Corporate Governance Efficiency Research Articles

The Choice of Values Behind Corporate Law: A Critique of Shareholder Primacy and a Response to China's Proposal

The theory of shareholder primacy, as an important value judgment in the U.S. corporate law on corporate governance model, has influenced the shaping of legal rules of corporate governance in different countries and regions of the world, as well as the revision of China's corporate law. The theoretical lineage of shareholder-centrism has its own peculiar soil of existence and should not be regarded as a universal value behind the norms of corporate law. Even in the U.S., shareholder primacy is highly controversial, and the direction it advocates is contradictory to the reality of corporate governance practices. China has not been affected by the shareholder primacy debate in the current revision of its corporate law, but has adopted a corporate power allocation model with Chinese characteristics, so as to achieve a balance between the efficiency of corporate governance and the protection of shareholders' interests.

Research on the Influence of Equity Structure on Corporate Performance

Equity structure constitutes a crucial component of corporate internal governance. A scientifically and reasonably structured equity system aids in enhancing the level and efficiency of corporate governance. Through empirical analysis of data spanning from 2013 to 2022, the study aims to verify the influence mechanism of equity structure on corporate performance. The results indicate that enhancing equity concentration and balance positively impacts corporate performance, with this effect persisting over time. Consequently, optimizing the degree of equity concentration, shareholder types, and the board of directors’ structure can assist enterprises in maximizing long-term value.

АНАЛІЗ ЕФЕКТИВНОСТІ КОРПОРАТИВНОГО УПРАВЛІННЯ АГРОПРОМИСЛОВИМИ ПІДПРИЄМСТВАМИ

The article assesses the efficiency of corporate governance in the largest integrated enterprises of the agricultural sector of Ukraine. The research was conducted using the methods of induction and deduction, comparative analysis and theoretical generalization. The main provisions of large enterprises of the agricultural sector of Ukraine and their experience in implementing corporate governance were studied. The author has developed algorithms (methods) for assessing the corporate governance rating with the relevant classification areas of assessment and indicators for assessing the relevant areas, a four-level rating scale for assessing the level of formation of the corporate governance institution in integrated agricultural formations (agroholdings) of Ukraine. It is established that the main characteristic components of the assessment of the level of corporate governance are: supervisory board, board of directors, committees, corporate secretary, audit committee, charter, etc. It is determined that agriholdings whose shares are listed on international stock exchanges meet the highest level of corporate governance standards, the level of which reaches the maximum value. It is also established that this level is ensured mainly by compliance with corporate governance standards introduced by international stock exchanges (Warsaw and London). The weighted average level of corporate governance in integrated agrarian formations (agroholdings) of Ukraine is at an unsatisfactory level, which causes significant risks for shareholders and investors. It is proved that the existing theoretical and practical provisions and recommendations for the formation and development of the institution of corporate governance in integrated formations have been deepened and new theoretical and practical provisions and recommendations for the formation and development of the institution of corporate governance in integrated enterprises in the agricultural sector have been developed. The obtained practical results are a recommendation base and are aimed at solving the problems of formation and development of the institution of corporate governance of integrated enterprises in the agricultural sector, can be used by state institutions to improve the existing institutional support for the development of economic entities. The results of the research can be used by the legislative and executive bodies of the country, as well as by agrarian organizations engaged in production, harvesting and processing of products, and creation of a market system for dissemination of agricultural knowledge and information. Keywords: agrarian enterprise, corporate management, valuation of effectiveness, integrate formation, agroholdings, joint-stock company.

Independent directors’ status and R&D: a study based on Chinese cultural background

PurposeIndependent directors are important corporate decision participants and makers. Based on the Chinese cultural background, this paper interprets the listing order of independent directors as independent directors’ status, exploring their influence on the corporate research and development (R&D) behavior.Design/methodology/approachThis paper studies A-share listed firms in China from 2008 to 2018 as the sample. The main method is ordinary least square (OLS) regression. We also use other methods to deal with endogenous problems, such as the firm fixed effect method, change model method, two-stage instrumental variable method, and Heckman two-stage method.Findings(1) Higher independent directors’ status attribute to more effective exertion of supervision and consultation function, and positively enhance the corporate R&D investment. The increase of the independent director’ status by one standard deviation will increase the R&D investment by 4.6%. (2) The above effect is more influential in firms with stronger traditional culture atmosphere, higher information opacity and higher performance volatility. (3) High-status independent directors promote R&D investment by improving the scientificity of R&D evaluation and reducing information asymmetry. (4) The enhancing effect of independent director’ status on R&D investment is positively associated with the firm’s patent output and market value.Originality/valueThis paper contributes to understanding the relationship between the independent directors’ status and their duty execution from an embedded cultural background perspective. The findings of the study enlighten the improvement of corporate governance efficiency and the healthy development of the capital market.

A multidimensional analysis of corporate governance mechanisms and their impact on sustainable economic development: A case study of Ghana’s financial sector

Efficiency remains pivotal to the banking sector, serving as a linchpin for resource allocation and competitive prowess. This study delves into the intricate dynamics between corporate governance and banking efficiency in Ghana, with an analytical lens on cost efficiency (CE) and total efficiency (TE). Utilizing Data Envelopment Analysis (DEA), our investigation spans over a decade (2008–2019) and encompasses a data set of 23 Ghanaian banks.The study findings unveils that rigorous corporate governance mechanisms, as quantified by the Corporate Governance Index (CGI), exert a salutary influence on both cost and total efficiencies. Moreover, a well-defined Risk Management Index (RMI) positively correlates with cost efficiency, albeit without a substantial impact on total efficiency. Conversely, the study identifies a counterintuitive effect: the current make-up of supervisory boards, as gauged by the Supervisory Board Index (SBI), inversely impacts both efficiency metrics, signaling sub-optimal governance structures.Significantly, the research also highlights a pressing concern: the average total efficiency of Ghanaian banks lags behind the global benchmarks prescribed by the World Bank. This discrepancy underscores an exigency for efficiency optimization within the sector.The study thereby offers invaluable insights for multiple stakeholders—including regulatory bodies, investment communities, and policymakers—by delineating the governance variables that can enhance or impede banking efficiency. It also identifies actionable avenues for improvement, specifically in the realms of risk management and board composition, with the potential to catalyze a transformation in Ghana's banking landscape.

Kontribusi Penerapan Good Corporate Governance Dan Eco-Efficiency Terhadap Nilai Perusahaan Dengan Kinerja Keuangan Sebagai Pemoderasi

This research examines the value relevance of the concept of environmental efficiency which refers to the process of maximizing the effectiveness of business processes in order to minimize a company's environmental impact. This research aims to determine how the contribution of good corporate governance (GCG) and environmental efficiency is moderated by financial performance on company value. This research uses secondary data from 2018 to 2022 and was conducted on companies in the non-primary consumer goods industry sector listed on the Indonesia Stock Exchange. Information obtained from annual reports and sustainability reports. The sampling method used was the purposive sampling method, obtaining a sample of 56 companies with 280 observed data. This data analysis method uses Moderated Regression Analysis (MRA). The research results show that companies that implement eco-efficiency strategies can increase their company value. Eco-efficiency strategies are able to produce greater cost efficiency and profits, so they are carried out by companies to improve their financial performance. This research also found that financial performance was able to mediate the relationship between eco-efficiency and company value. However, this does not affect the ability to implement GCG to increase the company's performance value. The contribution of this research lies in analyzing the influence of eco-efficiency, GCG, on company value in customer goods companies with ISO 14001 Certificate.

The Impact of Intellectual Capital and Corporate Governance on Bank Performance in Vietnam

Purpose – The importance of corporate governance and intellectual capital on financial performance has largely been ignored in emerging markets. The banking sector is considered to accumulate a higher level of intellectual capital and to adopt a better corporate governance system. We aim to examine the contribution of these two important aspects to the performance of Vietnam's banking sector. Design/methodology/approach – This paper utilizes data collected from the annual reports of banks in Vietnam from 2011 to 2021. The modified value-added intellectual coefficient (MVAIC) model is adopted to measure a bank's intellectual capital efficiency. In addition, the generalized method of moments is utilized to ensure the robustness of the findings. Findings – Empirical results strongly confirm that intellectual capital positively contributes to a bank's performance. In terms of corporate governance, the findings indicate that board size, board remuneration and major shareholders holding more than 20 percent of outstanding shares are the three most important factors that contribute positively to banks' performance. In addition, human capital efficiency and capital employed efficiency positively impact a bank's profit. Practical implications – Our study provides valuable evidence and implications for policymakers in managing and enhancing corporate governance and intellectual capital efficiency within the Vietnamese context, particularly in the banking sector. Originality/value – To the best of our knowledge, this is the first empirical paper conducted to examine the contribution of corporate governance and intellectual capital on banks’ performance in Vietnam.

Research on the Impact of AI Application on Capital Chain Resilience

Unfavorable external factors such as COVID-19 and economy recession have affected the abilities of enterprises to continue operating. Among them, capital chain resilience has become a key issue for enterprises. In the new era, artificial intelligence (AI) technology can provide new solutions for avoiding the breakage of the capital chain. Using data from listed companies in China, we find that AI technology can improve capital chain resilience. The main impact mechanism is to reduce the level of corporate financial constraints and improve internal control efficiency, and when corporate governance efficiency and resource acquisition capability are lower, such as poor levels of executive supervision and incentive, governance, executive resource acquisition ability, financial statement tone, business and financing environment, the effect of AI technology on improving capital chain resilience is more obvious. We enrich the research on AI and capital chain resilience, provide references for enterprises to use AI technology to help enterprises obtain more funds, warn of risks, and make correct decisions quickly in a crisis to help enterprises survive the crisis smoothly.

The Influence of Equity Structure and Financing Method on Corporate Governance-Taking Apple. Inc as Example

In recent years, influenced by COVID-19, most companies have sought to survive by optimizing corporate governance through adjustments to internal or external structures. Shareholding structure In corporate governance, shareholding structure is regarded as the basis of property rights, due to the fact that it determines the shareholders' structure and the general meeting of shareholders, which in turn determines the composition and operation of the entire internal control mechanism. A positive effect on the efficiency of corporate governance as a whole can occur through internal control mechanisms. Therefore, this paper chooses Apple Inc. as an example and analyzes the impact of equity structure and financing methods on corporate governance by means of a case study. Through analysis, we can know that when a company faces difficulties, it can choose its financing method to help the company get through the difficulties. For corporate governance, a company should clarify its development goals and plan them reasonably. In this way, it is possible to have a good and profitable development prospect.

ОСОБЕННОСТИ ОЦЕНКИ ЭКОНОМИЧЕСКОЙ ЭФФЕКТИВНОСТИ КОРПОРАТИВНОГО УПРАВЛЕНИЯ

This article presents an analysis of modern approaches to assessing the economic effi ciency of corporate governance, highlights the factors of corporate management effi ciency, and also considers the concept of the category “effi ciency” from the standpoint of various researchers. The economic effi ciency of corporate governance is considered in the context of functional management subsystems. In particular, the paper presents the author’s idea of the indicators of economic effi ciency of production management in terms of the productivity of the use of all working and fi xed production assets. A selection of indicators characterizing the eff ectiveness of the use of industrial production and management personnel, as well as the company›s own and borrowed sources of fi nancing, is proposed. The stages of the assessment were determined and a system of balanced indicators of economic effi ciency in the corporate management system was formed.

Does equity market openness increase productivity? the dual effects of Shanghai-Hong Kong stock Connect program in China

This study investigates the dual effects of equity market openness on aggregate total factor productivity (TFP) growth and finds that gains in aggregate TFP can be driven by within-firm and reallocation effects across firms. Using a quasi-natural experiment based on China’s Shanghai-Hong Kong Stock Connect program, we find that equity market openness has a positive effect on firms’ TFP. Stock price efficiency is the mechanism underlying this improvement. Equity market openness reduces firms’ stock mispricing and improves corporate governance and investment efficiency through the feedback effect, thereby increasing TFP. Finally, we argue that equity market openness induces significant growth in capital stock and employment among high-TFP firms, driving them to achieve rapid growth and greater market share. The reallocation effect of equity market openness translates into aggregate productivity gains. This empirical study considers stock pricing as a mechanism to shed light on the dual effect of equity market openness on TFP growth.

Minority shareholder protection, corporate governance, and investment efficiency

In 2016, the China Securities Investor Service Center (CSISC) held 100 shares of listed firms and exercised its rights as a minority shareholder in pilot regions. Using the hand-collected exercise data and a propensity score matching and difference-in-difference (PSM-DID) design, this study examines whether and how enhanced minority shareholder protection affects investment efficiency and explores the relationship among external governance mechanisms. We find that the exercise of rights by CSISC alleviates corporate underinvestment, especially for non-state-owned enterprises and firms with high levels of pre-existing tunneling activities and cash holdings. Furthermore, we document that the effect is more pronounced for firms audited by non-Big 4 and covered by fewer analysts, suggesting a substitutional relationship among external governance mechanisms. Collectively, our paper complements the studies concerning shareholder protection and renders practical references for regulators and policy-makers. Minority shareholders should not only be well-informed but also actively encouraged to enhance their engagement in corporate governance.

Mandatory Disclosure of Corporate Social Responsibility and the Quality of Earnings Management

Using the exogenous shock caused by the mandatory corporate social responsibility (CSR) information disclosure policy in 2008, this paper examines the impact of mandatory CSR information disclosure on the earnings management activities of listed firms in China from the perspective of external corporate regulation based on the Difference-in-Differences (DID) method. The results show that mandatory CSR information disclosure can significantly improve the quality of firms’ earnings management. The mechanism analysis shows that the policy’s enhancement of the effectiveness of external regulation by regulators and the media played an important role in curbing firms’ earnings management activities. The heterogeneity analysis shows that the inhibitory effect of mandatory CSR disclosure policy on firms’ earnings management activities is better in firms with lower analyst coverage and lower institutional ownership. The study further extends the mechanism of the impact of mandatory CSR disclosure on firms’ earnings management activities, and provides practical guidance on how to improve the quality of firms’ earnings management and enhance the efficiency of corporate governance.

The moderating effects of corporate governance and investment efficiency on the nexus between financial flexibility and firm performance

Purpose Financial flexibility, investment efficiency and effective corporate governance mechanisms have been issues of concern to stakeholders. Yet, little empirical evidence on the combined moderating effects investment efficiency and corporate governance mechanisms on the nexus between financial flexibility and firm performance. This study aims to address this gap and extend the extant literature by examining the moderating effects of corporate governance and investment efficiency on the nexus between financial flexibility and financial performance. Design/methodology/approach The empirical study is based on progression analysis using a sample of 13,865 US listed companies selected from BoardEx (WRDS) for the period (2010–2022) with 89,198 firm-year observations. Findings Findings of this study indicate that financial flexibility improves firm value as well as accounting performance. Furthermore, the results reveal that both investment efficiency and corporate governance moderate the effect of financial flexibility on firm performance. The authors complement and extend the literature on the optimal investment strategies domain by showing that the combined impact of corporate governance mechanisms and investment efficiency strengthens the nexus between financial flexibility and firm performance. Research limitations/implications Key limitations of this study due to the characteristics of the sample selection: country-specific context and proxies used by this study. Practical implications Findings of this study have managerial and theoretical implications for firms’ boardrooms, institutional and individual investors, regulators, academics and other stakeholders regarding behavioural aspects of investment decision-making. Originality/value The authors’ novel contribution to the extant literature is articulated by the conceptual framework underlying this study and by the new evidence regarding exploring the combined effect of corporate governance mechanisms on nexus between financial flexibility and companies’ performance.

How can China's medical manufacturing listed firms improve their technological innovation efficiency? An analysis based on a three-stage DEA model and corporate governance configurations

China's medical manufacturing industry is in a critical stage of transition to independent innovation. The government should create a business environment that is conducive to the development of the industry, and firms need to accurately identify obstacles to their innovation governance. However, the relationship between corporate governance (CG) and innovation efficiency remains unclear. Based on the CG configuration research framework, this study analyzes, using a three-stage data envelopment analysis (DEA) model and panel data fuzzy-set qualitative comparative analysis (fsQCA), the relationship between the internal governance and technological innovation efficiency (TIE) of China's medical manufacturing listed firms (CMMLFs) with the consideration of the impact of environmental parameters on innovation performance. The results show that (1) government support and medical spending among environmental factors create innovation input redundancy, and education investment and industrial competition promote innovation efficiency; and (2) the high TIE of firms is the outcome of multiple internal mechanisms, and there are five possible paths conducive to improving TIE and two mainstream, stable configurations for high technical efficiency. Our study systematically analyzes the external and internal organizational factors as two situational factors for CG and provides a reference for decision-making to further promote the efficient innovation of medical manufacturing firms.

The mediating role of intellectual capital in corporate governance and financial efficiency of Islamic banks

PurposeThe purpose of this study is to investigate the mediating role of intellectual capital (IC) on the association between corporate governance mechanism (CGM) and the financial efficiency of Islamic banks (Z-score, net investment income and loan to deposit) and verify it through standard mediation in the panel based on interaction.Design/methodology/approachThe data of this study draws from 125 full-fledged Islamic banks and windows from 26 Organization of Islamic Cooperation (OIC) over the period of 2009 to 2019. A two-step system generalize method of moment estimation is used to test the hypotheses.FindingsThe results underwrite that the inclusion of IC as a mediating variable has influenced positively the corporate governance and financial efficiency of IBs. Besides, only CEO power and Shariah supervisory board positively affect the financial efficiency of IBs. While structural capital and relational capital positively affect the financial efficiency of IBs. Apart from that, results show that the CGM has a significant relationship with the IC value of IBs.Research limitations/implicationsThese findings are valuable for policymakers and regulators to set policies to improve CG structure and effective use of IC resources to improve banking efficiency. Additionally, findings might be helpful for the bankers to proficiently use the IC as a premise to plan new strategies to get an upper hand in financial performance.Originality/valueThis study extends and contributes to the current literature by analysing the role of IC along with CG to boost the financial efficiency of banks in OIC countries.

The Implications of Corporate Governance on the Working Capital Efficiency of Manufacturing Companies: Evidence from Emerging Market

This article aims to evaluate the connection between corporate governance and working capital efficiency of manufacturing companies in India by providing evidence on the composition of board and its leadership structure on working capital efficiency. This article covers the top companies listed on the Bombay Stock Exchange (BSE) from 2014 to 2019 (498 firm–year observations). The study utilizes panel econometric methodology based on Generalized Least Squares (GLS) to check the interplay between corporate governance and working capital efficiency. The empirical results produce that audit committee meetings are very effective in the efficient management of working capital. Surprisingly, the authors found that CEO duality does have a significant impact on working capital efficiency. Overall, the findings highlight that corporate governance is an effective tool for monitoring working capital efficiently. The conclusion of this study may be utilized to offer management information if their working capital decisions are efficient or not and how they could increase the scope of their working capital decisions in light of corporate governance.

Exploring the macro-market determinants of Chinese FDI in OBOR nations: considering the role of IFRS adoption

The study investigated how accounting quality, corporate governance, and financial market efficiency attract Chinese FDI (CFDI) in the context of IFRS adoption among forty-three BRI economies from 2007–2018. The generalized linear model estimates demonstrated that (i) IFRS adoption negatively affected CFDI; (ii) accounting information quality had an insignificant effect on CFDI; (iii) corporate governance and financial market efficiency had a significant positive role in attracting FDI. Further, the sample was divided into IFRS and non-IFRS BRI Countries. The results were highly robust in economies that practiced IFRS, whereas accounting information quality became significant and positive in economies with no-IFRS practices.

Capital Structure, Corporate Governance and Cost Efficiency in Selected Listed Financial Firms in Nigeria

The study analyzed the cost efficiency of a subset of Nigerian listed financial firms and looked at the impact of corporate governance on the subset of listed financial enterprises. Additionally, it evaluated how corporate governance affected the chosen listed financial organizations in Nigeria taking into consideration capital structure and cost efficiency. They were with the intention of supplying details on the interactions between capital structure, corporate governance, and cost efficiency in a number of Nigerian financial organizations between 2005 and 2020 which is the post-consolidation period and the time the country was affected by the infamous virus that shook the whole world. The objective of this study is to examine the capital structure, and corporate governance on cost efficiency of selected listed financial firms in Nigeria. The study used secondary data from 20 quoted, carefully chosen financial firms in Nigeria and used a descriptive survey design. These data were analyzed using Stochastic Frontier Analysis (SFA) and the findings indicated that the deposit money banks in Nigeria had an average cost of efficiency of 54.6%. The capital structure was significantly impacted by corporate governance factors such as board size (t= 2.285, p0.05) and board expertise (t=-2.311, p0.05). Finally, the outcome demonstrated that elements of corporate governance such as board size (t=-2.807, p 0.05), board independence, and board composition, which acted as intermediary variables between corporate governance and cost-effectiveness, were both statistically significant at the 5% level. According to the study's findings, there was a significant association between cost-effectiveness, corporate governance, and capital structure.

What have we Learned from Firm Efficiency Research for the Past 35 Years? A Bibliometric Analysis

The increasing publication and citation performances of Firm Efficiency research for the past 35 years have attracted scholars to further embark on this area. Hence, the main objective of this study is to explore what scholars have learned from Firm Efficiency research over the past 35 years. This study uses bibliometric analysis to analyze top productive countries, top 10 journals, top 10 prominent authors, top 20 cited articles, and emerging themes. Selected findings indicated that the United States, China and Taiwan are the top three most productive countries in Firm Efficiency research. In addition, five emerging themes were highlighted in Firm Efficiency research for the past 35 years. The five themes were: 1) Stochastic Frontier Analysis in measuring firm productivity and size, 2) Bootstrapping DEA and SFA in measuring firm efficiency, 3) Corporate Governance and Technical Efficiency, 4) DEA as benchmarking in Firm Efficiency, and 5) Capital Structure and Ownership Structure. This study provides three contributions – 1) encourage scholars to observe the trends in publication and citation performances. 2) Allow scholars and authors to collaborate with an expert in Firm Efficiency research in the future, and 3) inspire the authors to look at the potential research gap and future directions in Firm Efficiency research.