Effect Of Corporate Governance Practices Research Articles

Enhancing cash flow management in Ghanaian financial institutions through effective corporate governance practices

Enhancing cash flow management in Ghanaian financial institutions through effective corporate governance practices

Corporate governance and firm performance in Vietnam: The moderating role of digital transformation

This study examines the interplay between corporate governance mechanisms and firm performance in the Vietnamese context, with a particular focus on the moderating role of digital transformation. Utilizing a sample of 150 Vietnamese firms in 2023, the study employs a GMM approach to analyze the relationship between board characteristics (size, independence, duality, gender diversity, meeting frequency, and nationality diversity), digital transformation, and firm performance, proxied by ROA, ROE, and EPS. The findings reveal that board size and CEO duality positively influence firm performance. Notably, the positive impact of gender diversity on performance is amplified by digital transformation. While digital transformation exhibits a standalone positive effect on performance, its moderating role on other governance mechanisms is mixed. These results underscore the importance of effective corporate governance practices, particularly in the context of digital transformation, for enhancing firm performance in the Vietnamese market.

Minimization of Audit Report Lag through Corporate Governance and Audit Matters: Empirical Study on LQ 45 Companies Listed on the Indonesia Stock Exchange

Timely publication of financial statements needs to be done by companies so that stakeholders can make decisions according to their needs. This study uses a quantitative approach to explore how corporate governance and audit matters affect the length of time for financial report publication. The research population came from LQ-45 index companies and listed on the Indonesia Stock Exchange (IDX) in 2020-2022 which were analyzed using Multiple Linear Regression Analysis. The purposive sampling technique was used to select 90 research samples. This study uses secondary data from the official website of the Indonesia Stock Exchange (IDX) and the company's official website. The findings of this study are that the audit committee and independent commissioners have a significant negative effect on audit report lag, but key audit matters show an insignificant negative effect. Future research is expected to expand the sample to other industries or examine factors such as business complexity, level of regulation, and economic conditions. This research has important implications for the government, OJK, companies, and KAP. The government and OJK can design policies to encourage effective corporate governance practices, while companies and KAP can use the results of this study as motivation to increase transparency and accountability in audit reports.

Effect of Corporate Governance on Financial Performance in China

Purpose: The aim of the study was to assess the effect of corporate governance on financial performance in China. Methodology: This study adopted a desk methodology. A desk study research design is commonly known as secondary data collection. This is basically collecting data from existing resources preferably because of its low cost advantage as compared to a field research. Our current study looked into already published studies and reports as the data was easily accessed through online journals and libraries. Findings: The study indicated a positive correlation between strong corporate governance practices and improved financial outcomes for companies. These practices typically include transparent decision-making processes, effective board oversight, and alignment of management incentives with long-term shareholder value. Study suggests that companies with robust corporate governance structures tend to experience higher profitability, better risk management, increased investor confidence, and enhanced access to capital. Additionally, strong corporate governance is associated with lower instances of financial misconduct and improved overall corporate reputation, which can further contribute to sustainable financial performance over time. Implications to Theory, Practice and Policy: Agency theory, stewardship theory and resource dependency theory may be used to anchor future studies on assessing the effect of corporate governance on financial performance in China. Implement best practices in corporate governance that align with empirical findings and theoretical insights to optimize financial performance. Advocate for regulatory frameworks and policies that incentivize effective corporate governance practices and align them with desired financial performance outcomes.

A Comprehensive Study on the Influence of Corporate Governance Factors on Financial Performance of Listed Banking Companies in Bangladesh

This comprehensive study investigates the influence of organizational management elements on the economic outcomes of publicly traded banking enterprises in Bangladesh. The research begins with an introduction highlighting the significance of this study Within the framework of the Bangladeshi Financial industry. The review of literature delves into existing research on Effective management of organizations and their economic achievements, providing a foundation for this study. It identifies gaps and emphasizes the need for specific analysis in the Bangladeshi banking industry. An abbreviated summary of corporate oversight principles and practices sets the stage for understanding the study’s framework. Subsequently, the analysis of the financial industry in Bangladesh offers essential context for the study. The examination and results portion showcases factual information and outcomes, demonstrating the correlation between corporate governance elements and economic efficiency in banks listed in Bangladesh. Here we use five years data of five banks and then we use SPSS as a statistical tool for data analysis. The conclusion synthesizes these findings, highlighting key takeaways and their implications for the sector. Finally, the study concludes by discussing policy implications. It outlines recommendations for regulatory bodies and banking institutions to enhance the financial performance of banks in Bangladesh by implementing effective corporate governance strategies and practices. This study intends to provide valuable perspectives for stakeholders and decision-makers in the banking industry.

How mixed ownership affects investment efficiency? evidence from state-owned enterprises in China.

The inefficiency observed in investment within state-owned enterprises presents a significant practical challenge that can affect the sustainable development of China's economy. To address this issue, this study comprehensively explores the intricate mechanisms underlying the governance implications of mixed ownership on the investment efficiency of listed companies. Drawing on unbalanced panel data encompassing Shanghai and Shenzhen Stock Exchange A-share listed companies in China spanning the period from 2008 to 2022, this study employs a fixed-effects model to unveil the nuanced ways in which mixed ownership influences investment efficiency through the lens of agency costs. This study transcends the boundaries of traditional agency conflicts between managers and shareholders. It delves deeper, illuminating the diverse effects of agency conflicts between significant controlling shareholders and minority shareholders. The results revealed a noteworthy positive correlation between mixed ownership and investment efficiency, and verified the intermediary role of agency costs between mixed ownership and investment efficiency, which is an important result of our research. Heterogeneity analysis indicates that the relationship between the two can be affected by external events, such as during the COVID-19 pandemic, investment efficiency is not the most concerned issue for enterprises. The findings have practical implications for practitioners and policymakers, as they offer avenues for optimizing investment strategies and fostering efficient and effective corporate governance practices.

The Role of Corporate Governance Mecanism in Enhancing Firm Value with CSR as Moderating Variable

Within the framework of GCG research, a company's value is an indicator of how well its performance and sustainability are assessed from the viewpoints of investors and shareholders. The study examines how corporate social responsibility disclosure (CSR) and effective corporate governance practices (GCG), including the presence of an audit committee, institutional ownership, and managerial ownership, influence firm value. Additionally, it explores the moderating effects of these factors on the relationship between CSR, GCG, and firm value. To determine the relationship between variables, this study uses a quantitative approach method where data is collected in the form of numbers and analyzed using the Eviews application. The study encompassed all mining corporations that were publicly listed on the Indonesia Stock Exchange (IDX) between 2020 and 2022. Purposive sampling was used for sampling, and resulted in a research sample of 99 companies. There is no discernible impact on managerial ownership, institutional ownership, and the presence of an audit committee regarding the moderated relationship between CSR and firm value because the probability value of the interaction between IO and CSR 0.9582 > 0.05, AC and CSR 0.8528 > 0.05, and MO and CSR 0.6689 > 0.05 more than 0.05. Thus, hypotheses H4, H5, and H6 which predict that MO, IO, and AC will have an impact on firm value when moderated by CSR are not proven correct based on the test results. The study results validate that institutional and managerial ownership positively impact firm value in a significant manner, whereas the audit committee exerts a positive yet statistically insignificant influence.

Do Corporate Governance and Bank-Specific Factors Matter On Banking Financial Performance?

Purpose: This study explores and presents empirical evidence on the influence of self-assessment of bank corporate governance and bank-specific factors on the financial performance of commercial banks in Indonesia. Methodology/approach: We conducted the study on 35 Indonesian public banks listed on the Indonesia Stock Exchange from 2017 to 2021. Using structural equation modeling, a thorough analysis was performed on a dataset of 160 observation samples that were carefully selected through purposive sampling. Findings: This study found that the implementation of corporate governance, which is proxied by the rating of self-assessment of corporate governance, and bank-specific factors significantly affect bank financial performance. The better the corporate governance self-assessment rating, the better the bank's financial performance. Other results indicate that bank-specific factors, as reflected by bank ownership, size, and diversification, significantly positively contribute to bank financial performance. Practical implications: This research aims to provide valuable insights that can support the Indonesian Financial Services Authority (OJK) in implementing effective corporate governance practices. It focuses on enhancing risk management, strengthening the bank's internal capacity, and ensuring compliance with regulations to promote best practices in bank management. Originality/value: This study provides new insight by examining the factors influencing financial performance in the banking sector, focusing on bank-specific factors and the regulatory aspects of Indonesian banking governance.

Fortifying Transparency: Enhancing Corporate Governance through Robust Internal Control Mechanisms

Purpose: This study explores how robust internal control mechanisms enhance corporate governance by fostering organizational transparency and accountability. The focus is on the interplay between internal controls and corporate governance practices, emphasizing their collective role in promoting organizational success and sustainability. Research Design and Methodology: The study employs a qualitative approach, conducting a comprehensive literature review of peer-reviewed articles, books, and reports. Using relevant keywords, data were collected from academic databases such as PubMed, Scopus, Web of Science, and Google Scholar. Thematic analysis was used to categorize and synthesize recurring themes and patterns, ensuring objectivity and rigor in data interpretation. Findings and Discussion: The findings of this study have significant practical implications. They reveal that effective corporate governance frameworks, underpinned by robust internal control mechanisms, not only enhance transparency, accountability, and ethical conduct but also mitigate risks, safeguard assets, and ensure compliance with regulations. This underscores the real-world relevance of the research and its potential to guide organizational practices. Implications: This study highlights the need for organizations to comprehensively integrate internal control mechanisms into their governance frameworks. It also emphasizes the importance of fostering a culture of integrity, adopting technological innovations, and maintaining compliance with evolving regulations. However, the study also points to the need for future research, particularly longitudinal studies, and interdisciplinary approaches, to further understand the dynamic governance-control relationship. This opens opportunities for further exploration and the development of more effective corporate governance practices.

Effect of Corporate Governance Practices on the Performance of an Established Medium-Sized Enterprise in the Mining Industry in South Africa

It is evident that SMEs have formed a significant part of the broader South African mining industry, faced their fair share of constraints and challenges, and often experienced a high failure rate. In light of this, the research objective of this study is to identify the CG practices followed by an established medium-sized enterprise in the mining industry. The study explored ethical culture, good performance, effective control, and legitimacy as CG outcomes in this particular SME, aiming to determine whether these practices have effectively addressed the challenges faced by SMEs. The study employed a qualitative research approach with two stages. First, a review of previous research regarding SME challenges. Second, a case study research design with a single medium-sized enterprise mine in the North-West province will be used as the unit of analysis. Data were collected using MS Teams, telephonic, and semi-structured interviews. The transcribed interviews were analyzed using Microsoft Excel. The SME demonstrated a strong ethical culture, achieved good performance through regular performance reporting and evaluation of the company’s core purpose, aligned to the effective control theme since the SME has a unique governing body and addresses the challenges of their size by implementing a governance structure and delegating authority and holds regular meetings with internal and external stakeholders to maintain a good relationship with stakeholders in order to fulfill the legitimacy theme. The study, therefore, concluded that CG outcomes are well understood and practiced by SMEs in the mining industry, affirming the effectiveness of these practices in addressing the challenges faced by SMEs.

The power of good corporate governance in activating the impact of internal information quality on tax savings

PurposeThis paper examines the moderating effect of good corporate governance on the association between internal information quality and tax savings.Design/methodology/approachThis study uses a quantitative approach. It employs an Australian sample of analysis composed of 1,295 firm-year observations from the period 2017 to 2021. Data relating to corporate governance are hand-collected from the annual reports.FindingsBased on the result of the analysis, this study demonstrates that the interaction between corporate governance and quality of internal information is positively associated with tax savings. Superior corporate governance is critical in activating the effect of internal information quality on tax savings. This finding is robust to a battery of robustness checks and additional tests.Research limitations/implicationsThis examination utilizes only publicly traded companies from one developed country.Practical implicationsFor the company management, an effective governance structure must be at the top because it will determine the development of all other areas. This study emphasizes the need to continuously improve the effectiveness of corporate governance practices. For long-term investors, an important indicator that can be considered in assessing the “safety” of a company’s tax strategy is its corporate governance aspects. For regulators, this study is expected to assist regulators in creating a more adequate corporate governance implementation and disclosure package to be implemented by corporations in the future.Originality/valueThis study provides new evidence on a crucial construct that can strengthen the relationship between internal information quality and tax savings.

Corporate Governance as Antecedent of Financial Distress: Case Study of Textile Industry of Pakistan

Purpose: The present research studies the effect of corporate governance practices on the level of financial distress of the Textile companies listed at PSX. 
 Design/Methodology: Data from 2019 to 2022 from a sample of 43 companies operating in the weaving, spinning and composite textile industry was assessed in the study. Regression analysis was used to predict the impact of board independence, board size, audit committee independence and duality in the role of CEO and chairman on the financial distress.
 Findings: The findings reveal that board independence, board size and the duality in the role of Chairman and CEO impacts the financial distress level of the companies and that in companies wherein governance structure is strong, the likelihood of financial distress is lower. However, the effect of Audit committee independence is found to be insignificant in this study.
 Originality: This study provides support to the companies in understanding the importance of governance structure and its significance in reducing financial distress level. The findings of the study will be of value to the companies operating in textile sector by enabling them to strengthen their governance structure to address the financial distress situation. Further, this study will help the regulators in drafting the governance requirements for the companies and also educating them about the importance of the latter. In future, other studies using different proxies of corporate governance like gender diversity in the board, number of board meetings and characteristics of audit committee may be conducted..

Long‐term value versus short‐term profits: When do index funds recall loaned shares for voting?

AbstractResearch Question/IssueIn this paper, we examine the effects of share lending or recall on proxy voting, with a particular focus on the role of index funds.Research Findings/InsightsOur study reveals that higher index ownership in a firm is associated with an increased likelihood of share recall, particularly in the presence of higher institutional ownership, lower past return performance, smaller firm size, and when more shares are held by younger fund families with higher turnover ratios or higher management fees. Using the Russell 1000/2000 Index reconstitution as an exogenous shock, we establish a causal relationship between index ownership and share recall through instrumental variable (IV) analysis. Furthermore, we find a positive correlation between index ownership and share recall for proxy voting proposals related to compensation, director election, and those sponsored by management. In subsequent proxy votes, shareholder‐sponsored proposals and environmental, social, and governance (ESG) proposals receive more support in firms with higher index ownership, especially when share recall is more prevalent. Our analysis does not provide evidence to support the conjecture that firms with higher index ownership are more vulnerable to empty voting issues.Theoretical/Academic ImplicationsOur study enhances the understanding of how index funds recall shares during proxy voting and the impact of index ownership on voting outcomes. The findings support the practice of index funds recalling shares to actively engage in proxy voting, effectively addressing the conflict between short‐term profit‐seeking through securities lending and long‐term governance responsibilities.Practitioner/Policy ImplicationsWe contribute to a better understanding of the role of index funds in corporate governance and shed light on the consequences of securities lending in proxy votes. These findings have important implications for investors, policymakers, and market participants in managing the potential conflicts arising from securities lending activities and promoting effective corporate governance practices.

Does board structure influence employee retention?: A systematic literature review

Employee Engagement (EE) has become a crucial element for the success of any organization. While psychology has conducted extensive research on EE, accounting has yet to give it the attention it deserves. This systematic literature review (SLR) was conducted to explore the linkage between corporate governance (CG) practices and factors that drive employee engagement (EED) in greater detail. The review identified several key factors influencing EED: board composition, audit committees, top leadership expertise, network power, other stakeholders’ supervision, and above-board application. In particular, the study revealed that effective CG practices have positive EE consequences, such as increased staff morale, job satisfaction, and productivity, and decreased employee turnover rates. The study underlined the importance of an employee-centric culture that encourages empowerment and fosters a sense of belonging in achieving maximum business success. It suggests that companies must create a work environment that promotes EE, provides opportunities for growth and development, recognizes employee contributions, and fosters open communication and collaboration. By leveraging these insights, companies can enhance their business operations and achieve maximum success by fostering a culture of EE and empowerment. The study concludes that businesses prioritizing EE as a core value can create a sustainable competitive advantage, increase their reputation, and attract and retain top talent.

Corporate governance report compliance rate and accounting conservatism: New evidence from Korea

This study investigates the relationship between the corporate governance report (CGR) compliance rate and a company’s accounting conservatism, utilizing the CGR compliance rate as a novel method to evaluate the effectiveness of corporate governance practices. Given the challenges of applying global indices to measure corporate governance in the Korean market, this study focuses on the CGR compliance rate as a key indicator. Utilizing the ordinary least squares (OLS) regression model, specifically the Ball and Shivakumar (2005) model widely employed in previous studies to assess accounting conservatism, this paper conducts empirical analyses based on 784 observations from Korean listed firms between 2018 and 2021. The main analysis reveals a positive association between the CGR compliance rates (coef = –2.416, p-value < 0.01) and accounting conservatism. A fixed-effect model and a propensity score matching (PSM) model also show a positive association between the CGR compliance rates, respectively (coef = –2.507, p-value < 0.01; coef = –3.118, p-value < 0.1) and accounting conservatism. This study proves that firms with high CGR compliance rates tend to promptly recognize financial losses in financial reporting, thereby safeguarding investors. This suggests that investors should consider the CGR compliance rates when evaluating potential investments. Overall, these findings contribute to validating the CGR compliance rates as a valuable proxy for assessing corporate governance practices in Korean firms.

Impact of competent board structure on financial performance

Effective corporate governance practices are considered crucial for the success of transforming and developing economies. This research delves into the importance of a competent board structure in improving firm performance and mitigating financial crises. The study employs quantitative research methods, focusing on firm performance measured through return on assets and Tobin’s Q. The independent variable of the study is board competence, with a sample comprising two hundred companies listed on the Pakistan Stock Exchange (PSX). Panel data spanning a decade from 2012 to 2021 is analysed using techniques such as the Hausman test, fixed effect model, and random effect model to test hypotheses. To address multicollinearity and heteroscedasticity, the study incorporates the variance inflation factor (VIF) and the heteroscedasticity test. The findings suggest that an optimal board structure, characterised by competence, enables effective strategy implementation, thereby providing organisations with a competitive edge. Independent directors, devoid of personal affiliations or biases, can exercise impartial judgment and demonstrate competence. While academic qualifications are often prioritised in the selection of board members, they do not always ensure superior performance.

The role of corporate governance structures in mediating the relationship between external supervision, credit appraisal measurement, capital adequacy, and performance of commercial banks in Nepal.

This study investigates the role of corporate governance structures as mediators between external supervision, credit appraisal measurement, capital adequacy, and the performance of commercial banks in Nepal. This research sheds light on the significance of effective corporate governance practices within Nepali commercial banks and how certain governance mechanisms may impact bank performance. A quantitative research design was employed, using data from commercial banks in Nepal for this study. Surveys were utilized to collect quantitative data. Structural equation modeling was used as a primary tool to assess the data. The findings add to existing literature about corporate governance and its effects on bank performance in emerging economies such as Nepal. The study's findings offer valuable insights into the significance of corporate governance structures, external supervision, credit appraisal measurement systems, and capital adequacy for commercial banks' performance in Nepal. The research methodology adds value to the existing literature using quantitative data collection methods. Its results may have practical ramifications for banks, regulators, and policymakers, suggesting effective governance practices as essential measures for increasing stability and performance at commercial banks.

Corporate Governance Practices and Performance of Imarisha Sacco in Bomet County Kenya

The problem in the Savings and Credit Cooperative Organisations industry, particularly in the teaching industry in Bomet County, is the presence of challenges related to corporate governance and organizational performance. There are issues with accountability, transparency, and risk management practices. Additionally, low levels of financial literacy among members, limited access to finance, and inadequate technology and systems further contribute to the performance-related challenges faced by these Savings and Credit Cooperative Organisations. The study was on the effect of Corporate Governance practices on the performance of Imarisha Savings and Credit Cooperative Organisation in Bomet County. The purpose of this study was to investigate how board competence, legislation, roles and responsibilities and internal controls affects performance Imarisha Savings and Credit Cooperative Organisation. The literature review focused on various theories which include core competence model, regulatory capture theory, legalistic theory, attribution theory and the balanced scorecard theory. The study design adopted was descriptive in nature considering a total population of 65 senior management, middle management, and support staff of which a complete census will be considered. Stratified sampling was used since the population was already broken down into the respective categories. Data was gathered using questionnaire and it was tested for validity and reliability. Content validity was tested with a content validity index threshold of 0.8 or higher. Reliability was tested with a Cronbach's alpha threshold of 0.70 or higher. Data was analysed using both descriptive and inferential statistics. Findings revealed that board competence, legislation, roles and responsibilities, and internal controls had a positive and significant effect on performance, that is, β= 0.469, p < 0.05), β=0.022, p < 0.05, β=0.404, p < 0.05) and β=0.045, p < 0.05 respectively. The study concluded that board competence, legislation, roles and responsibilities and internal controls improve performance. The study recommended that board members should continue to have strategic thinking skills and front the vision of the organization. Imarisha SACCO should have adequate internal policies that help to govern SACCO activities. Duties of board members at the organization should continue being properly described. The oversight committees should continue to meet regularly to oversight SACCO activities. The study recommended that further studies should be conducted on effect of corporate governance practices on performance of Imarisha SACCO in Bomet County. Indicators of corporate governance practices adopted in the study are board competence, legislation, roles and responsibilities and internal controls. The study recommends a similar study to be conducted on the subject matter but should be conducted on SACCOs’ in other Counties in Kenya.

Long-term Business Sustainability Through Corporate Governance

Effective corporate governance and sustainability practices can help a company build trust with stakeholders, reduce risks, and improve financial performance. They can also help a company demonstrate its commitment to responsible business practices and increase its credibility and transparency. However, companies that fail to address these issues may face reputational damage, financial losses, and regulatory penalties. Thus the role of corporate governance in long-term business sustainability is significant. The primary objective of this study is to investigate the concept of long-term business sustainability, with particular emphasis placed on the value that organizations bring to their stakeholders and shareholders, mainly through a discussion of the connection between corporate governance. The study analyses the numerous environmentally responsible business practices that are now in place by developing the findings by conducting a comprehensive literature review. Conclusions were drawn about the relationship between corporate governance and long-term business viability based on the literature review after discussing the result.

Relationship between Corporate Governance Practices and Credit Risk in Banking

Purpose: The aim of the study was to investigate Relationship between Corporate Governance Practices and Credit Risk in Banking.
 Methodology: This study adopted a desk methodology. A desk study research design is commonly known as secondary data collection. This is basically collecting data from existing resources preferably because of its low cost advantage as compared to a field research. Our current study looked into already published studies and reports as the data was easily accessed through online journals and libraries.
 Findings:The findings indicated a significant correlation between effective corporate governance practices and lower levels of credit risk exposure within banks. Specifically, banks that exhibited robust governance mechanisms, including independent board oversight, transparent risk management frameworks, and strong internal controls, demonstrated reduced instances of credit defaults and non-performing loans. These findings collectively underscored the pivotal role of corporate governance in mitigating credit risk and enhancing the overall stability and resilience of banking institutions.
 Unique Contribution to Theory, Practice and Policy: Agency Theory, Stakeholder Theory and Pecking Order Theory may be used to anchor future studies on relationship between corporate governance practices and credit risk in banking. Banks should prioritize recruiting directors with diverse skill sets, including expertise in risk management, to serve on their boards. Regulators should impose stricter disclosure requirements for banks' credit risk exposure and management practices.