Effect Of Corporate Governance Research Articles

Does ESG protect firms equally during crises? The role of supply chain concentration

The notion of environmental, social and governance (ESG) has been used by firms as a tool to resist crises. The aspect of ESG that enhances firm viability remains uncertain, as does whether this aspect varies across firms that exhibit distinct supply chain concentrations (SCCs). Clarifying these issues is essential for companies’ attempts to tailor their ESG portfolios in the context of operations to suit their unique circumstances and to improve supply chain viability. The COVID-19 pandemic offers an opportunity to examine these issues. Our study utilizes data regarding Chinese listed firms to conduct an empirical assessment of how ESG affects stock market performance in response to the increase in COVID-19 cases both within China (the national outbreak) and at the global level excluding China (the global pandemic). The results reveal that a significant decline in stock returns occurred as COVID-19 cases increased. Firms that exhibited higher levels of preexisting ESG performance were associated with a less pronounced decrease in stock returns during the national outbreak. Notably, environmental and social responsibilities emerged as key protective factors in response to the national COVID-19 outbreak, while corporate governance proved to be more effective with regard to addressing the global pandemic. In addition, our study reveals that the safeguard provided by environmental and social responsibilities functions as a form of insurance primarily among low-SCC firms. On the other hand, the protective effect of high corporate governance is more evident among high-SCC firms. These findings offer valuable insights for companies seeking to fine-tune their ESG portfolios and navigate the interactions between ESG and SCC.

The Moderation Effect of Islamic Corporate Governance on Fraud Financial Statement Detection Using Fraud Hexagon

Purpose: Given that Islamic corporate governance serves as a moderating variable, this study aims to examine the impact of the hexagon theory on fraudulent financial statements.Method: This study employed a quantitative methodology and garnered secondary data on Islamic commercial banks in Southeast Asia. Purposive sampling was carried out to collect data from 18 companies during five years (2017–2022), yielding 90 observations. The data analysis method employed Warp-PLS software version 8.0 and partial least square structural equation modeling (PLS-SEM).Findings: Study results demonstrate that financial stability significantly worsens the performance of fraudulent financial statements. Related party transactions, external auditors, director changes, C.E.O. education, company existence, and political connections did not affect governance, moderate the significant positive influence of financial stability, related party transactions, company existence, and political connections on fraudulent financial statements. Meanwhile, good oversight, external auditors, director changes, and C.E.O. education did not moderate the impact of misleading financial statements.Originality/Value: This research contributites significantly to the Islamic banking management. The Islamic corporate governance mechanism forms the process and structure of the entity’s supervisory, monitoring and advisory functions. The presentation of financial statements is carried out in an accountable and transparent manner based on Sharia principles, which can reduce the practice of financial statement fraud, so stakeholders will be more confident in investing.

Pengaruh Corporate Governance dan Corporate Social Responsibility Disclosure Terhadap Tax Avoidance pada Perusahaan Tambang di Bursa Efek Indonesia Periode 2019–2021

This study aims to analyze and determine the effect of corporate governance and corporate social responsibility disclosure on tax avoidance in mining companies listed on the Indonesia Stock Exchange (IDX) for the 2019-2021 period. Data collection techniques used are websites and documentation. The type of data is quantitative data with secondary data sources. The population used in this study are mining companies listed on the Indonesia Stock Exchange for 2019–2021 with a total of 47 companies by purposive sampling, so the number of samples is 11 companies x 3 years = 33 financial reports. The data analysis method in this study uses multiple linear regression analysis, the coefficient of determination, and hypothesis testing T-test and F-test. The results of this study indicate that: 1. The proportion of independent commissioners (KIND) partially has a significant positive effect on company tax avoidance (TAX) mines listed on the Indonesia Stock Exchange (IDX). 2. Partial institutional ownership (KI) has no significant effect on the tax avoidance (TAX) of mining companies listed on the Indonesia Stock Exchange (IDX). 3. Managerial ownership (KM) partially has a significant negative effect on the tax avoidance (TAX) of mining companies listed on the Indonesia Stock Exchange (IDX). 4. The audit committee (KA) partially has a significant positive effect on the tax avoidance (TAX) of mining companies listed on the Indonesia Stock Exchange (IDX). 5. Corporate social responsibility disclosure (CSRD) partially has a significant positive effect on the tax avoidance (TAX) of mining companies listed on the Indonesia Stock Exchange (IDX). 6. The proportion of Independent Commissioners (KIND), Institutional Ownership (KI), Managerial Ownership (KM), Audit Committee (KA), and Corporate Social Responsibility Disclosure (CSRD) simultaneously have a significant positive effect on tax avoidance (TAX) of registered mining companies on the Indonesia Stock Exchange (IDX).

Does digital transformation increase corporate violations?

AbstractThis study examines whether digital transformation influences corporate violations in China. Using data from Chinese A‐share listed companies from 2007 to 2020, this paper finds that digital transformation increases the incidence of corporate violations. The results remain robust through endogeneity checks, the use of alternative measurements for digital transformation and corporate violations, and subsample analyses. Cross‐sectional analyses suggest that the impact of digital transformation on corporate violations is more salient in non‐state‐owned enterprises, firms with lower institutional investors shareholding ratios, and firms with higher agency costs. Mechanism analyses indicate that digital transformation leads to corporate violations by increasing operational complexity and affecting information quality. Additional tests reveal that effective corporate governance helps reduce the occurrence of corporate violations resulting from digital transformation. This research deepens our understanding of the economic implications of corporate digital transformation and provides valuable insights for businesses undergoing this process.

Does Sustainability Assurance enhance the connection between Corporate Governance and Firm Performance in India?

Scholarly attention to the association between corporate governance and firm performance, considering sustainability assurance as a moderator is scarce. This study aims to examine the moderating role of sustainability assurance in the nexus between corporate governance and firm performance in India. The data relating to 35 environmentally sensitive companies among the top 100 National Stock Exchange (NSE) listed entities were gathered from the ProwessIQ Database and annual reports of companies during 2016–2022. The fixed effect regression model was employed. The results show an insignificant effect of board effectiveness on firm performance as measured by return on assets (ROA), return on equity (ROE), and Tobin’s Q. Similar findings were documented on the audit committee effectiveness and firm performance nexus, except for Tobin’s Q (β = 0.316). In addition, the study did not support the moderating role of sustainability assurance on the board effectiveness and firm performance nexus, indicating the presence of ineffective corporate governance mechanisms. However, the results show that sustainability assurance significantly and negatively moderates the relationship between audit committee effectiveness and ROA (β = –0.021), ROE (β = –0.074), and Tobin’s Q (β = –0.996). This implies that the practice of external assurance of sustainability reports by firms with audit committee effectiveness is an additional burden due to the extra cost involved. Further, the result indicates the learning curve effect among Indian companies. Thus, the findings suggest the need for regulatory focus on encouraging sustainable business practices in terms of effective corporate governance and sustainability assurance. AcknowledgmentThe authors are grateful to Manipal Academy of Higher Education (MAHE), Manipal, for providing financial assistance in the form of a “JRF Contingency Grant” for this research article.

The Effect of Implementation of Good Corporate Governance And Sharia Compliance On Customer Satisfaction of Bank Syariah Indonesia Sub-Branch Office Medan Cemara Asri

Both commercial banks and Islamic banks, good corporate governance (Gcg) and sharia compliance (SC) are fundamental elements. The effect of sharia compliance and good corporate governance on customer satisfaction and loyalty at Bank Syariah Indonesia Medan KC Cemara Asri, after processing and statistical analysis of the data obtained from the questionnaire answers in the IBM SPSS Statistics 25 program is at Bank Syariah Indonesia Sub-Branch Medan Cemara Asri, good corporate governance has a positive and significant effect on customer loyalty is one of the positive and large effects of good corporate governance features at Bank Syariah Indonesia Sub-Branch Medan Cemara Asri, Medan. At Bank Syariah Indonesia Sub-Branch Medan Cemara Asri, customer satisfaction is positively influenced by the Sharia Compliance variable. In accordance with the name of the institution, Bank Syariah Indonesia Sub-Branch Medan Cemara Asri has carried out sharia compliance well. The customer loyalty variable is positively and significantly influenced by the sharia compliance variable. The stronger the foundation, the more customers will trust the bank to be involved in their transactions. These elements are the basis for assessing the satisfaction of bank customers in using bank services during transactions. The questionnaire is one of the techniques or procedures that researchers can use to collect data in this study. Validity test, reliability test, normality test, classical assumption test, multiple linear regression test, hypothesis test, and coefficient of determination test are procedures used for data analysis. In this study, quantitative research was used.

Is CEO power linked to corporate social responsibility disclosure? Evidence from an emerging economy

AbstractThe research aims to analyze the influence of Chief Executive Officer (CEO) power factors on corporate social responsibility (CSR) disclosure by listed companies on the Vietnamese stock market. To examine the relationship between CEO power and CSR disclosure (CSRD), our study used the generalized method of moments (GMM) estimation method with panel data from 210 listed companies on the Vietnamese stock market during the period 2015–2022. The research results indicate that factors such as duality, tenure, share ownership, and CEO compensation reduce the level of CSR disclosure by companies. On the other hand, CEO education and age show a positive relationship with disclosure level. The empirical results of this study provide a solid foundation for managers to establish effective corporate governance mechanisms and enhance the quality of sustainable reporting by companies.

Pengaruh Tata Kelola Perusahaan, Pelaporan Keberlanjutan, dan Koneksi Politik terhadap Penghindaran Pajak

The purpose of this study is to examine the effect of corporate governance, sustainability reporting, and political connections on tax avoidance practices. The data used in the study involves data derived from the financial statements of companies in the infrastructure sector listed on the Indonesia Stock Exchange for the period 2020 to 2022. Information is obtained through the page www.idx.co.id and from the website of each company. The method applied in the research is quantitative method, using purposive sampling data collection technique. While the number of samples selected for this study was 30 observations. The research findings show that corporate governance represented by independent commissioners and audit committees, as well as sustainability reporting has a negative effect on tax avoidance.

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 and enforcement on fair value accounting in Brazil

PurposeThis paper aims to investigate whether Brazilian firms that legally bond to stricter enforcement and commit to stringent corporate governance requirements experience increased value relevance of discretionary fair value measurements (Levels 2 and 3), and how different measurement levels are associated with firms’ systematic risk.Design/methodology/approachThe Brazilian data’s distinctive feature helps in analyzing fair value’s relevance in an emerging market with heterogeneous enforcement regimes. Given the inherent self-selection in corporate governance levels and cross-listing decisions, the authors use a two-step generalized method of moments approach. Building upon Song et al.’s (2010) framework, the authors carefully address potential selection biases. Furthermore, the authors expand Riedl and Serafeim’s (2011) model, based on Ohlson’s (1995) model, to explore whether the negative correlation between Level 1 net assets (assets minus liabilities) and firms’ beta is more pronounced compared to Levels 2 or 3 net assets. Additionally, the authors investigate whether this relationship intensifies when firms align themselves with enhanced governance structures and stricter enforcement regimes.FindingsFair value measurements which require more judgment (Levels 2 and 3) are more value-relevant when a firm is legally bonded to higher enforcement and better corporate governance. Level 1 fair values of these firms’ net assets are associated with lower systematic risk, while Levels 2 and 3 fair values (high subjectivity valuation) are not.Originality/valueThe authors show that firms that bond to better corporate governance and stricter enforcement regimes mitigate the information risk involved in subjective fair-value measurements.

Good Corporate Governance and Financial Performance: Does Leverage Matter?

This study aims to determine the effect of Good Corporate Governance on Financial Performance with Leverage as a moderating variable. The population used in this study are banking companies listed on the Indonesia Stock Exchange for the 2018-2021 period. The sampling technique used was purposive sampling and obtained as many as 23 banking companies as a sample with 92 observations. The analytical method used is multiple linear regression analysis and MRA. The results of this study partially show that in 2018-2021 the Good Corporate Governance variable did not affect Financial Performance. The results of the study show that in 2018-2021 the Good Corporate Governance variable had significant effect on Financial Performance with Leverage as a moderating variable.

Exploring the Modification Effect of Corporate Governance on the Relationship Between Good Governance and Logistics Performance

Exploring the Modification Effect of Corporate Governance on the Relationship Between Good Governance and Logistics Performance

Bank Corporate Governance: Shield Against Fraud

An efficient corporate governance system in a bank is crucial for maintaining financial stability, boosting stakeholder confidence, promoting corporate accountability, and mitigating fraud risks. This paper investigates the role of bank corporate governance in safeguarding against fraud, reviwing 20 artciles published from 2017-2024. The study belives that fraud in banking institutions is a significant threat to the financial system, causing financial hardship and disrupting the banking system, indicating that opportunity such poor governance, weak control systems, poor organizational culture is the most contributing factor of these illegal and unethical behavior. The paper found that strong corporate governance significantly reduces the risk of fraud, with the board and audit committee playing a crucial role in ensuring accountability and boosting governance. To achieve bank corporate governance goals, it is necessary to utilize all available resources, including human and technological resources. The paper also found that corporate governance brings benefits such as increased transparency, accountability, reduced risk, enhanced decision-making, compliance, ethical conduct, and improved brand value, underlying that fraud risk incurs financial costs, reputational and regulatory risks, and decreased employee efficiency. The review concludes that bank corporate governance can act as shield against fraud, adding that ethical leadership, focusing on transparency and accountability, is essential for effective governance and deterring bank fraud. The study suggests investigating various types of fraud in the banking sector and their correlation with corporate governance, as well as conducting longitudinal studies to assess the long-term effects of robust corporate governance. Originality/contribution: The study asserts that effective governance is crucial for banks to become secure, stable, and robust. It emphasizes the importance of the board, audit committee, and moral leadership as crucial elements, and offers a how bank fraud is mitigated through good bank governance.

Pengaruh Good Corporate Governance dan Leverage Terhadap Kinerja Keuangan Perusahaan

Financial performance is one form of assessment with the principle of benefits and efficiency in the use of financial budgets, the financial performance of a company can be obtained from the information presented in financial reports in a period, not only seen from the development of stock prices. The company's performance can be measured using Tobin's return on equity and return on assets. This study aims to examine the effect of good corporate governance and leverage on the company's financial performance. The research approach used in this study is to use the associative method with a quantitative approach. The Data used in this study were obtained from the official website of the Indonesia Stock Exchange regarding the annual reports of banking sub-sector companies in 2020-2022. The population in this study is banking companies listed on the IDX for the period 2020-2022. Sample selection in this study using purposive sampling method. The results of this study can be concluded that the board of Commissioners, audit Committee, Board of Directors has no effect on financial performance, while leverage has a significant effect on financial performance.

The Influence of Good Corporate Governance on Firm Value with Financial Performance as a Moderation

This study investigates the direct and moderating effects of various corporate governance factors on firm value. The direct effect analysis reveals that financial performance alone does not significantly influence firm value, whereas the roles of independent commissioners and independent directors are crucial, significantly enhancing firm value through improved governance and oversight capabilities. Conversely, the direct impact of independent audits on firm value is found to be non-significant, suggesting their influence is more indirect, supporting a trustworthy financial environment. The moderating effect analysis underscores the importance of corporate governance in leveraging financial performance to enhance firm value. Independent commissioners, directors, and audits all have significant moderating effects, enhancing the positive relationship between financial performance and firm value. Independent commissioners and directors ensure effective utilization of financial gains and risk mitigation, while independent audits ensure the reliability and transparency of financial reporting, building investor trust and confidence. Combining insights from both analyses, the study concludes that effective corporate governance is paramount in maximizing firm value. Strong governance structures, including the inclusion of independent commissioners, directors, and auditors, not only directly enhance firm value but also amplify the positive effects of financial performance. This study emphasizes the need for stakeholders and policymakers to prioritize strengthening corporate governance frameworks to achieve sustainable value creation.

Corporate Governance and the Value Relevance of Financial Information in Tanzanian Savings and Credit Cooperatives: A Panel-Data Approach

The study examined the influence of corporate governance on the relevance of financial information towards the value of Savings and Credit Cooperative Societies (SACCOS) in Tanzania. Thus far, evidence on how corporate governance influences the relevance of financial information in cooperative societies is limited globally, notably in emerging economies. Therefore, this research contributes to the body of knowledge by extending the application of agency theory to determine this relationship among variables. The study specifically employed a quantitative panel data set of 202 SACCOs from 2013 to 2020 that was gathered from yearly financial reports and processed through descriptive analysis and regression models. Descriptive statistics demonstrate that the SACCOs' value in Tanzania is increasing. Empirical results show a significant positive relationship between earnings financial information and the value of SACCOS; the book value of equity financial information insignificantly influences the value of SACCOS. The findings deliver empirical and theoretical backing for the notion that board size, skills and supervisory committee skills have a significant impact on the relevance of financial information towards the value of the firm. However, the examination showed no proof that the number of meetings affected the relevance of financial information. This implies that Policymakers should make reforms that will enable SACCOs to improve the quality of financial information and widen the publication of financial reports through effective corporate governance, including the emphasis on online publications.

A Review of Research on the Corporate Governance Effects of Financing and Securities Financing Systems

A Review of Research on the Corporate Governance Effects of Financing and Securities Financing Systems

Enterprise risk management, corporate governance and insurers risk-taking behaviour in South Africa: evidence from a linear and threshold analysis

PurposeThis study examines the linear and non-linear effects of enterprise risk management (ERM) and corporate governance (CG) on insurers’ risk-taking behaviour.Design/methodology/approachThe study employed panel data of 63 insurers from South Africa over the period 2015 and 2019. The study used the generalised method of moments (GMM) to determine the direct relationship, while the dynamic panel threshold technique was utilised to discover whether there is non-linearity in the relationship and the threshold level at which ERM and CG stimulate insurance risk-taking.FindingsThe result from the GMM elicits a positive relationship between ERM and risk-taking, implying that insurers with a robust ERM system are more likely to pursue higher risks. The empirical evidence also suggests that board size and board independence improve insurers’ risk-taking. Contrarily, gender diversity shows an inverse relationship with risk-taking. The dynamic panel threshold regression confirms non-linearities between ERM, CG and risk-taking. The empirical evidence indicates a U-shaped relationship between ERM and risk-taking, implying that a robust ERM system increases insurers’ risk-taking and vice-versa. Further, board size and independence reveal an inverted U-shaped relationship, suggesting that larger boards and a higher proportion of independent directors exhibit lower risk-taking. However, gender diversity presents a negative relationship, demonstrating a strong impact at higher threshold levels. This tells that the presence of females on the board reduces insurers’ risk-taking preferences.Practical implicationsDue to the risk-bearing nature of the insurance business, it is required that they ensure a robust ERM system for prudent risk-taking decisions. This demands strict adherence to ERM principles and allocating sufficient resources for effective implementation. Also, there is a need for strong CG structures that pay more attention to diversity when selecting board members due to their influence in ensuring improved risk-taking choices.Originality/valueThis study contributes to the existing literature by providing insights into the under-researched role of ERM and CG in insurers’ risk-taking behaviour. The study further extends the literature by providing evidence on the non-linearity and threshold levels at which ERM and CG influence insurers’ risk-taking choices. The findings are unique and contribute to the growing body of literature documenting the need for strong ERM and CG systems in insurance companies.

Differences in the influence of the board of directors and the board of commissioners on real earnings management: empirical evidence from Indonesia

Purpose – This research investigates the influence of the Board of Directors (BOD) and the Board of Commissioners (BOC) on real earnings management (REM) practices in Indonesian manufacturing companies. Real earnings management involves genuine alterations to operational decisions that affect financial reporting.Design/methodology/approach – The research uses a sample of manufacturing firm listed on Indonesia Stock Exchange (BEI) from 2016 to 2022 and uses panel data regression techniques, including the Pooled Least Square (PLS) and Fixed Effect Model (FEM), to examine the effects of BOD and BOC characteristics on REM. The empirical analysis considers multiple proxies for BOD and BOC attributes, such as board size, independence, meeting frequency, and expertise. Additionally, control variables including leverage, firm size, and growth indicators are incorporated into the analysis.Findings – The findings reveal a significant positive relationship between the presence of BOD and REM activities. In contrast, the presence of BOC demonstrates a non-significant but negatively associated impact on REM. Furthermore, the research identifies the moderating role of BOC in strengthening the relationship between BOD and REM.Research limitations/implications – The research contributes to the existing literature by providing empirical insights into the roles of BOD and BOC in shaping REM practices within the Indonesian manufacturing context. These findings highlight the importance of board characteristics in influencing financial reporting decisions and emphasize the need for effective corporate governance mechanisms to mitigate opportunistic behaviors related to earnings management.Practical implications – Enhancing corporate governance practices, provide an input for more effective board composition, increase the investor confidence and transparency, enhance policy implications and provide advice for company’s long-term performance focus.Originality/value – This research addresses a gap in the literature by focusing on the Indonesian context. Use the BOC to moderate the relationship between BOD and REM may be less common in the context of Indonesia and even in regional focus.

Effect of Corporate Governance on Banking System Stability in Nigeria

The study focused on the effect of corporate governance (CG) on banking system stability in Nigeria. The purpose of this study was to assess the effect of corporate governance on banking system stability. Data used for this study were secondary data collected from the audited annual report of 13 listed deposit money banks in Nigerian for the period of eight (8) years, the data was analyzed using STATA 14 and hypotheses were tested using random effect regression with respect to the Breusch and Pagan Lagrangian multiplier test and Hausman specification test. From the random effect regression analysis table, the results show that board size, ratio of male- female, board committee, the number of board meeting have contributed insignificantly to our model while the overall hypothesis also show an insignificant effect on CG and banks’ stability. The study recommends that since the variables used in this study have no significant effect on the banking system stability, emphasis should be shifted from these variables to other corporate governance variables. The study also suggested that More research on the study variable should be undertaken in Nigeria, this would throw more weight on the importance of corporate governance in ensuring banking system stability on a larger scale by incorporating all the deposit money banks in Nigeria.