Quality Of Governance Research Articles

Firm-level political risk and corporate investments in the hospitality and tourism industry: The moderating role of asset tangibility and corporate governance quality

Firms in the hospitality and tourism (HT) industry need to continuously make capital investments to sustain their long-term growth. These investments occur under varying conditions, including levels of political risk. Hence, this study examines the effects of firm-level political risk on corporate investments of 251 U.S. HT over the period 2002–2022. It further explores the moderating role of asset tangibility and corporate governance. Using fixed-effect regression analyses, the study finds that firm-level political risk negatively impacts corporate investments in the HT industry. Results reveal that asset tangibility and ownership concentration help mitigate the negative effect of firm-level political risk, while institutional ownership exacerbates this negative effect. Given that corporate investments are the backbone of the sustainable growth of HT firms, this research provides important implications for policymakers and practitioners in their attempts to reduce the negative effect of political risk on corporate investments.

Towards better governance: creating a corporate governance index for South African firms

PurposeThe purpose of this study is to construct a robust index and subindices to measure the quality of corporate governance for 266 firms listed in South Africa from 2004 to 2021.Design/methodology/approachPublic information on the compliance of King Code of Good Corporate Governance is used to construct a main index predicated on provisions relating to board characteristics, accounting and auditing and risk management. These categories are transformed into three subindices. All constructs are scored with binary coding and equally weighted.FindingsCronbach’s alpha test reveals that the index and subindices are highly reliable measures of corporate governance. The principal component analysis supports the construct validity of all measures.Research limitations/implicationsThe index is limited to only three corporate governance subcategories and only focuses on South Africa.Practical implicationsThese corporate governance indices provide governing authorities, policymakers, investors and other market participants direct information on the quality of corporate governance in South African firms.Originality/valueAs South Africa lacks a formal corporate governance indicator, the development of an appropriate corporate governance index and subindices contributes towards understanding the quality of corporate governance in South African firms. To the best of the authors’ knowledge, this is the first paper to conduct robustness tests on corporate governance indices designed for South African companies.

Corporate social responsibility and firm value: the role of enterprise risk management and corporate governance

Purpose Corporate social responsibility (CSR) has gained tremendous importance after several corporate scandals, financial crises and the rise of the hyper-competitive world. Firms must address multiple stakeholders’ interests to increase firm value. This study aims to investigate the effect of CSR on firm value. This study also examines the mediating role of enterprise risk management (ERM) and the moderating influence of corporate governance (CG) in this CSR-firm value relationship. Design/methodology/approach The sample of the study comprises 119 Pakistan Stock Exchange (PSX) listed firms and the study covers the period from 2010 to 2021. The corporate social responsibility performance has been quantified across five dimensions. These aspects are product, environment, employee relations, diversity and community. Four proxies i.e. strategy, operation, reporting and compliance, have been used to measure ERM. The governance quality of the sample companies was evaluated using the governance index, which included 29 governance provisions. The authors used the dynamic panel data technique (system-GMM) is used to achieve the objectives of the study. Furthermore, a firm’s engagement in CSR activities can also be measured through a multinational financial approach to check the robustness of the result. Findings Based on the regression analysis, the authors discovered that CSR was positively connected with firm value, validating the stakeholder view of CSR. Furthermore, following Baron and Kenny’s (1986) mediation technique, the findings confirm that ERM mediates this association. These results are robust by using the bootstrapping tests by Preacher and Hayes (2004). Furthermore, the result shows that corporate governance (CG) is positively connected with firm performance, and this relationship is strengthened in the presence of an effective governance system in the organization. Practical implications This study provides useful insights to regulators, investors and policymakers to consider CSR as a value-enhancing factor and encourage the development of enterprise risk management and compliance with CG mechanisms to improve firm value. Originality/value The presented analysis strengthens the existing CSR–firm value relationship by analyzing the mediating and moderating roles of ERM and CG, which have not yet been tested, particularly in the context of Pakistan.

Does climate risk vulnerability affect the value of excess cash? International evidence

AbstractIn this paper, we investigate the impact of climate risk on the value of excess cash. Based on an international sample of 6468 firm‐year observations from 2010 to 2019, the results show that climate risk vulnerability positively affects the value of excess cash. This suggests that investors may consider firms with excess cash to be better positioned to challenge extreme weather events by using cash reserves to cover up expenses and maintain operations. This positive effect is more pronounced for firms operating in countries with strong investor protection, for those with strong governance quality, and for those with high corporate social responsibility performance. However, it is less accentuated in the presence of financial constraints. Overall, our findings have significant practical implications for decision‐makers, investors, and policymakers.

Fostering innovation through governance systems: empirical insights from South Asian countries

Purpose Innovation is necessary to ensure consistent economic growth and to meet the global competition. In view of this, the purpose of this study to check the effect of governance quality as a tool for fostering innovation performance. Design/methodology/approach The empirical analysis was arranged on 20 year’s (2000–2019) data from South Asian economies. Subject to the existence of cointegration, the authors use the fully modified ordinary least square model for regression analysis and check the robustness through robust least square model. Findings The empirical findings infer that all dimensions of governance have a positive significant impact on both research and development expenditures and trademark applications jointly known as innovation performance. In addition, the empirical analysis discloses the positive effect of all control variables, including FDI inflow, banking sector development, economic growth, ease of doing business index and government subsidies on innovation activities. The analysis confirms the “grease the wheel” role of governance in fostering innovation. Practical implications It is apparently recommended to strengthen the exercise of better governance to harvest better innovation scores. Originality/value This study advocates the positive role of individual dimensions of governance recommended by existing literature and complements the literature by jointly exploring the impact of all governance dimensions on overall innovation performance.

Natural resources, digital financial inclusion, and good governance nexus with sustainable development: Fuzzy optimization to econometric modeling

AbstractThis study aims to investigate the complex interplay between natural resources, digital financial inclusion, good governance, and sustainable development outcomes, employing a hybrid methodological approach which combines fuzzy‐set qualitative comparative analysis (fsQCA), necessary condition analysis (NCA), and econometric modeling. Drawing on data from 18 countries spanning 2013–2019, the study unravels the impact of these factors on sustainable development (SD) and explores the moderating role of governance. The findings reveal positive effects of digital financial inclusion, natural resources, and good governance on SD, with governance quality enhancing the relationship between digital financial inclusion and development outcomes. However, governance does not significantly moderate the link between natural resources and sustainability, which illustrates the need for tailored governance approaches in resource‐dependent contexts. Theoretical implications highlight the relevance of institutional theory in understanding the dynamic nature of development processes, while practical implications offer actionable insights to foster holistic and resilient pathways to sustainable development. Thus, the study contributes to advancing our understanding of the intricate relationships shaping SD outcomes and informs evidence‐based policy interventions in this critical domain.

The impact of financial feedback on the innovative activity of companies: the moderating role of corporate governance quality

ABSTRACT This research analyzes performance feedback and corporate innovative activity in the context of corporate governance quality. The research goal is as follows: to examine the influence of social and historical performance feedback on R&D intensity of a firm, and to determine whether governance quality strengthens interconnection between performance feedback and R&D intensity. The sample consists of panel data on 283 South-Eastern Asian public companies from the manufacturing industry sector. The sample covers seven countries during the time period from 2015 to 2020, providing 1698 firm-year observations. It was discovered that sample firms are sensitive to positive and negative social performance feedback and do not respond to historical feedback. A comparative analysis between types of feedback has shown that firms value social feedback more than historical feedback. It was also established that higher corporate governance quality decreases performance feedback sensitivity among firms, which weakens the relationship between the feedback and innovative activity. Firms with weak governance systems value social performance feedback more than companies with mature governance. The study of these types of feedback in combination with the quality of corporate governance can be used by company executives in corporate strategic planning and operational decision-making. CEOs should be ready to use performance feedback information in addition to their personal judgment.

Corporate governance, firm strategy disclosure, and executive compensation

We empirically investigate the relation between the quality of corporate governance and the propensity of executives to offer investors guidance on firm strategy. Using a hand-collected data set, we demonstrate that companies with lower managerial entrenchment, i.e. better corporate governance, are less likely to disclose strategic information. This result is contrary to the traditional agency argument, but consistent with investor-management disagreement theory (Thakor 2015, Strategic information disclosure when there is fundamental disagreement. Journal of Financial Intermediation, 24 (2), 131–153). Per disagreement theory, better-governed firms have less incentive to disclose such information. By not sharing information pertaining to their strategies, these firms reduce the probability that investors who disagree with their plans will deny them funding. Our empirical results also suggest that executives who do offer guidance on their firm’s strategy receive higher compensation.

Does Corporate Governance and Earning Quality Mitigate Idiosyncratic Risk? Evidence from an Emerging Economy

Does Corporate Governance and Earning Quality Mitigate Idiosyncratic Risk? Evidence from an Emerging Economy

The Marginal Value of Cash: Structural Estimates from a Model with Financing and Agency Frictions

How much value does an additional dollar of cash create for a firm? It is generally recognized that the marginal value of cash (MVC) can either exceed or fall below one dollar. Estimates of MVC can guide corporate cash and payout policy, indicate the quality of governance, and make a firm a target for takeover or activism. Yet the existing methods of estimation lack a rigorous theoretical foundation and often provide implausibly high or low estimates. In this paper, we provide a formulation of MVC and structurally estimate the MVC based on a model that encompasses the important determinants for the choice of cash savings, including financing and agency costs. We find that firms with large cash and capital stocks have lower marginal value of cash, whereas the relationship between leverage and marginal value of cash is hump shaped. Two quasi-natural experiments validate the MVC estimates. This paper was accepted by Lukas Schmid, finance. Funding: D. Li would like to thank the support by the Guangdong Natural Science Foundation [Grant 2024A1515011703]. Supplemental Material: The online appendix and data files are available at https://doi.org/10.1287/mnsc.2022.01013 .

Renewable energy generation in ASEAN: The influence of economic factors, infrastructure, and governance quality

Renewable energy generation in ASEAN: The influence of economic factors, infrastructure, and governance quality

Carbon blessing or carbon curse? The role of fiscal policy

Green development is the inevitable requirement of high-quality development in the resource-based regions, and it is also the fundamental guarantee for realizing environmental sustainability in the resource-based regions. Based on the panel data of 242 cities in China from 2006 to 2019, this paper explores whether mineral resource abundance is a blessing or a curse for carbon emission intensity and whether fiscal policy plays an intermediary role. We draw the following conclusions: (1) The overall performance of mineral resources is a carbon curse effect, because the carbon curse effect of mineral resources is greater than the carbon blessing effect. (2) Mechanism analysis reveals that the decrease in fiscal pressure and the increase in fiscal dependence are the formation paths of carbon blessing and carbon curse, respectively. (3) Heterogeneity analysis shows that the occurrence and intensity of the carbon curse are related to the level of local foreign investment, government intervention, and industrial diversification. The research results explain the supplementary motivation of government quality and provide Chinese evidence for the transformation and upgrading of resource-based regions.

Monetary policy impact on sustainability: Analyzing interest rates and corporate carbon emissions

This study aims to investigate the impact of monetary policy on firms’ carbon emissions. The primary focus is on the effect of increasing interest rates on the carbon footprint of companies, both prior to and following the implementation of the Paris Agreement in 2015. The results show that there is a positive relationship between interest rates and carbon emissions indicating that in the face of increasing interest rates, companies are more likely to choose short-term financial stability above long-term sustainability objectives. This positive relationship is less prevalent following the Paris Agreement suggesting that policymakers should continue to strengthen global climate initiatives as a pressure for companies to invest in green activities. Additional evidence suggests that the impact of interest rates on carbon emissions is particularly noticeable in situations characterized by elevated levels of economic and policy uncertainty, weak corporate governance quality, and poor investor protection. These results are robust to endogeneity concerns, alternative measures of interest rates, carbon emission, and alternative samples.

Does SASAC boost the innovation of state-owned enterprises?

This study examines the causal effect of government monitoring on the innovation of state-owned enterprises (SOEs). By exploiting an exogenous shock to SOEs caused by the establishment of the State-owned Assets Supervision and Administration Commission (SASAC) in 2003, our difference-in-differences estimates show that government monitoring effectively promotes SOEs' innovation, and this positive innovation-driven effect becomes more prominent in SOEs with lower initial governance quality, stronger policy intensity, and greater innovation intensity. Furthermore, the underlying mechanisms are that this reform helps reduce corporate policy burdens and improve management efficiency. In addition, government monitoring promotes SOEs' patent quality, resulting in enables better performance and higher productivity. Taken together, our findings suggest that government monitoring can be vital to SOEs' innovation activities.

Examining the environmental consequences of China's mineral wealth and governance in the context of the natural resource curse

This study investigates the environmental consequences of China's mineral wealth and governance within the framework of the natural resource curse. The natural resource curse posits that countries rich in natural resources often experience less economic growth and worse development outcomes than countries with fewer natural resources. This phenomenon is particularly relevant for China, which has experienced significant mineral wealth since the 1990s. The primary aim of this research is to assess how China's mineral wealth and governance structures have influenced environmental outcomes from 1990 to 2022, using an econometric model. The results reveal three key findings: First, regions with higher mineral wealth have experienced more severe environmental degradation, particularly in terms of air and water pollution. Second, governance quality plays a critical role in moderating these effects, with better governance associated with less environmental harm. Third, economic growth driven by mineral wealth does not necessarily translate into improved environmental conditions, highlighting a disconnect between economic and environmental objectives. The policy implication is clear: to mitigate the environmental consequences of mineral wealth, China must strengthen its governance mechanisms and integrate environmental considerations into its resource management strategies.

Optimalisasi Pelayanan Masyarakat di Kelurahan Kilasah Kecamatan Kasemen Kota Serang dalam Mencapai Good Government

Community services that do not run optimally result in obstruction of the government regulatory system in the agency. It can also cause fatal problems, such as increasing complaints from people who experience inconvenience and their service rights are not fulfilled. In principle, community service is a determining factor in the quality of government and the welfare of all sub-district officials and the community. This happened in various subdistrict agencies in various regions, including in Kilasah Subdistrict, Kasemen District, Serang City. As for the physical condition of the Killah sub-district office, it still does not have a permanent and independent sub-district office building, limited competent human resources, minimal facilities and infrastructure, minimal number of community service administration staff. So this Community Service activity aims to help optimize community services in Kilasah Village. The steps taken in implementation are the observation, preparation, implementation and evaluation stages.This community service (PkM) activity runs smoothly, the PkM team can assist in community services such as compiling sub-district correspondence, assisting in collecting data on poor people for social service events, collecting data on MSME actors for assistance in making NIBs and product branding, create social media accounts for online community service, and as a forum for citizens' aspirations in an easy way, as well as other administration . This can realize the role of the Kilasah Subdistrict government as a progressive, innovative and optimal service provider. So that we can achieve the ideals of Good Government that are aspired to by all governments, especially Kilasah Village

RESEARCH ON FACTORS INFLUENCING THE SUSTAINABLE DEVELOPMENT OF SINO-FOREIGN COOPERATIVE UNIVERSITIES IN CHINA

The purpose of this study is to explore the factors influencing the sustainable development of Sino-foreign cooperative universities in Zhejiang Province, China. The research data was collected from semi-structured interviews with 10 staff members currently employed at Sino-foreign cooperative universities, including 4 senior management personnel and 6 active teachers. Analysis of the interview content revealed that factors influencing the sustainable development of these universities encompass both external and internal dimensions. Externally, they are influenced by government support, evaluation systems, admission policies, and geopolitical factors. Internally, they are affected by program offerings, the quality of talent cultivation, faculty strength, and internal governance. Overall, the universities demonstrate significant strengths, and their prospects for sustainable development are optimistic.<p> </p><p><strong> Article visualizations:</strong></p><p><img src="/-counters-/soc/0790/a.php" alt="Hit counter" /></p>

Agroecology, slow food and sustainable development goals (SDGs): resilience of agro-food systems, combat hunger, and local governance

The Sustainable Development Goals (SDGs), transcending their prescribed targets and actions, propose a critical reflection on global food production and consumption patterns. These inquiries foster the promotion of resilient agri-food systems, with Agroecology identified as a pragmatically viable alternative for achieving the advocated goals. The scope of this article is to discuss these intersections, demonstrating that simple actions such as valuing local products, as advocated by Slow Food, can strengthen relationships and networks around food, promoting food security, preservation of knowledge, practices, traditions, and biodiversity, as well as the sense of belonging, improvement of quality of life, sustainable development, and local governance. Methodologically, this research is qualitative, adopting a bibliographical approach and employing a literature review to contextualize and reflect the problem, anchored in the Agroecology domains, SDGs, and the paradigm proposed by the Slow Food movement. This study substantially contributes to understanding the intricate relationships between the SDGs, agri-food systems, and Agroecology. By emphasizing the importance of seemingly simple practices, such as valuing local products, the article highlights the imperative of holistic and sustainable approaches to achieve broader sustainable development goals guided by the principles of “well-being.”

Natural resource abundance, governance, and government expenditure: Empirical insights from environmental sustainability

AbstractThis study examines the quest for environmental sustainability in Africa by analyzing the roles of natural resource abundance, governance quality, and government expenditure. It explores the relationships between these variables, employing the N‐shaped hypothesis across 42 African countries from 1986 to 2020 grouped into resource‐rich and resource‐poor countries. Utilizing the Lewbel 2SLS modeling technique, the research evaluates how these factors interact and impact carbon and nitrous emissions in the region. The findings reveal distinct patterns: resource‐poor countries exhibit an N‐shaped relationship between natural resource abundance and emissions. In contrast, resource‐rich countries show such patterns between government expenditure and carbon emissions. Moreover, in resource‐rich countries, higher natural resource abundance, government expenditure, and governance effectiveness tend to increase carbon emissions but decrease nitrous emissions. Conversely, in resource‐poor economies, carbon emissions decrease with natural resource abundance and governance quality but increase with government expenditure and effectiveness. Additionally, regulatory quality positively correlates with nitrous emissions across all contexts. The study's insights offer valuable guidance for policymakers aiming to foster environmental sustainability, emphasizing tailored strategies based on the diverse impacts of natural resources, governance, and government spending across different economic contexts.

Factors affecting effective citizen-based monitoring of frontline service delivery in South Africa

Background: In South African local government, citizen-based monitoring (CBM) for frontline service delivery is pivotal for enhancing governance. Understanding the factors shaping effective CBM in this context is crucial for improving public service delivery. This study examines the complex dynamics involving government departments, community-based organisations (CBOs) and local media communities in CBM to uncover challenges and opportunities within frontline service delivery.Aim: This research identifies and analyses the factors impacting the effective CBM of frontline service delivery in South African local government. Despite existing research, gaps persist in understanding collaboration among government departments, CBOs and local media in frontline service delivery.Setting: The study conducted within South African local government focuses on frontline services like healthcare and education across urban and rural areas, ensuring comprehensive insights into CBM challenges.Methods: A mixed-methods approach was used, including qualitative interviews, surveys and document analysis. Interviews with government officials, CBO representatives and media members provided qualitative data, while surveys collected quantitative insights from citizens. Secondary sources supplemented the findings.Results: The study reveals multifaceted factors influencing CBM in frontline service delivery, including communication dynamics, resource availability, political influences and diverse stakeholder perceptions.Conclusion: Addressing these factors requires stakeholder collaboration to foster trust, allocate resources and mitigate political influences. Policymakers must optimise CBM to enhance frontline service delivery.Contribution: This study contributes to improving public service access and quality in South African local government by identifying challenges and opportunities. It offers insights for policymakers and stakeholders to enhance transparency, accountability and citizen engagement.