Effect Of Corporate Governance Structure Research Articles

Does corporate governance structures promote shareholders or stakeholders value maximization? Evidence from African banks

PurposeThe purpose of this paper is to explore the relationship between corporate governance structures and stakeholder and shareholder value maximization perspectives in 267 African banks from 2006 to 2011.Design/methodology/approachThe authors used the Prais–Winsten ordinary least squares and random effect regression models to explore this relationship to ensure consistency and efficiency in results. The data for this study were collected from Bankscope.FindingsThe results of this study show that corporate governance structures such as CEO duality, nonexecutive members and extreme large board size lead to a reduction in both shareholder and stakeholder value maximization. However, audit independence and board size also promote both shareholder and stakeholder value maximization. Although gender diversity promotes profit maximization, it was not significant in any of the models estimated. The results further suggest that the same corporate governance structures promote and detract shareholder and stakeholder value maximization in Africa although the effect of corporate governance structures was weightier on shareholder value maximization confirming the agency theory.Practical implicationsFrom these findings, bank management must pursue the institution of good corporate governance structures and avoid weak corporate governance structures to promote shareholder and stakeholder value maximization. Also equity holders may have to pay particular attention to corporate governance structures because they benefit the most from the institution of good corporate governance structures.Originality/valueThis study explores and compares how corporate governance structures promote shareholder and stakeholder value maximization separately in African banks. To the best of the authors’ knowledge, this is the first of such studies.

Corporate governance structures and bank risk taking behaviour: evidence from Africa using income bracket approach

The study sought to determine the effect bank level corporate governance have on risk taking behaviour of banks in Africa and its income bracket groupings using a two-step GMM panel dataset of 215 banks from 29 African countries. The results show that while board size and CEO duality significantly reduce risk taking behaviour of banks in Africa, extreme increase in board size increased risk taking behaviour of banks in Africa. Furthermore, the results reveal that the effect of bank level corporate governance structures on bank risk taking behaviour varies greatly across banks in different income brackets in Africa. This implies that the effects of corporate governance structures are shaped by contextual settings and effects. The policy implication from these findings are that bank regulators must institute corporate governance frameworks that help shape risk taking behaviour of banks which will enhance financial institution and sector soundness and stability. Also, bank ownership and management must be careful in the selection and implementation of bank corporate governance structures since not all the corporate governance structures induce the stability of banks given the income bracket a bank finds itself.

Innovation propensity and international development of small and medium firms: the moderating effects of corporate governance structure

Innovation propensity and international development of small and medium firms: the moderating effects of corporate governance structure

Innovation propensity and international development of small and medium firms: the moderating effects of corporate governance structure

The paper aims to explore the moderating effects of governance structure on the relationship between innovation propensity and international development of SMEs. Based on agency and organisational learning theories, we hypothesise that ownership concentration, institutional ownership, family-owned firm, and foreign group affiliation have positive moderating effects on the innovation-internationalisation relationship. Using a sample of 2,876 Italian firms, the results suggest that ownership concentration and foreign group affiliation positively moderate the relation between innovation and international development. Institutional investors seem to have no interest in being involved in innovative processes or, to some extent, in the international expansion. Family-owned firms have a positive influence on international development only when they interact with the innovation efforts of the firms.

기업지배구조가 효율성 및 기업가치에 미치는 영향 : 효율성의 매개효과와 대리인문제의 조절효과를 중심으로

기업지배구조가 효율성 및 기업가치에 미치는 영향 : 효율성의 매개효과와 대리인문제의 조절효과를 중심으로

Effect of Corporate Governance Structure on the Financial Performance of Johannesburg Stock Exchange (JSE)-Listed Mining Firms

There have been many corporate collapses and financial crises in recent years linked to a lack of effective corporate governance. The South African King IV Code of Corporate Governance recommends that corporate governing bodies should be comprised of an appropriate balance of knowledge, diversity, and independence for discharging their duties objectively and more efficiently. This study examines the effect of corporate governance structures on firm financial performance. The secondary data of selected Johannesburg Stock Exchange (JSE), Socially Responsible Investment (SRI) Index-listed mining firms’ sustainability reports, and integrated annual financial statements are used. Using panel data analysis of the random effects model, we determined the relationship between board independence and board size and the return on equity (ROE) for the period 2010–2015. Results indicate a weak negative correlation between ROE and board size, and a weak, but positive, correlation between ROE and board independence. Additionally, there is a positive, but weak, correlation between ROE and sales growth, but a negative and weak relationship between ROE and firm size. The study suggests that effective corporate governance through a small effective board and monitoring by an independent board result in increased firm financial performance. We recommend that South African companies see compliance with the recommendations of the King IV Code on Corporate Governance not as a liability, but an ethical investment that may likely yield financial benefit in the long-term. Although complying with corporate governance principles does not necessarily translate into a significant economic benefit, firms should, however, continue to adopt corporate governance for ethical reasons to meet stakeholder’s social and environmental needs for sustainable development.

A STUDY OF CORPORATE GOVERNANCE STRUCTURE, DISCLOSURE AND INFORMATION ASYMMETRY IN INDONESIA BANKING INDUSTRY

The purposes of this study are to find out the effect of corporate governance structure on information asymmetry, to find out the effect of corporate governance structure on disclosure, and to find out the effect of disclosure on information asymmetry in Indonesia banking industry. This study used partial least square/ variance based statistical method. The results of this study found out that good implementation of corporate governance structure will increase disclosure in Indonesia banking industry. The other result implied that the higher implementation disclosure will reduce information asymmetry in Indonesia banking industry (disclosure represented by the indicator of percentage corporate governance items disclosed or as IPCG).

Corporate governance, CEO compensation and tax aggressiveness

Purpose The purpose of this paper is to examine the effect of corporate governance structure and CEO compensation on the level of tax aggressiveness. Design/methodology/approach This work analyzes a sample of 471 observations of 100 companies listed on the NASDAQ 100 for the period 2008-2012. It uses a fixed-effect panel model to analyze the effect of different model variables on the tax aggressiveness level. Findings The main finding of this study is the great influence of corporate governance structure and CEO compensation on reducing tax aggressiveness. Indeed, it finds a significant negative relation between board size, CEO salary, CEO stock options and tax aggressiveness. In addition, the study reveals that there is a direct negative relation between CEO duality, tax fees and tax aggressiveness. Research limitations/implications The study was conducted using robust methods to test the effect of corporate governance structure and CEO compensation on tax aggressiveness level. The generalized least squares method was used to fit panel data and overcome heteroscedasticity and autocorrelation problems. The aim of the study was to prove the great effect of both corporate governance structure and CEO compensation on reducing tax aggressiveness. As this study was based on data from American companies, the results cannot be generalized to all contexts. Originality/value This paper differs from previous work and tests the effect of corporate governance structure, CEO compensation, CEO characteristics and audit fees on tax aggressiveness. The findings of this study will enrich the literature on tax aggressiveness by suggesting that corporate governance structure and CEO compensation can significantly limit tax aggressiveness behavior. Therefore, shareholders must be aware of these two variables. They need to limit tax aggressiveness behavior, as it is usually accompanied by rent diversion, as reported by Desai and Dharmapala (2006). Therefore, these findings will be helpful to investors, managers and regulators because they have implications for the interactive decision-making process.

PERAN STRUKTUR CORPORATE GOVERNANCE DALAM TINGKAT KEPATUHAN MANDATORY DISCLOSURE IFRS

The objective of this study is to find out the effect of corporate governance structure which is proxied by managerial ownership, institutional ownership, the number of board of commissioner meetings, the number of audit committee meetings, the proportion of independent commissioner and the amount of audit committee to the level of compliance with IFRS mandatory disclosure. The independent variables in this study are managerial ownership, institutional ownership, the number of board of commissioner meetings, the number of audit committee meetings, the proportion of independent commissioners and the amount of audit committee. The dependent variable in this study is the level of compliance with IFRS mandatory disclosure. Samples that used in this study were coal mining company listed on the Indonesia Stock Exchange (IDX) 2011-2013, there are 18 companies choosed with a sampling technique using purposive sampling method. This study uses multiple regression statistical technique (multiple regression model) to test the effect of independent variables on the dependent. The program used for hypothesis testing is SPSS 22. The results of this research indicates that the independent variables which managerial ownership, institutional ownership and the proportion of independent commisioners affect the level of compliance with IFRS mandatory disclosure. While theother independent variables are the number of board of commissioner meetings, the number of audit committee meetings and the amount of audit committee has no effect on the level of compliance with IFRS mandatory disclosure.

Moderating Effect of Corporate Governance Structure between Corporate Social Responsibility and Performance

Objectives: To empirically analyze the moderating effect of corporate governance structure between CSR and the corporate performance. Methods/Statistical Analysis: To figure out if the corporate governance structure affects the corporate performance through CSR, this paper set the governance structure propriety factor as independent variable, the social responsibility as mediating variable, and the corporate performance as dependent variable. And Moderator regression analysis was conducted to verify the moderating effect of the governance structure between CSR and the corporate performance. Analysis was carried out in four steps regression. Findings: The result of empirical analysis is as follows: First, CSR has a positive effect on the performance; second, the governance structure has a moderating effect between CSR and the performance. In the process to implement CSR activity, agency costs would be incurred from a conflict between shareholders and the board. So considering that the effect CSR has on the performance is subject to the governance structure, sound governance structure may improve the corporate performance. This paper among other studies on CSR has significance in that it analyzed the moderating effect of corporate governance structure between CSR and the corporate performance for the first time. Above all, the inducements to implement CSR activities voluntarily and consistently were found. The significant result of this study is also practically meaningful and able to present a direction for policy making of the government on the corporate social responsibility. Improvements/Applications: The tasks to be done in the future include a relevant study consists of a considerable number of samples and time series data covering long period.

The Effect of Corporate Governance Structure on Dividend Smoothing

The Effect of Corporate Governance Structure on Dividend Smoothing

Disclosure of Corporate Governance Structure and the Likelihood of Fraudulent Financial Reporting

The purpose of this study is to examine the relationships between corporate governance structure and the likelihood of fraudulent financial reporting. Likelihood of fraudulent financial reporting is based on an integration of Beneish M-score model and Altman's Z-score model. These relationships are examined based on content analysis of annual reports of 227 Public Listed Companies in Malaysia for the year 2010-2011. Results of this study provide evidence that the effectiveness of corporate governance structure reduces the likelihood of fraudulent financial reporting. These results indicate that effective corporate governance structure is paramount in enhancing the credibility of financial reporting.

Corporate governance, resources, FDI commitment and firm performance

Purpose – This study aims to explore the effects of corporate governance structure and resources on foreign direct investment (FDI) commitment and firm performance. Design/methodology/approach – The data are collected from high-tech firms listed by the Taiwan Stock Exchange. All selected 137 firms have complete FDI and other required data during 2007-2009. The mean values of the variables during the three-year period were used for analysis. Findings – The results indicate that both chief executive officer (CEO) duality and government shareholding affect a firm’s FDI; and the higher the management shareholding ratio, the lower the return on equity. Moreover, a large ownership of substantial shareholders can enhance a firm’s performance; and higher institutional ownership can lead to higher firm performance. Research limitations/implications – This study analyses the limited data from 137 high-tech firms in Taiwan during the three-year period of 2007-2009. Further analyses of other industries, countries and time periods are needed to generalize the conclusions. Practical implications – A firm with CEO duality should increase the ratio of government holding to mitigate the influence of CEO on FDI decisions. When a firm’s performance is poor, the ratio of managerial holdings should be reduced; conversely, the firm could attract more holdings from domestic securities and funds to improve performance. Originality/value – This study provides guidelines for shareholders to analyze governance structure and formulate their investment strategies. Corporate policymakers may use these as the principles for designing a corporate governance structure that could engender optimal firm performance.

Ownership structure and innovative behavior

Purpose– The purpose of this paper is to expand understanding of the determinants of adoption innovation in SME context by empirically examining the effect of corporate governance structure on manager's innovative behavior. This was done through exploring whether ownership structure affects managers’ innovative behavior and if so, whether the effect is mediated by board composition.Design/methodology/approach– Using a sample of 197 managers within Tunisian SMEs, hypotheses were tested through structural equation modeling and especially using covariance structure analysis (or LISREL method) with Analysis of Moment Structures (AMOS) 18.0 software and maximum likelihood estimation method.Findings– The paper found that ownership structure is significantly associated with manager's innovative behavior. Further analysis arising from introducing outsiders’ representation on the board as a mediating variable reveals that the relationship is fully mediated by this variable.Practical implications– This study gives insights to policy makers who are interested in improving board efficacy in emerging economies such as Tunisia. Indeed, the study results should encourage nominating committees and seniors to reflect warily on an effective structuring of board composition by ensuring a certain priority for innovation activities in the firm.Originality/value– This paper extends the understanding of how ownership structure shapes strategic decisions such as innovation in emerging markets. In addition, it fills the literature void by introducing the board composition as a mediating concept between ownership structure and innovative behavior, which was neglected by previous researchers.

Ownership Structure and Innovative Behavior: Testing the Mediatory Role of Board Composition

The primary objective of the present study was to expand understanding of the determinants of adoption innovation in SME context by empirically examine the effect of corporate governance structure on manager’s innovative behavior. This was done through exploring whether ownership structure affects managers’ innovative behavior and if so, whether the effect is mediated by board composition. Using a sample of 197 managers within Tunisian SMEs, the study finds that ownership structure is significantly associated with manager’s innovative behavior. Further analysis arising from introducing outsiders’ representation on the board as a mediating variable reveals that the relationship is fully mediated by this variable. Research and practical implications are discussed.

CEO Attention, Governance Structure, and Corporate Social Performance: Evidence from China

This study links CEO attention to corporate social performance (CSP) and examines the moderating effect of corporate governance structure. Primarily building on the attention-based view of the firm...

The Effect of Corporate Governance Structure on the Asymmetric Behavior of Logistic Costs

The Effect of Corporate Governance Structure on the Asymmetric Behavior of Logistic Costs

The Effects of Corporate Governance Structure on Firms' Investment Activities and Productivies

The Effects of Corporate Governance Structure on Firms' Investment Activities and Productivies

Effectiveness of corporate governance structure: An alternative metric on the performance of listed Chinese companies

We analyse a panel data set covering the years 2001 to 2005 and comprised of a stratified sample of A, AB and AH non financial companies listed on China’s Shanghai and Shenzhen stock exchanges to provide empirical evidence on the influence of corporate control and governance characteristics on the quality and independence of corporate decision making in these companies. The characteristics considered are the level of concentration in and type of ownership of the companies, particularly high levels of government and foreign ownership, and the composition (expertise) and size of the companies’ two boards. Performance outcomes, and by association the quality and independence of corporate policy decisions, are measured in the form of firm bad debt to accounts receivable ratio (BD/AR). We find that for our sample firms’ concentration of ownership, including state and foreign ownership, and board size and independence are significant factors in determining the levels of the bad debt ratio.

A TEST OF THE TWO‐TIER CORPORATE GOVERNANCE STRUCTURE: THE CASE OF JAPANESE KEIRETSU

AbstractWe examine the effect of corporate governance structure on the relation between ownership structure and financial leverage among Japanese firms. Under normal conditions, we find no significant relation between ownership variables and financial leverage. When firms signal financial difficulties, however, keiretsu financial institution equity owners intervene to moderate the use of debt. This evidence reveals the existence of a keiretsu two‐tier corporate governance system. In the first stage, the unique corporate cross‐shareholding allows mutual monitoring under normal circumstances. In the second stage, when firms get into financial trouble, keiretsu financial institutions assume control by reducing debt levels. The results highlight differences between keiretsu and independent corporate governance structures.