listed firms from the environmental, social, and governance (ESG) index between 2019 and 2022 using linear regression with panel data to test its assumptions. The data was acquired from annual reports of Indonesian corporations. The acquired empirical data clearly shows that gender diversity appears to significantly improve the integrated reporting quality. Also noteworthy is that board size, independence, and CEO duality are not significantly related. This study has several practical implications in addition to its theoretical implications. Managers, shareholders, and policymakers should take note of these findings, as they are particularly relevant. Therefore, stakeholders should evaluate the precision of disclosure when deciding on the best reporting approach. A more accurate assessment of risk, less stock volatility, more long-term value for shareholders, and an improved company reputation are all outcomes of this. Corporate social responsibility and sustainability literature is lacking, which this article seeks to remedy. It fills a gap in the literature by providing more information about ESG company-specific integrated reporting and corporate governance. This study has important implications for professionals and practitioners who want to raise the bar on the quality of their integrated reports.

"CEO Duality Dynamics: Assessing Financial Performance in Corporate Governance"

In today's corporate world, the importance of corporate governance has led to a focused examination of company board structures and the pivotal role played by CEOs. This scrutiny arises from the CEO's crucial involvement in a multitude of areas including board dynamics, the promotion of transparency, fostering shareholder engagement, ensuring accountability, embracing gender diversity within leadership, cultivating stakeholder relations, strategic oversight, enhancing risk management, fortifying internal controls, and managing the company's reputation. The practice of leadership dualism, where an individual simultaneously occupies the roles of CEO and board Chairman, is a subject of debate. While this leadership model is favored in emerging markets, it is generally prohibited in more developed economies that operate with two-tier board systems. Despite the Indian Companies Act of 2013 introducing reforms aimed at strengthening corporate governance by overhauling board practices, the dual role of CEOs remains unaddressed in the current legal framework. This research delves into the effects of a CEO holding dual roles on the financial outcomes of companies in India. The analysis reveals that the financial performance of companies does not show a clear correlation with the practice of leadership dualism.

An evaluation of intellectual capital disclosure: evidence from Vietnamese firms

Purpose This study aims to explore the extent of Intellectual Capital Disclosure (ICD) in the annual reports of the top 50 listed Vietnamese companies. It assesses the influence of firm characteristics and corporate governance structure on ICD practices. Design/methodology/approach ICD was measured using content analysis, specifically word count percentage. Panel data regression analysis was employed to examine the relationship between firm characteristics, governance structures and the level of ICD. Findings Results reveal that ICD levels among Vietnamese firms sampled are relatively low, averaging 17.43% of the overall annual report word count. Relational capital emerges as the most disclosed category of IC. Firm size, profitability, industry type, number of independent board members and CEO duality significantly impact the level of ICD. However, leverage, board size and the presence of an audit committee show no significant influence on ICD. Practical implications These findings offer insights into agency and signaling theories. They provide empirical evidence for stakeholders, academics and regulatory bodies to comprehend ICD practices and identify factors that could enhance ICD in emerging markets like Vietnam. Originality/value This study contributes to the literature by examining ICD practices in an emerging market context and identifying the impact of firm characteristics and governance structures on ICD levels, offering valuable implications for both theory and practice.

Board Gender Diversity and CSR Spending: Does Critical Mass Play Any Role in Post-Companies Act 2013? Case Of Indian-Listed Firms

The study examined whether women board directors in Indian organizations, as mandated by the Companies Act 2013, impacts their CSR spending and is relevant in the Indian business environment. 361 firms listed in NIFTY 500 were selected to analyze the increase in gender diversity affecting the trend of CSR spending from 2014-19. A dummy variable for critical mass was also considered along with control variables of firm and board size and CEO duality to examine the change in CSR spending with their inclusion in the relationship. Findings showed that only 8% of the 361 large-size organizations have three or more women directors on boards with an average of 10 members and a significant change in CSR spending trend with the inclusion of women directors, wherein the control variables also played a determining role. A strong board composition through independent directors and a critical mass of women directors is suggested for effective CSR spending.

How Do the Political Connections and the Corporate Governance Mechanisms Affect the Firm Risk of Chinese Dual-listed Companies?

This research aims to assess the influences of political connections and corporate governance (CG) mechanisms on the firm risk of Chinese dual-listed companies (CDLC). CDLCs are Chinese companies that have core businesses in China and simultaneously list their shares in the Hong Kong and the China A-share markets. One hundred CDLCs are chosen for this research from 2003 to 2019. A binary variable of state control firm attribute (SCFA) is created to proxy the political connections to the Chinese government. The standard deviation of daily stock return and the mean of the natural logarithm of squared daily stock return are the two proxies of firm risk. The regression results show that the SCFA negatively influences the firm risk. Thus, the political connections, proxied by the SCFA, mitigate the firm risk. However, the state ownership’s influence on firm risk is insignificant. The regression results are supportive of our argument that SCFA and state ownership are two distinct concepts. Both the board size and independent director ratio insignificantly influence the firm risk. The CEO duality cannot be concluded to positively influences the firm risk and is not a destabilising factor in CDLCs. Evidence of the legal bonding effect is not observed in this research.

The Role of Corporate Governance Practices on Saudi Stock Exchange Voluntary Disclosure

This study examines the impact of corporate governance practices on voluntary disclosure among non-financial firms listed on the Saudi Stock Exchange (Tadawul) from 2011 to 2022. The research focuses on key governance variables, including board size, board independence, CEO duality, audit committee effectiveness, ownership structure, and board diversity, to understand their influence on transparency and information sharing. Employing panel data analysis, the study utilizes fixed effects, random effects, and pooled OLS models, with the fixed effects model emerging as the most robust. The findings reveal that board size, board independence, audit committee effectiveness, ownership structure, and board diversity significantly enhance voluntary disclosure, whereas CEO duality and firm-specific factors such as firm age and leverage show limited influence. The results highlight the importance of strong corporate governance frameworks in fostering transparency and aligning with Saudi Arabia’s Vision 2030 goals to attract foreign investment and boost market confidence. This study contributes to the literature on corporate governance and disclosure in emerging markets, offering practical insights for policymakers and corporate leaders to improve governance structures and reporting practices.

Analysis of factors affecting financial distress in Vietnam – an emerging economy in East Asia

Understanding the conditions leading to business failure and predicting them earlier is the best way for companies to overcome and minimize their harm, improve their performance, and avoid financial distress and bankruptcy. This paper aims to measure the level and trends of factors affecting financial distress in Vietnam – an emerging Southeast Asian economy, along with the managerial implications drawn from the research results. Research data were collected from 606 firms listed on the Vietnam Stock Exchange from 2018 to 2022. The Altman Z-score is used to determine the financial distress of these firms. The factors researched and tested in this study are all internal factors divided into two groups with distinct features. Non-financial factors belong to management characteristics; financial factors are typical indicators of a firm’s financial statements. The study uses OLS, FEM, and REM models to analyze the influence of financial factors (Total liability to Total assets, Sales growth, Firm size, and Firm age) and non-financial factors (Board size, CEO duality, Institutional ownership level, Independent member, and Foreign CEOs) on financial distress and GLS regression to overcome the model’s shortcomings. The results show that the factors in the research model significantly impact financial distress, of which six factors (Board size, CEO duality, Institutional ownership level, Foreign CEOs, Sales growth, and Firm age) are negatively correlated. Three other factors (Independent members, Total liability to Total assets, and Firm size) are positively correlated with financial distress. AcknowledgmentThe author thanks everyone who helped make this study possible.

The Determinants of Firm Value: A Panel Data Approach on the S&P 500 Companies

Over the last two decades, the US companies have faced a series of challenges caused by the two of the most significant events, namely the global financial crisis and the Covid-19 pandemic crisis. To analyze the influence of these crises along with other factors on the firm value represented by Tobin’s Q, there were estimated unbalanced panel data multiple regression models, with cross-section fixed effects, with cross-section and period fixed effects, with cross-section random effects, and with cross-section random effects with period fixed effects, using a sample of 442 non-financial companies included in the Standard & Poor’s 500 index, over a period of 20 years, from 2004 to 2023. The independent variables are divided into three categories, namely financial indicators, corporate governance variables, and dummy variables that indicate the crisis periods. The results showed that the financial leverage, asset tangibility, liquidity, firm size, the number of meetings attended by the board members annually, the proportion of the independent members on the board and the Covid-19 pandemic crisis had a positive effect on the company value, while the firm age, CEO duality, the number of the members on the board, the proportion of the females on the board and the global financial crisis exerted a negative impact on the firm value. To better differentiate the determinants of the firm value in the context of the two major events that occurred during the analyzed period, there were estimated other empirical models using interaction variables between each dummy variable showing the crisis and the other factorial variables.

Corporate governance structures and their implications on audit quality: UK evidence

This study evaluates the impact of corporate governance variables on audit quality in the United Kingdom (UK). The aim of the study is to ascertain the influence of board size, chief executive officer’s (CEO) dual role, and audit committee independence on audit quality. Two different proxies of audit quality were employed: the level of discretionary accruals and auditor size. The sample comprised 1,306 firms listed on the FTSE All Share Index for a long period covering 2012–2022. Different methodologies were employed to reach conclusions. Panel least squares and logit regressions provided robust results. Specifically, the results imply a positive relationship between board size, audit committee independence, and audit quality. Interestingly, CEO duality does not seem to alleviate audit quality levels. Contrary to many research findings and regulatory concerns, the CEO’s dual role is positively related to both audit quality proxies. All independent variables in the panel least squares model are statistically significant at conventional significance levels. The logit model provides unequivocal support to the beneficial role of board size on audit quality, at all levels of significance (p-value 0.00). The UK’s “comply or explain” regime offers a unique setting for future research on several corporate governance variables.

CEO Duality, Audit Committee Independence and Cost of Equity Capital: An Empirical Study from Jordan

CEO Duality, Audit Committee Independence and Cost of Equity Capital: An Empirical Study from Jordan

Political connection and firm’s financial performance; the role of corporate governance

Purpose This study aims to analyze the impact of political connection on the firm’s financial performance in presence of corporate governance. Design/methodology/approach The study utilizes panel regression analyses (OLS) and margin and contrast analysis techniques on a data set of Pakistan’s listed companies ranging from 2012 to 2021. For political connection, an aggregate score was calculated from political ties at the central, provincial and local level. Corporate governance was measured through an index using principal component analysis technique capturing its attributes comprised of board size, board tenure, board independence, board gender diversity, CEO duality, audit committee tenure and audit quality. Findings The study finds that politically affiliated individuals can exploit the wealth of firms. It also supports the positive role of corporate governance in augmenting the firm financial performance and further confirms that the presence of robust corporate governance practices can help mitigate the risk posed by the political connection. Practical implications The study provides valuable information to investors and offer insights into the investment opportunities available in nonfinancial sectors and identifies areas where investments may not yield favorable results. It provides solutions to the companies to effectively compose their boards and offset the adverse effect of political connection and capitalize on its potential benefits. Investors can draw upon these insights to inform and facilitate their investment decision-making processes. By gaining a better comprehension of the impact of political associations on corporate governance and performance, regulators and policymakers can better design policies that strike a balance between preventing abuses while still allowing firms to reap the benefits of political connections. Originality/value To the best of the authors’ knowledge, this is the first study that delves into an analysis to mitigate viz-a-viz offset the adverse effect of political affiliations by implementing robust practices of corporate governance. Further, in lieu of a binary indicator variable of political connection, this study applies a different approach to quantify the varying intensities of the political connections, which is a nascent method. It further undertakes margin & contrast analysis and also analyzes effect of different levels of political connections as well as the role of various attributes of corporate governance, which offer a novel contribution.