Corporate Governance Ratings Research Articles

The ignored tool of corporate governance rating: An overview of the corporate world in the emerging market

Generally, the interest of stakeholders is to see the growth of their entities, also they benchmark their entities through business performance metrics or tools like return on equity, return on assets (Mishra & Kapil, 2018), earnings per share, gross profit margin, employee productivity, sales turnover, ratings given by prominent credit rating agencies, such as Investment Information and Credit Rating Agency (ICRA), Credit Rating Information Services of India Limited (CRISIL), Standard and Poor, etc. In addition to this, internal governance mechanisms, board of directors’ characteristics, their independence, transparency, concentration, and presence of employees in the ownership structure also influence financial and stock market performance (Braendle, Stiglbauer, Ababneh, & Dedousis, 2020). However, assessing the performance of entities through some of these limited angles is not always possible. One more criterion for assessing the performance of entities is corporate governance rating (CGR). However, it is not widely used as a tool to assess a firm’s performance in emerging markets. The present research paper is intended to address the scenario of corporate governance rating in Indian corporate world to assess a firm’s performance. With the help of majorly secondary sources of data, this study was conducted from 2003 to 2021 based on the CRISIL’s rating pattern. The results revealed that only 20 companies adopted the process of corporate governance rating. The findings showed the significance of corporate governance rating, its adoption and future research in the development of the rating mechanisms in India as well as in other emerging markets.

The impact of corporate governance on corporate financial performance: Cases from listed firms in Turkey

This paper examines the effect of corporate governance on corporate financial performance in Turkish firms from 2008 to 2018. Therefore, the objective of the paper is still highly contentious (Ahmed, Alabdullah, Thottoli, & Maryanti, 2020). The generalised method of moments (GMM) technique is employed. The findings show that the board independence ratio is significantly positively related to all performance measures in both the short-run and long-run periods. Ownership structure depicts a significant positive link between return on assets (ROA) and Tobin’s Q (significantly negative to return on equity — ROE) in the short run. In the long run, ownership structure and Chief Executive Officer (CEO) duality significantly foster ROE and ROA, but significantly lower Tobin’s Q. CEO duality is significantly negatively related with ROA and Tobin’s Q, although insignificant, but significantly positively linked with ROE in the short run. Audit quality develops a significant negative connection with ROA in the short run although significantly positive with both ROE and Tobin’s Q. In the long run, audit quality significantly fosters all the financial performance proxies. Corporate governance rating is significantly positively linked with ROA, although just positive with ROE in the short run only, but is significantly negatively related with Tobin’s Q in both periods.

ESG rating and stock price crash risk: Evidence from China

While several studies evidence that firm social responsibility lowers stock crash risk, few investigate this for China. Further, few studies investigate the aggregate role of environmental, social, and corporate governance responsibilities, rather than just social responsibility alone. Additionally, unlike previous studies, we consider both stakeholder and agency explanations. We investigate the relationships between environmental, social, and corporate governance (ESG) ratings and stock price crash risk, finding a statistically and economically significant negative relationship for Chinese firms. Results are consistent with agency-theory based explanations. Results will be of interest to scholars interested in the general impact of promotion of public goods on firm performance, as well as to researchers and investors interested in the Chinese institutional environment.

Corporate governance and fraudulent financial reporting

PurposeThis study aims to trace the impact of corporate governance and its mechanisms in preventing companies from turning to fraudulent financial reporting.Design/methodology/approachFor this purpose, using the systematic elimination pattern, the information of 187 listed companies on the Tehran Stock Exchange over six years from 2013 to 2019 were collected, and the hypotheses were examined using a linear regression model. To measure fraudulent financial reporting, the adjusted model of Beneish (1999) was used to evaluate corporate governance. Its mechanisms based on nine corporate governance mechanisms, including board independence, board remuneration, CEO financial expertise, expertise in CEO industry, board financial expertise, board industry expertise, board effort, CEO duality and managerial ownership, have been examined. These mechanisms are calculated as a combined index of corporate governance.FindingsThe findings indicate that robust corporate governance significantly reduces companies’ intention toward fraudulent financial reporting. In the same way, a negative and significant relationship was observed between each of the nine corporate governance mechanisms, except for board compensation and fraudulent financial reporting.Originality/valueThis study’s findings provide valuable insight into the importance of strengthening companies to prevent companies’ managers from engaging in fraudulent financial reporting activities. Hence, it is suggested that professional references bodies more seriously follow the rules to dictate to companies for using and empowering their corporate governance.

The Relationship between Corporate Governance and Profitability: A Study in Borsa Istanbul, Turkey

Interest in the concept of corporate governance has increased dramatically in recent years, especially after scandals and crises in major international companies around the world, and also, profitability is one of the most important things that companies and their shareholders care about, as it is the criterion that shows the success and efficiency of management in leading investment, and profitability is the main goal of any An investor in any investment, as the biggest concern for any investor is to get the largest possible return on his investment. Therefore, work has been done through this study to discuss these two important concepts in one research, by studying the relationship between them, and corporate governance was considered as the independent variable and profitability as the dependent variable. The study was carried out on the companies listed within the corporate governance index at the Borsa Istanbul in order to ensure the existence of a relationship between corporate governance and profitability. For the purposes of completing the study, statistical processes were used, such as regression analysis, ANOVA analysis, and correlation analysis. The study sample included 43 companies listed in the corporate governance index that have a corporate governance rating for eight years from 2013 to 2020, as the corporate governance index It currently contains 52 companies, but not all companies have ratings for eight years, as some of these companies are recent in the index. Through the use of the SPSS statistical program in data analysis, the result of the study was that there is no clear and direct statistical relationship between corporate governance and corporate profitability. At the end of the study, the researcher made some recommendations, the most important of which is the necessity of obligating all companies on the Borsa Istanbul to conduct an evaluation of their governance by recognized rating companies, because of the great impact of governance on companies’ commitment to disclose transparently and not to manipulate and fraud with information and data, and recommended that studies Others on the relationship of governance with other non-profit matters in order to show the impact of governance on companies, and it was recommended that companies, shareholders and stakeholders continue to be educated about the importance of governance and work to benefit from the experiences of all countries and to draw lessons from the results that reached its application.

The Effect of Corporate Governance Rating Grades on Firm Performance: The Case of BIST Restaurants and Hotels Sector

The Effect of Corporate Governance Rating Grades on Firm Performance: The Case of BIST Restaurants and Hotels Sector

Disciplinary power in corporate governance: A Foucauldian analysis of the emergence and development of proxy advisors

Prior research in corporate governance has extensively investigated the mechanisms through which a variety of actors (financial analysts, investment managers, shareholder activists) monitor and discipline corporate executives. However, one recently emerged actor has received little attention so far: the proxy advisory firm. Mobilising Foucault’s concept of disciplinary power, this study uses historical analysis to examine the role of proxy advisors in corporate governance. This article shows that proxy advisors actively contributed to developing and implementing disciplinary mechanisms. This involves (1) hierarchical observations of corporations and their executives on a global scale. These observations are made available to institutional investors on proxy advisors’ voting platforms which have Panopticon-like features; (2) normalisation of judgements through the provision of generic voting policies, generic voting recommendations and corporate governance ratings prepared by proxy advisors and delivered to many institutional investors; (3) ritualised examination of the performance of corporations and of their executives during the annual general meeting, including record-keeping of all past voting results.

To Be Rated or To Be Indexed: Corporate Governance Rating Experience in Borsa Istanbul

We aim at answering whether it is more noteworthy for investors to attain or sustain corporate governance goals by examining how the market reacts towards announcements regarding corporate governance ratings (CGR) and corporate governance index (XCORP) including the firms listed in Borsa Istanbul within the sample period of 2007-2018 using a standard event study methodology. We found that, although both announcements produce relatively weak signals, joint announcements made upon XCORP inclusions along with first ever CGR (attainment) have more significance when compared to single announcements of subsequent CGR (sustainment) in the pre-event period. However, we also determined that the impact of subsequent CGR announcements in the post-event period was more profound. Our results revealed that the market anticipates XCORP inclusions whereas subsequent CGR are unexpected. Besides, the weak support for signaling hypothesis was considered to result from the obscuring effects of current legislation and market practices.

How Useful are Commercial Corporate Governance Ratings in Emerging Markets?

How Useful are Commercial Corporate Governance Ratings in Emerging Markets?

Modeling the effect of environmental corporate governance rating in the pricing information asymmetry

Information flow is a key parameter in an economic activity that acts as the main factor in the capital market emergence, stability, and efficiency. The purpose of the current research is to investigate the effect of the environmental points of cooperate governance on the pricing of information asymmetry. In this regard, we have extracted data related to companies accepted in the "Tehran Stock Exchange" from 2009 to 2018, and a panel-data regression model was utilized to test research hypnosis. The results show that information asymmetry and environmental points of cooperate governance have a significant effect on the expected return (cost of capital) on an investment. In addition, the effect of environmental points of cooperate governance on the relationship between the information asymmetry and the cost of capital has been verified. Finally, the results show that environmental points of cooperate governance leads to the differences in the cost of capital in the different levels of information asymmetry.

Corporate governance in India from the internal stakeholder’s perspective

The underlying aim of the research paper is to evaluate the internal stakeholders’ perceptions of the current corporate governance regime in India. In order to analyze the internal stakeholder’s perception towards current corporate governance regime, regulations and issues, a structured questionnaire has been prepared covering various aspects of corporate governance like components and performance implications of corporate governance in India, major issues in corporate governance, corporate governance strategies and practices, key players etc. The majority of the respondents perceive that there is a need to make the internal and external corporate governance better, enhance the standards of accounting, audit and disclosures, prohibit or check related party transactions, improve relation between board and management, publicize corporate governance ratings of companies, strengthen stock exchanges to ensure transparency, improve access to new capital etc. The findings of the study has contributed to the future development of corporate governance regulations in India. It will aid regulators, policy makers, stock exchanges and think tanks to rethink their priorities and develop rules to incorporate best practices on corporate governance. Keywords: Corporate governance, Corporate governance practices, Regulatory framework, Listing agreement, Securities markets.

Corporate Governance Quality, Stakeholders’ Pressure, and Sustainable Development: An Integrated Approach

The goal of this paper is to explore the interrelated relationships between the quality of corporate governance, Stakeholder’s pressure, and Sustainability Reporting. We claim that sustainable development strategies are the result of the interaction of two variables: the standard of corporate governance and the pressure of stakeholders rather than the outcome of a single variable. The results indicate that the company size and corporate governance rating are positively correlated with sustainability reporting Scores disclosed by the Turkish companies. The analysis of 125 firm-year data suggest that the company provides more SRS if it has a better corporate governance rating; or larger total assets. The paper also reveals that social, environmental and economic indicators, as pillars of sustainable development, are not the result of corporate governance practices or of stakeholder pressure alone, but represent a holistic reflection of the accumulated effects of various factors related to both corporate governance practices and stakeholder theory. This paper extends the work of Taşkirmaz, and Gamze (2017) which examined the relationship between corporate governance and corporate social responsibility. Our results increase understanding of sustainable practices of the circular economy in Turkish industrial companies and indicate future trends for these applications. This research will help managers of manufacturing companies in formulating their plans to maximize the use of available resources and improve efficiency in the context of the circular economy.

Towards a Brave New World of Corporate Governance Practices in Emerging Markets: The Case of Listed Banks in Romania

Financial crises, in general, are putting a greater emphasis on the best practices regarding corporate governance in emerging economies. Boards of Directors are under great pressure to be transparent and accountable. In the same background, given the current socioeconomic context, due to the crisis generated by the new Coronavirus (CoVid-19) pandemic, the banking sector is under analogous levels of scrutiny, subject to a similar regulatory backlash. In this context, banks must not fail to fulfil the expectations of policy makers in particular, and society in general. The Code of Corporate Governance (CCG) issued by the Bucharest Stock Exchange (BSE) aims at creating an internationally attractive capital market in Romania, based on best practices, transparency and trust – pillars that encourage companies to build a strong relationship with their shareholders and other stakeholders, by an effective and transparent communication, as well as openness towards all potential investors. This paper aims to highpoint the degree of compliance of the banks listed on the BSE with the principles and provisions stipulated by the CCG in force. As such, the assessment consisted in measuring the corporate governance quality and effectiveness in the main Romanian banks: Banca Transilvania, BRD, Erste Group and Patria Bank. Evaluating corporate governance eminence is constructed by using the score function method in regards to disclosure and transparency practices, as proposed by BSE. In this respect, an investigation was performed, focusing on the mode in which the principles enforced by the BSE are respected. This goal is important due to the current sensitive socioeconomic environment, which, undoubtedly, makes the corporate governance in the banking sector a controversial subject. In this framework, valuable conclusions were reached, regarding a satisfactory compliance level with the CCG issued by BSE. The research emphasized a high level of adoption of the best practice doctrines. Copyright © 2020. Delia DELIU. Distributed under Creative Commons Attribution 4.0 International CC-BY 4.0

Comparative Analysis of Corporate Governance Ratings with TOPSIS, Grey Relational Analysis and MAUT Methods

Kurumsal yönetim, işletmelerin faaliyetlerini sürdürürken iç ve dış paydaşlara karşı alması gereken sorumlulukları ortaya koymaktadır. Bu bakımdan işletmelerin kurumsallaşma sürecinde kurumsal yönetim ilkelerine uyum sağlamaları önem arz etmektedir. Çünkü, kurumsal yönetim ilkelerinin işletmeler tarafından ideal bir şekilde uygulanması ile çalışanların işletmeye bağlılığının artması, çalışan devir hızının azalması, müşteri memnuniyeti ve bağlılığın artması, şeffaf yönetim anlayışının egemen olması, tedarikçiler ile uzun süreli iş birliğinin oluşması, eksiksiz bir şekilde yasalara uyumun sağlanması ve hissedarların haklarının iyi bir şekilde korunması mümkün hale gelmektedir. Bu çerçevede, kurumsal yönetim ilkelerine uyum sağlayarak faaliyetlerini gerçekleştiren işletmeler yatırımcıların dikkatini çekmektedir. Bu açıdan, kurumsal yönetim ilkelerine uyum raporlarının derecelendirme şirketleri tarafından derecelendirilmesi ile işletmeler tarafından kamuoyunu bilgilendirme çerçevesinde kurumsal yönetim ilkelerine uyum derecelendirme raporları yayımlanmaktadır. Derecelendirme raporlarında işletmelerin kurumsal yönetim ilkelerine ne ölçüde uyum sağladıkları konusunda verilen notlar bir taraftan işletmelerin kurumsal yönetim yolculuğundaki başarılarının hangi düzeyde olduğu konusunda bilgi vermekte diğer taraftan yatırımcılar ve kredi kuruluşları gibi diğer paydaşların işletmelerin kurumsallaşma başarısının yeterli olup olmadığı hakkında bilgi edinmelerini mümkün kılmaktadır. Bu çalışmanın amacı, hisse senetleri BIST Kurumsal Yönetim Endeksi (XKURY)’nde işlem gören işletmelerin kurumsal yönetim derecelendirme notlarına göre sıralanması ile işletmelerin derecelendirme notlarının TOPSIS, Gri İlişkisel Analiz ve MAUT Yöntemlerine göre sıralanması arasında bir farklılık olup olmadığını araştırmaktır. Elde edilen bulgulara göre işletmelerin kurumsal yönetim derecelendirme notlarına göre sıralanması sonucu ilk iki sırada yer alan işletmelerin TOPSIS, Gri İlişkisel Analiz ve MAUT Yöntemlerine göre yapılan sıralamada da aynı şekilde ilk iki sırada yer aldıkları saptanmış, buna karşın diğer işletmelerin kurumsal yönetim derecelendirme notlarının sıralanması arasında belirgin farklılıklar olduğu görülmüştür.

Pengaruh Rasio Permodalan, Risiko Pembiayaan, Peringkat Good Corporate Governance dan Rentabilitas terhadap Dana Pihak Ketiga pada Bank Umum Syariah di Indonesia Periode 2014 - 2019

This research is to know the effect of the Capital Ratio (Capital Adequacy Ratio), Financing Risk (Non Performing Financing), Good Corporate Governance Ratings and Earnings (Net Rewards) on Third Party Funds at Sharia Commercial Bank in Indonesia for the period 2014 - 2019. The population in this research amount of 14 Sharia Banks in Indonesia for the period 2014 - 2019 with sample amount of 8 Sharia Banks. The method used is multiple linear regression analysis using the SPSS program or software. The results showed that partially the Capital Adeguacy Ratio has negative and significant effect on Third Party Funds, Non Performing Financing has positive and significant effect on Third Party Funds, the Good Corporate Governance Rating has negative and insignificant effect on Third Party Funds and Net Rewards has positive and not significant on Third Party Funds. While, simultaneously the Capital Adequacy Ratio, Non Performing Financing, Good Corporate Governance and Net Rewards have significant effect on Third Party Funds.

The Review of using Unified BPM Cycle for Public Credit Recovery Activites

Business Process Management (BPM) is a combination of Information Technology and management science, which applies to improve business process in order to improve operational excellence and business performances [1] leading to process automation. This review article based is on a case study in application of business governance in public sector organization, which was conducted by Abimael R. Do Nascimento, Roquemar de Lima Baldam, Lourenço Costa and Thalmo de Paiva Coelho Junior in 2018. The article analyzes the implementation of unified BPM in operational activities in a federal public advocacy body with evaluating corporate governance practices of the process. The study used mix method approach to gather data and to analyze them. Findings revealed the requirement of corporate governance practices, prioritizing BMP and auditing process.

ESG controversies and controversial ESG: about silent saints and small sinners

Based on an extensive international dataset containing Thomson Reuters environmental, social and corporate governance (ESG) rating, as well as Thomson Reuters newest controversies and combined score of an average of 2500 companies in the years 2002–2018, this article contributes to the existing discourse of the relationship between corporate social performance and corporate financial performance (CFP) by examining the Fama and French (J Financ Econ 116(1):1–22, 2015) five-factor risk-adjusted performance of positive screened best and worst portfolios, based on a 10% cutoff, respectively, for equally, value- and rank-weighted strategies in the European, US and global market. Furthermore, the controversies score allows us to examine the mid-to-long-term effects of scandals on the CFP without having to rely on the event study methodology. Even though a value-weighted strategy does not show any significant abnormal returns, we examined a significant outperformance for equally weighted worst ESG portfolios and best controversies strategies. These results strongly indicate that this is, on the one hand, driven by low-rated smaller companies (“small sinners”) and clean-coated firms with regard to controversies (“silent saints”) on the other hand. The findings hold for several robustness checks such as adjusting the cutoff rates or splitting the dataset across time.

AN ANALYSIS OF THE RELATIONSHIP BETWEEN THE QUALITY OF CORPORATE GOVERNMENT ACTIVITIES AND THE FINANCIAL PERFORMANCE BY PANEL DATA ANALYSIS UNDER CROSS-SECTIONAL DEPENDENCY: AN INVESTIGATION ON THE COMPANIES LISTED IN THE BORSA ISTANBUL CORPORATE GOVERNANCE INDEX

In this study, the effects of corporate governance ratings on financial performance are investigated. For this purpose, a sample that include the annual data of the 27 listed companies in the Borsa Istanbul’s Corporate Governance Index for the 2012-2018 a period are used. The existence of cross-sectional dependence among the firms included in the sample is analyzed by Breusch and Pagan (1980) LM test, Pesaran (2004) LM test, Pesaran (2004) CD test and Baltagi, Feng and Kao (2012) LMBC test. According to test results, the cross-sectional dependence between firms is determined. Stationarity level of the series is examined by CADF panel unit root test developed by Pesaran (2007). According to the findings of the test, all series are determined as stationary. The causality relationship between the series are examined by Dumitrescu and Hurlin (2012) method and the causality relations are found from the corporate governance rating of the firms to the operating profits. The coefficients in the econometric model are estimated using Westerlund (2007) OLSAdj method and it is determined that the annual operating profits will increase by 110.74 Million TL when corporate governance quality (ratings) of the firms increase by 1 unit.

Kurumsal Yönetim İlkelerine Uyum Derecelendirmesi: Borsa İstanbul Kurumsal Yönetim Endeksine (BIST-XKURY) Tabi Şirketler Üzerine Bir Analiz (Compliance Rating of Corporate Governance Principles: An Analysis on Companies Based on Borsa Istanbul Corporate Governance Index (BIST-XKURY))

Purpose – The purpose of this study is; to determine the effect of the Corporate Governance Compliance Level elements on the predictive effect of the Corporate Governance score. In addition, to determine whether there is a difference in the average of points according to the rating company is another purpose of the study. Design/methodology/approach – The research was carried out with multivariate regression analysis method. The data of 47 companies in the Borsa Istanbul Corporate Governance Index (BIST-XKURY); as of 01.07.2019, were analyzed within the scope of the analysis. In the research model, while Corporate Governance Rating Score is dependent variable, Shareholders Rating Score, Public Disclosure and Transparency Rating Score, Stakeholder Rating Score, and Board Rating Score represent independent variables. While performing multiple regression analysis, “Enter” method was chosen as the method. Findings – In the results of study; the relative importance order of the Corporate Governance Principles in the formation of the Corporate Governance score was determined as Shareholders Score, Board of Directors Score, Public Disclosure and Transparency Score, Stakeholder Score. According to the results of the difference analysis made for the rating companies; It has been determined that all ratings except for the Board of Directors do not differ according to the rating company (JCR: 8,9327 SAHA: 9,2025 KOBIRATE: 9,2254). Discussion – Except for the deviation in the Board's rating, the importance ranking was shaped in parallel with the impact levels determined by the SPK. It was observed that the scores of the Board of Directors of the JCR rating company differed significantly from the scores of the other two rating companies.

Corporate governance and stock price crash risk: Evidence from Taiwan

Managers are likely to withhold negative news to protect their own interests. When they can no longer withhold such news, extreme negative returns and a stock price crash (SPC) follow. This study explores whether a favorable corporate governance (CG) mechanism helps reduce SPC risk. The findings reveal that CG affects SPC risk. Moreover, the effects of institutional ownership, board size, and disclosure violation frequency are particularly significant in family‐owned businesses. We also examine the effectiveness of CG evaluation (CGE) in Taiwan and discover that companies with high rankings are substantially less likely to encounter an SPC. This study verifies that CGE can be considered an indicator of SPC risk.