High-quality Governance Research Articles

Exploration of the application of blockchain in e-government: Opportunities and risks coexist

Blockchain technology provides a technical solution for the challenges faced by e-government, such as low efficiency, excessive energy consumption, and lack of trust mechanisms. It can promote the establishment of a more efficient and high-quality government service system, thereby enhancing the public trust of the government. Although blockchain technology provides theoretical innovation to traditional governance structures with its decentralization, consensus mechanisms, and enhanced trust, its impact and ability to transform existing governance structures still have limitations in practical applications. Based on an in-depth analysis of the concept and application boundaries of blockchain, this article explores its value in the field of e-government. At the same time, it systematically proposes strategic suggestions to promote the development of blockchain technology in the field of e-government from multiple aspects such as institutional construction, technical standardization, and professional talent cultivation, in response to its limitations and application risks. By accelerating technology research and development and standard construction, strengthening high-level promotion, optimizing promotion competition mechanisms, and conducting rooted research, the application and promotion of blockchain in government governance can be accelerated, laying a solid foundation for building a future intelligent and transparent government service model.

Data Quality and Data Governance: Investigating the Impact on Data Science Outcomes

Abstract: The purpose of this study is to evaluate the effects that high data quality and effective data governance have on the outcomes of data science, with a particular emphasis on the vital roles that these factors play in improving decision-making within businesses. The rising use of data science projects by enterprises for the purpose of digital transformation presents major hurdles, particularly with regard to the trustworthiness of data and compliance with appropriate legal frameworks. A high data quality improves model accuracy, decision-making efficiency, and error reduction, while good governance boosts compliance with rules, data security, and accessibility, according to the findings of the study, which were derived from an analysis of data collected from professionals working in data science and related sectors. These findings demonstrate the synergy that exists between data quality and governance, underscoring the fact that businesses may obtain more dependable and trustworthy outcomes by prioritizing these components, which in turn supports digital transformation programs that are effective and responsible.

Board characteristics and accounting value relevance: Insights from Saudi Arabia

This study aims to determine the extent to which corporate governance affects the usefulness of financial information available to investors in Saudi Arabia. The research investigates the impact of board characteristics—including independence, size, and frequency of meetings—on the value relevance of financial statements. Data from 125 non-financial firms from 2018 to 2022 were analyzed. The results indicate that increases in both book value per share (BVPS) and earnings per share (EPS) significantly enhance share prices. Furthermore, board independence, size, and meeting frequency amplify the value relevance of EPS but not BVPS, highlighting the complementary role of these governance attributes in equity valuation. High-quality governance and financial reporting are crucial for accurate evaluation of financial statements, enabling investors to perform more precise equity valuations. This underscores the importance of robust corporate governance structures. These insights are valuable for regulators, firms, and investors. Regulators can use these findings to strengthen corporate governance frameworks, ensuring boards are independent, well-sized, and diligent, thereby enhancing financial transparency. Firms can improve their governance practices, boosting the credibility and usefulness of their financial reports, which fosters greater market trust and attracts investment. Investors benefit from more reliable financial information, allowing for better-informed decisions and more precise equity valuations.

The failure of the United Kingdom’s accounting and fiscal governance

PurposeThis paper aims to unravel the puzzle that the United Kingdom’s high-quality government accounting and fiscal architecture is associated with low-quality outcomes, including poor productivity growth, high public debt, public services which do not meet citizen expectations and historically high levels of taxation. It contributes to public sector accounting research in the fields of fiscal transparency and governance.Design/methodology/approachThis paper uses Miller and Power’s (2013) economization framework and Dunsire’s (1990) concept of collibration to explain why being a global leader in public sector accounting reform and in fiscal and monetary architecture has not protected the UK from weak governance. The intersection of economization’s roles of accounting with modes of government accounting clarifies the puzzle.FindingsWhereas accruals government accounting contributes to fiscal transparency, this is not a sufficient condition for well-judged policy and its effective application. Collibration is the dominant mechanism for mediation in the fiscally centralized UK, but it has failed to deliver stable outcomes, in part because Parliament is limited in its ability to hold back inappropriate behaviour by the Executive. Subjectivization has disrupted adjudication because governments at all levels resist constraints on their behaviour, with unpredictable and often damaging consequences.Originality/valueThis paper provides insights through the combined lens of economization and modes of government accounting, demonstrating the practical value of this conceptualization. Although some causes for unsatisfactory outcomes are specific to the UK, there are cautions for accounting and fiscal reformers in other countries, such as Member States of the European Union.

Role of Culture, Income Level and Governance Quality on Driver Behaviours

The regional differences in road safety parameters have been attributed to cultural and economic factors. Nevertheless, there are differences in road safety outcomes between countries with similar cultural backgrounds and income levels. The current study examines this fact by considering the role of governance quality in the relationship between culture, income level, and driver behaviours. In this study, we modelled driver behaviour scores from 65 countries with Hofstede’s cultural dimensions, Schwartz’s cultural values, and the worldwide governance indicators from the World Bank’s database. Hayes’ PROCESS macro was utilised to analyse the moderation roles of governance quality and income level in the relationship between culture and driver behaviours. High governance quality can prevent or discourage drivers to commit non-speeding violations. Governance quality could regulate the relationship between cultural variables, income level, and driver behaviours. The Power Distance dimension was associated with non-speeding violations in high-income countries with medium or low governance quality. The embeddedness value was associated with speeding behaviours in countries with low governance quality and high/medium income. Governance quality is a critical factor of road safety in high- and middle-income countries. Where there is a lack of qualified governance to establish and enforce rules and individuals have access to social and material power, the culture becomes the determinant of aberrant driver behaviours. This is the first study relating governance quality to driver behaviours at the country level. The implications and limitations of the study were acknowledged.

The geography of acquisitions and greenfield investments: Firm heterogeneity and regional institutional conditions

AbstractThis paper investigates how institutional conditions at national and regional levels shape the decisions of Multinational Enterprises (MNEs) to invest abroad by means of either acquisitions or greenfield investments. The empirical analysis covers all foreign direct investment (FDI) projects in the European Union by the largest MNEs in the world to study alternative choices by the same firm and account for firm‐level characteristics in investment decisions. The empirical results show that—other things being equal—regions with stronger investment eco‐systems are more likely to attract acquisitions, while greenfield investments are more likely in regions with comparatively weaker systemic conditions. Howerver, the regional quality of institutions makes a fundamental difference to the nature of the investment projects attracted by regions: those with high quality of government can attract greenfield investments undertaken by the most productive MNEs. By improving their quality of government, local, and regional policy makers can attract higher quality greenfield investment projects to their constituencies, potentially breaking the vicious circle between low productivity areas and low productivity FDI.

Corporate Governance Dynamics and Financial Performance: Analysis of Listed Commercial Banks in the Ghanaian Context"

This study aims to determine the effect of corporate governance on the financial performance of 14 listed commercial banks in Ghana. The research employs a panel data set from 2008 to 2020 to examine how board size, ownership structure, board independence, capital adequacy ratio, audit committee effectiveness, board gender diversity, and overall corporate governance score affect ROA and ROE for banks. These relationships are analyzed using Ordinary Least Squares (OLS) regression within the framework of panel data analysis. Results indicate that ROA is positively related to board size, board independence, audit committee, and Board gender diversity. Also, ROE is positively influenced by companies’ ownership structure, capital adequacy ratio, audit committee effectiveness, and overall corporate employment governance rating. However, there is a significant negative correlation between ROE and women’s representation or board gender diversity. Also, another key finding is that both Return on Assets (ROA) and Return on Equity (ROE) are significantly affected by debt and debt-to-equity ratios. This indicates that banks borrowing more have reduced profitability, underlining the need for a well-managed capital structure and no over-reliance on loans. This study contributes to the understanding of the relationship between corporate governance and performance in the banking sector of Ghana, emphasizing that high-quality governance systems can improve and enhance financial performance. The insight gained from this analysis shows that Banks should aim towards good corporate governance practices such as; maintaining proper board size, promoting greater board independence, ensuring efficient audit procedures, and encouraging more gender diversity to enhance profitability. The outcomes also emphasized a well-built base of capital and concentrated ownership, enabling better financial results.The outcomes of this research are useful to Ghanaian policymakers, regulators, and bank executives who view the need for strong corporate governance environments to buttress the stability and growth of the banking sector.

Shades of grand corruption among allocative efficiency and institutional settings. The case of Italy

This paper examines the underexplored impact of the procedures in public contracts on market allocation efficiency that are at risk of corruption. We integrated the GMM-SYS estimator with analyses of a balanced panel database of all the provinces in Italy between the period 2013–2021. The use of a high level of spatial granularity in an under-researched context revealed two distinct scenarios. In competitive markets, a more entrepreneurial and less widespread form of corruption emerged which may enhance market efficiency (bottom-up pattern). Conversely, in a context with limited market competition and low institutional quality, corruption indicators may be less useful due to potential pre-bribery behavior (top-down pattern). Our study underscores the capacity of corrupt suppliers to exploit market opportunities and secure selection. We found that corruption risk practices within public contracts have the potential to improve market efficiency, thus rendering them appealing to corrupt suppliers due to their capacity to deliver economic advantages. This also applies to provinces with high-quality governance. Additionally, the paper highlights the limitations of indicators in alternative contexts. The paper has significant implications for policymakers in defining assignation criteria in high-quality contexts, but also offers insights into the effectiveness of grand corruption indicators for academics.

How does governance quality affect the shadow economy-sustainable development nexus? New insights from a dynamic threshold analysis

Purpose The purpose of this study is to assess the impact of the shadow economy on three sustainable development indicators while considering the moderating effect of the governance quality, and to highlight the non-linearity of the considered relationship.Design/methodology/approach A sample of 82 countries covering the period from 1996 to 2017. The dynamic first-differenced generalized method of moments (FD-GMM) panel threshold model is implemented to control for non-linearity.Findings The shadow economy hinders sustainable development in countries with low-governance quality, while the opposite result holds in countries with high-governance quality. The critical thresholds triggering the switch from one regime to another vary across the sustainable development indicators. Boosting growth requires enhancing the legal system and the economic dimension of governance, while promoting environmental quality requires the implementation and enforcement of specific environment-friendly regulations.Originality/value The study addresses non-linearity and the moderating effect of governance quality. The use of six governance indicators allows to gauge the ability of each governance dimension to curb the negative effects of the shadow economy. Considering the three objectives of sustainable development allows to identify specific policy recommendations for each of them.

Terror threat and investor sentiment: International evidence

Terrorism remains a persistent threat to global peace and stability, but its impact extends beyond the realm of security. We examine the impact of terrorism on the important capital market transaction of initial public offerings (IPOs). Consistent with the notion that terrorism dampens investor sentiment, we reveal robust evidence that first-day returns are lower in countries with higher Global Terrorism Index scores. Examining this issue at an international scale allows us to advance the literature in two important ways. First, we provide direct evidence that greater terror threat is associated with lower investor sentiment. Second, we determine that strong democratic principles, high-quality governance institutions, and transparent accounting disclosures moderate the negative impact of terror threat on investor sentiment and IPO returns.

Accuracy and practical considerations in an RDD text-to-web survey

This study investigates the accuracy of a survey that combines smartphone completion, random digit dialing (RDD), and text message invitation to a web survey. A benchmarking study was conducted using 26 questionnaire items from a survey on wellbeing, health, and life in general. Additionally, methodological, technical, ethical, and cost considerations of this relatively new approach to web survey data collection were investigated, compared to previous research findings, and discussed with an aim to propose practical solutions. Ultimately, average errors in this survey were compared to average errors in three other probability samples and one nonprobability online panel sample (i.e., reference samples) using nationally representative benchmarks from high-quality government data sources. The results showed that the sample used in this study was similarly accurate to the reference samples from a different benchmarking study. Based on these findings, a very low response rate in the RDD text-to-web survey did not appear to introduce significant nonresponse bias for a majority of survey items, and all large errors can be explained. Hence, in countries where prior consent to text messages is not required, RDD text-to-web should be considered as a cost- and time-effective alternative to probability- and nonprobability-based online panel surveys, telephone, or interactive voice response surveys, and used in market, public opinion, and social research.

Corporate investment sensitivity to equity market misvaluation

PurposeThe purpose of this paper is to investigate the effect of equity market misvaluation on manager behavior. Using a sample of 535 French-listed over 2000–2018, the authors analyze whether corporate investment decision is sensitive to equity market overvaluation.Design/methodology/approachThe study adopts market-to-book (M/B) decomposition developed by Rhodes-Kropf and Viswanathan (2004, RKV) that proxies for market misvaluation at the firm and industry levels. The authors conducted a long-term performance analysis via a portfolio sorting procedure and a Carhart (1997) four-factor pricing model. The authors tested the relationship between equity misvaluation, corporate investment decisions and equity issuance. The authors ran several robustness tests.FindingsThe empirical results show that equity market misvaluation affects corporate investment positively as the stock price deviates further away from its fundamental. Based on market timing theory, the authors find that corporate investment occurs in periods of high valuation motivated by equity issuance to benefit from the low cost of capital. This effect is more prominent for financially constrained firms. Consistent with the catering channel, the authors find that the misvaluation-investment nexus is more pronounced in firms with short-horizon investors. By examining the stocks’ long-term performance of misvalued firms, via a sorting portfolio procedure, the authors find that undervalued firms outperform and generate higher abnormal returns (Jensen’s alpha) than overvalued firms, suggesting that mispricing-driven investment appear to be short-lived and lead to lower return in the long term.Practical implicationsCorporate decision-makers and governance structures should pay attention to the rationality of the corporate investment decision in the context of equity market misvaluation. Managers who focus on maximizing the stock market value in the short-run at the expense of its long-term performance must give preference to value-creating investment, not driven by an external mechanism such as equity market mispricing. More generally, investors and portfolio managers must take into account the market mispricing process in decision-making. Nonetheless, from the portfolio sorting perspective, decision-makers must act in terms of high governance quality to mitigate suboptimal investment due to stock market mispricing (Jensen, 2005). Finally, equity market overvaluation, leading managers to invest via equity financing in particular, should be a signal to attract investors’ attention to seize the window of opportunity and embark on a short-term portfolio strategy. Such a strategy promises high returns in the short term.Originality/valueThis paper investigates jointly two theoretical channels: equity market timing and catering. The authors propose for the analysis three components of the M/B decomposition to dissociate market misvaluation at the firm and industry level from the fundamental component of market value (growth). This procedure provides a better understanding of the role of firm and industry misvaluation in explaining corporate investments. The authors provide evidence of the equity market misvaluation via a portfolio sorting procedure and a Carhart (1997) four-factor pricing model. The authors examine the effect of misvaluation on both the investment and the financing decisions.

When Are Voluntary Environmental Programs More Effective? A Meta-Analysis of the Role of Program Governance Quality

We meta-analyze 103 studies of 23 voluntary environmental programs (VEPs) to assess how their governance quality, or the rigor of their internal institutional mechanisms, drives their ability to improve their participants corporate environmental and financial performance. The goal of VEPs is to incentivize firms to reduce firms’ environmental impacts by bolstering their reputations and helping them learn practices that improve their financial performance. Research on VEP effectiveness, however, is inconclusive, in part, because most studies sampled individual programs, and were unable to analyze how difference in program characteristics drive their effectiveness. We draw on institutional theory to argue that VEP governance quality determines whether they improve participants’ environmental performance, and the natural resource-based view to argue that they improve their financial performance. Results confirm our predictions, and in doing so, help to establish a business case for VEPs with high-quality governance.

The Impact of FDI on Innovation in Developing Countries: The Mediating Role of Governance

While most studies in the existing literature focused on the direct relationship between FDI and innovation, this paper further analyzes whether governance in developing economies mediates this relationship. A 25-year cross-sectional time-series data from 1995 to 2019 were collected from the World Bank Development Indicators and the Worldwide Governance Indicators (2019) databases. This panel dataset was estimated using a system GMM. A novel finding emerged from the investigation: the positive impact of FDI on domestic innovation is mediated by two governance variables: voice and accountability and regulatory quality. This suggests that the impact of FDI on domestic innovation is strengthened when combined with the effects of mediating variables. The results imply that, in the absence of high governance quality, the traditional policy prescription—such as increasing government spending on R&D and education—may not be adequate to promote FDI's innovation spillovers. The findings suggest that governments in developing nations should work to improve the voice & accountability and regulatory quality indicators by ensuring that citizens take part in the decision-making to promote the flow of knowledge and information that fosters innovation. This will help to strengthen the influence of FDI on domestic innovations. In addition, the governments should foster an environment that is welcoming to foreign investment and implement the appropriate regulatory reforms, such as those that strengthen competition protection, property rights protection, and transparency in the operations of the organizations implementing policies.

Sustainable Energy Supplies in Developing Countries: Does National Governance Matter?

In this paper, we examine the impact of national governance quality on clean energy supplies in developing countries. We used a large sample of 103 developing countries over 21 years. We employ pooled ordinary least squares as the primary estimator. Additionally, we apply a Fixed Effect and the Two-Step System-Generalized Method of Moments to mitigate contemporaneity bias. Following prior studies, we construct national governance quality from the six World Governance Indicators. Consistent with our expectations, we find a positive and significant association between national governance quality and clean energy supplies. The results show that countries with high national governance quality are more likely to generate high amounts of clean energy than low-governed countries and to experience a high green economy. The results are also significant when the governance indicator is disaggregated into individual components. However, in a continental analysis, we found that the link between national governance quality and clean energy supplies is stronger in Africa than on other continents. Our results are robust to alternative measurements and econometric identification strategies.

Effect of Country Governance on Cross-Border Renewable Energy Investment and Climate Actions in Emerging Countries

ABSTRACT This study investigates the effect of country governance on climate actions, specifically climate-change mitigation and adaptation, through cross-border renewable energy investment (CB-REI). Using data from 74 emerging countries from 2008 to 2019, we find that the control of corruption, regulatory quality, citizens’ voices and accountability are the key governance pillars that attract CB-REI, which enhances climate actions. Heterogeneity analyses reveal that the CB-REI channel effect is more evident in countries with higher governance quality and carbon emission levels. This study offers policy implications pertaining to governance-related obstacles for CB-REI in emerging countries and their transition toward low-emissions, climate-resilient pathways.

Does Institutional Quality Matter for Foreign Direct Investment and Human Development?

This study examines the relationship between foreign direct investment (FDI), institutional quality and human development) in host countries from 2002 to 2019, using the Human Development Index [HDI] as the measure of human development. This study utilized a panel dataset of 143 countries, including both developed and developing economies, over a 17-year period. Additionally, the study employed a GMM (generalized method of moments) estimator to address unobservable heterogeneity and simultaneity. This study reveals a significant positive relationship between FDI and human development, with a stronger effect observed in developing countries compared to in developed countries. Notably, the impact of FDI-HDI nexus is larger in countries with moderately high-quality institutions, irrespective of their income level. Furthermore, good governance plays a crucial role in enhancing human development, as developing economies with high governance quality experience a greater impact of FDI on HDI compared to other countries. The findings of this study suggest that attracting FDI can be beneficial for enhancing the HDI, especially in developing countries. Additionally, the study highlights governance as a moderating factor in the relationship between FDI and HDI. Improving governance quality can enhance the positive impact of FDI on human development in host countries, especially in developing countries.

Does the crime rate respond symmetrically or asymmetrically to changes in governance quality and macroeconomic variables? The application of linear and non-linear ARDL

PurposeSocioeconomic development needs quality governance to provide and protect property rights and other economic means. In this regard, the current study examines the symmetric and asymmetric effect of composite governance index, unemployment rate (UR) and consumer price index on the crime rate (CR) in Pakistan.Design/methodology/approachThe current study uses time series data (1996–2020) on CR, composite governance index, UR and consumer price index. In this study, the authors first constructed a composite governance index from six governance indicators using the principal component analysis (PCA) method. After that, the short-run and long-run symmetric and asymmetric effects were estimated through linear and non-linear autoregressive distributed lag (ARDL) models, respectively.FindingsThe authors found short-run and long-run symmetric and asymmetric effects of governance, unemployment and consumer prices (CPI) on the CR in Pakistan. For asymmetric effects, the findings show that high-quality governance diminishes and poor governance accelerates committed crimes in Pakistan. Interestingly, the asymmetric unemployment effect suggests that criminal behavior diminishes when people find job opportunities and do not adopt criminal behavior even if people lose employment. In other words, if unemployment decreases CR will fall, and when unemployment increases, the CR may not increase. Lastly, rising product prices lead to criminal behavior, while falling prices do not help to diminish the CR in Pakistan.Originality/valueThe study provides the first empirical evidence of symmetric and asymmetric responses of CR toward composite governance index, UR and consumer price index.Peer reviewThe peer review history for this article is available at: https://publons.com/publon/10.1108/IJSE-09-2022-0625

A heuristic perspective on factors that drive governments' approval of genetically modified crop commercialization

AbstractWhile there is abundant research on innovations, we know little about why and when the commercialization of highly contested innovations, such as genetically modified (GM) crops, is approved by governments. In this paper, we argue that governments' decision to approve the commercialization of GM crops is influenced by heuristics based on the decisions of other governments with which they have greater trade, the gap between country performance and aspiration, and governments' prior decisions on GM crops field trials. We further propose that the effect of these heuristics weakens when the government operates in countries with higher governance quality. Using data on approval of GM crop commercialization between 1991 and 2016, we found support for these arguments and suggest the joint effects of heuristics based on the decisions of trade partners and governance quality on governments' approval of GM crop commercialization.

Health service quality in 2929 facilities in six low-income and middle-income countries: a positive deviance analysis

Primary care is of insufficient quality in many low-income and middle-income countries. Some health facilities perform better than others despite operating in similar contexts, although the factors that characterise best performance are not well known. Existing best-performance analyses are concentrated in high-income countries and focus on hospitals. We used the positive deviance approach to identify the factors that differentiate best from worst primary care performance among health facilities across six low-resource health systems. This positive deviance analysis used nationally representative samples of public and private health facilities from Service Provision Assessments of the Democratic Republic of the Congo, Haiti, Malawi, Nepal, Senegal, and Tanzania. Data were collected starting June 11, 2013, in Malawi and ending Feb 28, 2020, in Senegal. We assessed facility performance through completion of the Good Medical Practice Index (GMPI) of essential clinical actions (eg, taking a thorough history, conducting an adequate physical examination) according to clinical guidelines and measured with direct observations of care. We identified hospitals and clinics in the top decile of performance (defined as best performers) and conducted a quantitative, cross-national positive deviance analysis to compare them with facilities performing below the median (defined as worst performers) and identify facility-level factors that explain the gap between best and worst performance. We identified 132 best-performing and 664 worst-performing hospitals, and 355 best-performing and 1778 worst-performing clinics based on clinical performance across countries. The mean GMPI score was 0·81 (SD 0·07) for the best-performing hospitals and 0·44 (0·09) for the worst-performing hospitals. Among clinics, mean GMPI scores were 0·75 (0·07) for the best performers and 0·34 (0·10) for the worst performers. High-quality governance, management, and community engagement were associated with best performance compared with worst performance. Private facilities out-performed government-owned hospitals and clinics. Our findings suggest that best-performing health facilities are characterised by good management and leaders who can engage staff and community members. Governments should look to best performers to identify scalable practices and conditions for success that can improve primary care quality overall and decrease quality gaps between health facilities. Bill & Melinda Gates Foundation.