Improve Corporate Governance Research Articles

Coming of age: The Evolution of Corporate Governance Laws in Greece

This research examines the evolution of corporate governance laws in Greece from Law 3016/2002 through to the latest Law 4706/2020, as well as the related Decision No. 1/891/30.09.2020 by the Capital Market Commission. It focuses on a detailed review of existing literature to understand the administrative and fiscal impacts of these changes on companies listed on the Athens Stock Exchange. The study highlights a significant shift from the earlier "soft law" approach, which suffered from weak monitoring and enforcement, resulting in a gap between the legislative goals and actual results. Law 4706/2020 introduces a stricter regulatory framework with numerous requirements designed to improve corporate governance structures. Key features of this reform include the creation of new committees overseeing remuneration and compliance, stringent board member qualifications, and a stronger focus on gender diversity and stakeholder engagement. These developments aim to enhance accountability, transparency, and efficiency, essential for effective governance. The research compares old and new legislative frameworks to demonstrate the progress made in aligning Greek corporate governance with international standards. It argues that Law 4706/2020 is a significant advancement in corporate governance, potentially serving as a model for other regions. However, the detailed and strict compliance requirements introduced may challenge implementation and effectiveness. The paper suggests that these legislative changes mark a new chapter in corporate governance that requires diligent, forward-looking, and adaptable management from companies. It also stresses that achieving full compliance with the new regulations requires ongoing commitment to improvement and readiness to handle the complexities of this new regulatory environment.

The role of Sharia compliance in moderating the indirect influence of board diversity on roe mediated by Zakat disclosure

This study aims to examine the moderating role of Sharia compliance on the relationship between the diversity of the Board of Directors, Board of Commissioners, and Sharia Supervisory Board and Return on Equity (ROE), with Zakat Disclosure as a mediating factor. The research is grounded in agency theory, stakeholder theory, and legitimacy theory, focusing on how board diversity and Sharia compliance influence corporate governance and financial performance, specifically in the context of Islamic banking. The study utilizes a sample of Islamic commercial banks listed with Bank Indonesia. Data from the banks' annual reports and financial statements between 2013 and 2023 are analyzed using a panel data regression model. Multi-Group Analysis (MGA) is employed to test the moderating effects of Sharia compliance on the indirect relationships between board diversity and ROE, mediated by zakat disclosure. The results show that Sharia compliance moderates the relationship between the diversity of the Board of Directors and ROE, with zakat disclosure acting as a mediator. However, Sharia compliance does not moderate the relationship between the diversity of the Board of Commissioners and Sharia Supervisory Board with ROE, as mediated by zakat disclosure. The research provides insights for Islamic banks, highlighting the importance of Sharia compliance and board diversity in enhancing financial performance through zakat disclosure. The findings can inform regulators and practitioners in improving corporate governance practices within Islamic financial institutions. This study contributes to the literature by offering new evidence on the role of Sharia compliance in the governance-performance relationship, particularly the indirect effects through zakat disclosure, and how this dynamic operates within the unique framework of Islamic banking.

Can the Inclusiveness of Foreign Capital Improve Corporate Environmental, Social, and Governance (ESG) Performance? Evidence from China

Foreign direct investment (FDI) has become an important factor influencing corporate operational strategies, yet the impact of its inclusiveness on corporate environmental, social, and governance (ESG) performance remains unclear. In this study, the correlation of city-level FDI inclusiveness with corporate-level ESG performance was investigated based on data from 1258 Chinese A-share listed companies between 2011 and 2021. The effects of FDI inclusiveness on corporate ESG performance and its underlying mechanisms were investigated. The findings indicate that an increase in FDI inclusiveness significantly improves corporate ESG performance. Additionally, the moderating role of corporate competitive advantage and urban entrepreneurial vitality was analyzed, and the findings indicate that an increase in urban FDI inclusiveness significantly improves corporate ESG performance. Managerial green attention and corporate innovation capability play intermediary roles in the overall impact, with the total impact being positively moderated by investor attention. Furthermore, the influence of FDI inclusiveness on corporate ESG performance exhibits significant heterogeneity resulting from variations in digital policies, environmental policies, and ownership structures.

Mandating Women Board Members in Sport Organizations: Change via Coercive Institutional Pressure

Boosting board representation of women redresses structural unfairness and improves corporate governance and performance. The Change Our Game initiative, running over 3 years statewide in Victoria, Australia, mandated 40% representation of women on state sport boards. At the start, only 44% of state sport boards had 40% women representation; by the mandate deadline, this had increased to 93%. Using an institutional theory lens, the authors qualitatively analyzed four stakeholder groups: mandators, policy champions, operationalists, and mandate targets. Stakeholder sentiments were analyzed pre- and postmandate deadline over 3 years. Sentiments ranged from positive to equivocation to denigration. The mandate’s coercive pressure, supported by institutional legitimacy and work to accelerate changes, led to institutional change and achieved a significant increase in women board members. Change was grounded in strong ethical and cognitive support from mandate champions. Microsocial expressions of denigration and change resistance did not prevent successful change.

Does capital market liberalization increase corporate labor income share? Evidence from China

Labor income share is crucial for maintaining social stability and promoting sustainable economic development, capturing the attention of both academics and policymakers. Existing studies focus on the impact of industry transformation and corporate operation on labor income share. Utilizing a quasi-natural experiment based on the implementation of the Shanghai–Hong Kong and Shenzhen–Hong Kong Stock Connect policies, this study identifies the causal effect of capital market liberalization on corporate labor income share in China. The results show that capital market liberalization enhances labor income share by optimizing human capital, improving corporate governance, and promoting market competition. The findings provide essential implications for advancing income distribution and optimizing the structure of China's capital market.

Corporate Governance in Nigeria: Evolution, Regulatory Frameworks and Challenges

Aims: Undoubtedly, good corporate governance is critical for economic growth and development. In Nigeria, corporate governance has undergone a considerable revolution, driven by regulatory reforms, global standards as well as the need to strengthen corporate institutions. This review explored the evolution of corporate governance practices in Nigeria and the operating environment of the Nigerian Stock Exchange highlighting the milestones, regulatory frameworks and key challenges inhibiting the corporate sector. The review emphasized the roles of the regulatory agencies including the Securities and Exchange Commission (SEC), Financial Reporting Council of Nigeria (FRCN), Central Bank of Nigeria (CBN), National Insurance Commission (NAICOM), Pension Commission (PENCOM) as well as the Nigerian Communications Commission (NCC) in enforcing governance codes and principles. Study Design: It is a theoretical review that explores developments in the corporate governance landscape in Nigeria. Place and Duration of Study: The place of study is Nigeria and the duration is 1960 to 2024. Methodology: The study examined policy documents exploring different codes and mechanisms of corporate governance from inception to date. Results: While notable progress has been made through the introduction of corporate governance codes, mechanisms and regulatory oversight, challenges such as corruption, insider abuse and enforcement of governance policies remain prevalent. Conclusion: The review underscored the need for continuous improvement in corporate governance given its role in promoting transparency, accountability, increasing stakeholder awareness as well as stronger enforcement to ensure good governance practices and sustainable economic growth.

Corporate Governance: Exploring Key Concepts, Mechanisms, and Historical Evolution

Corporate governance involves several key concepts that help define its scope and purpose. Though review of key corporate governance concepts and historical evolution is widespread in the extant literature, detailed review across the globe is limited. Motivated by this dearth, this study reviewed these concepts and explored how firms rely on them to implement effective corporate governance. The study employed documentary and descriptive research methods to review concepts of corporate governance, systems, mechanisms and historical perspectives around the world. Our study discovered that understanding internal controls helps ensure compliance, minimize risks and safeguard the firm’s assets. Similarly, the study discovered that executive compensation structures help align management interests with shareholder value and external oversight through auditing and regulation which provides an unbiased assessment of the firm’s financial reports. Our historical perspective of corporate governance highlighted significant milestones that have shaped its evolution. Importantly, these include reports and acts aimed at addressing corporate scandals and improving governance practices. We also discovered that to improve corporate governance standards worldwide, multilateral organizations like the Organisation for Economic Cooperation and Development (OECD) among others have played a number of roles in developing international guidelines and codes of best practice. Further, the study explored the dynamic nature of corporate governance in response to evolving economic, social and technological trends. The study concluded that understanding the concepts, systems, mechanisms and historical perspectives of corporate governance is essential for firms and stakeholders to maintain transparency, accountability and sustainable performance.

Government green procurement and corporate ESG performance

This study utilizes data from China's A-share listed companies from 2009 to 2022 and manually collects government green procurement lists published on the Chinese government procurement website. By matching this data with listed companies, we employ a multi-period Difference-in-Differences (DID) model to examine the impact of a firm's inclusion in government green procurement lists on its Environmental, Social, and Governance (ESG) performance. We find that government green procurement significantly improves firms' ESG performance. In the mechanism analysis, we find that executive green perceptions and media and analyst attention amplify the positive impact of government green procurement on firms' ESG performance. Through the heterogeneity analysis, we find that government green procurement promotes ESG performance more significantly when the listed company is a state-owned enterprise, and this promotion is more obvious in central state-owned enterprises. In addition, we find that government green procurement enhances ESG performance more significantly when the company is located in a region with higher levels of market integration. Further research find that government green procurement effectively inhibit “greenwashing” behavior and reduce the probability of negative events. Our findings provide important micro-empirical evidence for understanding the effects of market-based policy instruments on corporate ESG performance and contribute positively to the practice of improving corporate governance capabilities.

Intelligent manufacturing, auditor selection and audit quality

PurposeThe purpose of this paper is to examine the influence of intelligent manufacturing on audit quality and its underlying mechanism as well as the variation in this influence across different types of organizations.Design/methodology/approachThis research utilizes a difference-in-differences (DID) method to examine how enterprises that apply intelligent manufacturing choose auditors and impact their audit work. The study is based on 15,228 observations of Chinese-listed A-shares from 2011 to 2020.Findings(1) There is a strong correlation between intelligent manufacturing and audit quality. (2) This positive correlation is statistically significant only in state-owned enterprises (SOEs), those that have steady institutional investors and where the roles of the CEO and chairman are distinct. (3) Enterprises that have implemented intelligent manufacturing are more inclined to employ auditors who possess extensive industry expertise. The auditor's industry expertise plays a crucial role in ensuring audit quality. (4) The adoption of intelligent manufacturing also leads to higher audit fees and longer audit delay periods.Practical implicationsThis paper validates the beneficial impact of intelligent manufacturing on improving corporate governance. In addition, it is recommended that managers prioritize the involvement of skilled auditors with specialized knowledge in the industry to ensure the high audit quality and the transparency of information in intelligent manufacturing enterprises.Originality/valueThis study builds upon previous research that has shown the importance of artificial intelligence in enhancing audit procedures. It contributes to the existing body of knowledge by examining how enterprise intelligent manufacturing systems (IMS) enhance audit quality. Additionally, this study provides valuable information on how to improve audit quality in the field of intelligent manufacturing by strategically selecting auditors based on resource dependency theory.

Seeing is believing: Do face‐to‐face meetings between independent directors and investors enhance corporate ESG performance?

AbstractThis article explores the topic of whether face‐to‐face communication between independent directors and investors can help them obtain firm‐specific information and promote management to improve corporate environmental, social, and governance (ESG) performance. Our findings revealed a notable positive correlation between the frequency of independent directors attending shareholder meetings (IDASM) and ESG performance. The underlying mechanism for this correlation is that IDASM increases investment in research and development (R&D) and green patent applications, which can drive long‐term firm value. Further analysis reveals that independent directors attending annual shareholder meetings can more effectively enhance a company's ESG performance. Independent directors attending shareholder meetings also exhibits a more noticeable impact on improving corporate governance performance than environment performance and social performance. The effect becomes more pronounced when independent directors possess an accounting background, have shorter tenures, when the meetings attended by more minority shareholders, the degree of enterprise information asymmetry is high. The research results have reference significance for improve the information disadvantage position of independent directors, restrain short‐sighted behavior of management, and improving the role of shareholder meetings in protecting investor interests.

Common Institutional Ownership and Auditor Risk Response

Based on the data of China's Shanghai and Shenzhen A-share listed companies from 2010 to 2021, this paper investigates the relationship between a company's common institutional ownership and auditors' risk response behavior. The study shows that common institutional ownership drives auditors to increase audit investment and audit fees, which supports the collusive fraud effect. Further analysis reveals that the effect of common institutional ownership on auditor risk response behavior is more pronounced in firms with a higher degree of industry competition as well as in state-owned enterprises, and that Big Four auditors will be more sensitive to the collusive fraud effect of common institutional ownership and respond to this risk mainly by increasing audit investment. This paper not only enriches the research literature on the factors influencing auditors' risk response behavior and the economic consequences of common institutional ownership but also sheds light on how to improve corporate governance and regulate the market order in practice.

SCENARIO FORECAST OF THE IMPLEMENTATION OF THE DIGITAL MULTILEVEL MODEL OF TRANSPARENCY OF FINANCIAL RELATIONS

The study aims to develop and evaluate scenarios for implementing a digital multi-level financial and economic relations transparency model, which covers public, corporate, and personal finances. The study aims to identify key factors affecting the level of transparency, assess the consequences of implementing the model, and develop strategic recommendations to improve the efficiency of financial resource management and strengthen trust between market participants.The study's main results include the definition of three model development scenarios: optimistic, pessimistic, and realistic. Each scenario considers the specifics of public, corporate, and personal finance and reflects different levels of influence of key factors such as technological readiness, government support, and market participants' adaptation to changes. The implications of each scenario were assessed, including the potential benefits, risks, and challenges associated with implementing the model at different levels of finance.The study's main conclusions confirm that the digital multi-level model of transparency is an effective tool for increasing the transparency of financial and economic relations, reducing risks, and improving management efficiency. Implementing the model contributes to increasing trust in state institutions, improving corporate governance, and protecting the rights of consumers of financial services. Scenario forecasting makes it possible to adapt the model's implementation strategies to the changing conditions of the external environment, which contributes to its stability and successful integration into the financial system.The study also identifies directions for further research, including assessing the impact of individual digital technologies, developing new methods for monitoring transparency, and exploring barriers and incentives for implementing the model across industries and regions.

FISCAL ASPECTS OF ESG BUSINESS DEVELOPMENT CONCEPTS

The subject of the study is the fiscal aspects of the ESG concept of business development. Methodology. The study uses general scientific methods, in particular, theoretical generalisation, methods of analysis and synthesis and statistical analysis, as well as the graphical method to visualise the results of the study. The purpose of the study is to analyse the strategic guidelines of tax policy through the prism of the ESG concept. Conclusion. The fiscal aspects of the ESG concept are an important element in understanding its impact on business. They include various tax incentives and mechanisms that promote the implementation of ESG standards and take into account the consequences of non-compliance for businesses. In particular, fiscal policy includes tax incentives for businesses that invest in green development, support social initiatives or improve corporate governance. In a broad sense, instruments such as environmental taxes are aimed at achieving sustainable growth and economic development. Strategic tax policy guidelines under the ESG approach include encouraging investment in sustainable technologies through tax incentives for companies investing in renewable energy and environmentally friendly projects. Social initiatives are supported through tax rebates for companies that develop programmes to develop local communities and improve working conditions. Corporate governance regulations require companies to report on the environmental, social and governance aspects of their activities. Promoting the circular economy includes tax incentives for companies that implement recycling and waste reduction practices. Support for small and medium-sized businesses includes tax incentives for SMEs that implement ESG standards and easier access to green finance. International cooperation involves bringing tax policy in line with international ESG standards and participating in global tax transparency initiatives. Adaptation to climate change includes the introduction of taxes on greenhouse gas emissions and the transition to low-carbon business models. Green project financing involves the use of tax revenues to support green initiatives. Innovations in tax administration are being introduced through new technologies, and education and training include funding for ESG training programmes. These guidelines will help businesses adapt to new conditions, create sustainable value and meet modern environmental, social and governance requirements.

Buying inferior to selling: Explore the impact of transaction direction on the effects of related-party transactions

Throughout, the effects of related-party transactions (RPTs) have been a hot topic in financial markets and corporate governance research. This paper analyzes the theoretical foundation of the effects of RPTs and constructs a new indicator, the quasi-profit margin, to assess the effects of RPTs by studying their impact on the quasi-profit margin. Based on the information asymmetry between transaction parties and the information screening theory, the paper proposes the buying inferior to selling theory, systematically explaining the impact of transaction direction on the effects of RPTs. Subsequently, using panel data from Chinese A-share listed companies from 2016 to 2021, the paper constructs fixed-effects models and conducts empirical studies from both exogenous and endogenous perspectives, employing estimation methods such as high dimensional fixed effects method, two-stage least squares method, and three-stage least squares method. The research indicates that RPTs of Chinese A-share listed companies generally exhibit a tunneling effect, and the transaction direction significantly affects the effects of RPTs. The higher the proportion of RPTs conducted as sellers to the total RPTs, the smaller the overall tunneling effect of the RPTs. This study has implications for reducing the tunneling risk of RPTs and improving corporate governance for listed companies, as well as providing some references for financial regulatory authorities to identify and rectify illegal RPTs.

Can Digital Transformation Drive Green Innovation in China’s Construction Industry under a Dual-Carbon Vision?

Against the backdrop of increasing global environmental pollution and energy consumption, green innovation is necessary to achieve green transformation. As an industry with a huge demand for resources and energy consumption, the construction industry shoulders the mission of the times to promote green innovation to enhance the ability of sustainable development. Digital technology provides new opportunities for green innovation in the construction industry. However, the impacts and mechanisms of digital transformation driving green innovation have not been thoroughly studied. In this paper, 121 listed companies in China’s construction industry are selected as a sample from 2011 to 2021, and a total of 1331 annual observations are obtained, and the impact and mechanism of digital transformation on construction enterprises’ green innovation are empirically analyzed by establishing regression models. The study indicates that digital transformation can facilitate green innovation in construction companies by enhancing corporate risk-taking and improving corporate governance. Compared with non-state-owned enterprises, state-owned enterprises have more endogenous incentives for green transformation based on multiple pressures, which to some extent weakens the driving role of digital transformation. The driving effect of enterprises’ digital transformation is more significant when the intensity of regional environmental regulation is high. This paper examines how the digitization of construction enterprises can lead to new greening ideas from the perspective of green innovation. It provides an important theoretical basis and decision-making reference to support the construction industry in its digital transformation and realize the goal of “dual carbon”.

The bright side of analyst coverage: Evidence from stock price resilience during COVID-19

Understanding a firm's stock price resilience is crucial in an increasingly uncertain environment. We investigate the impact of financial analysts on a firm's stock price resilience. We find that firms in the Chinese stock market with higher analyst coverage were more resilient during the COVID-19 crisis and had lower pandemic-induced stock price declines, shorter decline and recovery periods, and higher recovery probability. This positive relationship is more prominent for firms with strong star analyst coverage and does not depend on ownership type or firm size. Moreover, analysts help firms attract attention from media and institutional investors, improve corporate governance by improving information disclosure quality (especially for private information), and reduce financial constraints, in turn, firms’ ability to absorb pandemic shocks improves. Overall, we demonstrate that financial analysts play a crucial role in shaping a firm's stock price resilience during crises, particularly for firms with strong star analyst coverage.

Entrepreneurship and Corporate ESG Performance—A Case Study of China’s A-Share Listed Companies

This paper examines the contemporary implications of entrepreneurship and utilizes panel data from Chinese A-share listed companies spanning 2011 to 2022. Based on the five aspects of Chinese entrepreneurship, namely “patriotism, courage to innovate, integrity and law-abiding, social responsibility, and international vision”, the findings suggest that fostering entrepreneurship enhances the environmental, social, and governance (ESG) performance of firms. Mechanism analysis indicates that green technology innovation, social performance enhancement, and governance capability optimization mediate this relationship. Furthermore, factors such as corporate market power, regional marketization processes, and advancements in artificial intelligence technology influence the link between entrepreneurship and ESG performance. Robust entrepreneurship equips firms to navigate environmental uncertainties, but entrepreneurship cannot improve corporate governance performance. This article elucidates the distinctive significance of entrepreneurship, expanding the institutional economics research perspective, offering practical insights for cultivating entrepreneurship and elucidating potential determinants of corporate ESG performance. This article also provides spiritual guidance for sustainable development.

Blockchain Espousal in Legal Compliance with Corporate Governance

There is much exhilaration about blockchain technology in practically every business, including financial, and significant investments are being made worldwide. In order to uncover critical criteria for blockchain espousal in corporate governance, we undertook a systematic examination of a sample of 52 articles (10 industrial and 42 academics) through a preliminary research period from 2012 to 2020. We perform textual and empirical research to build a paradigm for decentralised autonomous governance. Additionally, we relate classic corporate governance theories to blockchain espousal using this framework. Our research also focuses on how blockchain technology may be used to improve the way corporations are run, now and in the future, as well as its possible consequences. By doing a systematic study and conducting an analysis of the text, we uncovered other gaps in the earlier academic and industrial literature and common tendencies. In addition, as part of our empirical research, we are compiling a one-of-a-kind blockchain investment database to make future investment projections. In addition, in the course of and after the COVID-19 conference, we researched the many ways blockchain technology may be used to improve corporate governance. According to our findings, previous academic publications prefer to concentrate on regulation and Initial Coin Offerings (ICOs). In contrast, previous publications in the sector have focused on exchanges and cryptocurrencies. Final thoughts on the impact of blockchain technology on corporate governance from the perspectives of behaviour, law & regulatory requirements, ethical considerations and managerial practices.

Debt and the Excess Value of Diversified Firms: Evidence from Nigeria

The purpose of this study was to examine the relationship between debt and the value and excess value of diversified firms in Nigeria. This is against the background that there is no consensus on the factors that distinguish value-creating from value-destroying diversified firms. Data were collected from the annual reports of 62 diversified firms listed on the Nigerian Stock Exchange between 2008 and 2018. The multilevel generalized method of moments technique in the REndo package in the R Statistical Package was used to test the hypotheses. There is a significant positive relationship between debt and diversified firms’ value and excess value. The study and its findings are significant in several ways. First, no study has examined the relationship between debt and the value and excess value of diversified firms in the Nigerian context, and the few relevant studies have been in the context of developed countries. Second, it contributes to the literature on the valuation implications of firm diversification by providing some insight into the diversification discount often documented in the literature. These findings suggest that diversified firms’ failure to use the debt capacity that diversification creates is one reason some experience valuation discount. Third, the study employs the multilevel GMM analytical technique to control for endogeneity in the absence of valid instrumental variables. This technique has not been used in the diversification literature. The implication of the findings is that diversified firms should use the debt capacity that diversification provides to invest in positive net present value projects. The use of debt also adds a layer of corporate governance required in an environment of increased complexity and opacity associated with diversification. Increased investment in positive NPV projects and improved corporate governance through increased use of debt will enhance firm performance and value. The increased valuation of diversified firms due to debt increases the ability of diversified firms to play their developmental role in society. Investors would also benefit more from investing in diversified firms with higher debt ratios than those with lower debt ratios, all things being equal.

Does Privatization improve Corporate Governance and Profitability? Evidence from Cement Company of Northern Nigeria

The paper study how Privatization improves Corporate Governance and Profitability of Cement Company of Northern Nigeria. Data was collected from secondary sources, and the statistical tools employed in the Methodology were descriptive statistics and OLS regressions. The study aimed at bridging literature gap on studies that relate corporate governance and privatization policy in Nigeria. The results suggest that, The result suggest that, the company has lower market capitalization, private sector and foreign investors have concentrated ownership, bigger board size, lower percentage of executive directors and higher percentage of non-executive directors, Board chairmen were not the chief executives and chairmen audit committees were non-executive directors, lower workforce, higher percentage of management staff small percentage of non-management staff, lower profitability, products demand depended on government capital projects, The Company purchased 5MW power plant in 1991, macro-economic challenges such as devaluation of naira, energy sector crisis, foreign exchange rate, inflation, trade liberalization, inconsistent stabilization policies, political instability and banks’ strikes and weak private sector. Inferential result reveals that, has state ownership, percentage of management staff, percentage of non-management staff and privatization have positive and significant relationship with profitability. However, minority ownership has a negative and significant relationship with profitability. Based on these findings, the researcher arrived at the conclusion that, Corporate governance has significant impacts on profitability of Cement Company of Northern Nigerian. Even though, unfavourable macroeconomic environment militated against its efficiency. The study recommends that, government needs to introduce macroeconomic stabilization measures that will improve effective demand of cement products particularly with the problem of withdrawal of fuel subsidy in the economy. The company should, as a matter of necessity, design strategies that will; create international market opportunities, enhance security measures, cheap inputs, efficient financial and inventories management that will improve profitability post privatization.