Interests Of Shareholders Research Articles

BOARD CHARACTERISTICS AND CORPORATE PERFORMANCE: EVIDENCE FROM THE NIGERIAN OIL AND GAS COMPANIES

This study investigated how board characteristics such as board size (BOSI), board independence (BOID), board gender diversity (BOGD), and board meeting (BOMT) impact the performance of the Nigerian oil and gas sector. Seven oil and gas firms were randomly selected, and data collected on the relevant variables for ten (10) years. Data were descriptively analysed using mean, standard deviation, skewness, and kurtosis, while a panel data model was used as the estimation technique. The study found that BOSI, BOID, and BOGD positively and significantly impact the performance of oil and gas firms in the country. Though the relationship between BOMT and the performance of oil and gas firms is positive, it was not statistically significant. It is, therefore, concluded that critical attention should be paid to board characteristics as they play critical role in monitoring the company’s management, establishing strategic direction, and protecting the interests of shareholders and stakeholders. This study recommends that oil and gas firms maintain stipulated number of independent directors that could help sustain positive and significant association between board independence and performance of the sector.

ОРГАНІЗАЦІЙНІ УМОВИ КОРПОРАТИВНОГО УПРАВЛІННЯ В АГРАРНОМУ ІНТЕГРОВАНОМУ ПІДПРИЄМСТВІ

The article is devoted to the study of scientific knowledge on the general organizational conditions for corporate governance in an agrarian integrated enterprise. Based on the analysis of scientific knowledge on the conditions and features of corporate governance in integrated agricultural structures, the authors have found that relations arise not between the owners of a corporation, but between the corporation and the owners, and thus relations in the group of owners are absent or minimized. In practice, the key element of contracting is not an attempt to determine the behavior of the CEO in all possible situations, but to develop a structured system of remuneration for managers. The main goal of this operation is to find the optimal combination of different types of remuneration for top managers, which will ensure mutually beneficial interests of both shareholders and managers of the corporation. The author proves that the most effective mechanism of internal control over the activities of a corporation's management personnel is to involve shareholders in protecting their interests through agents (outsiders) who are not employees of the corporation but are vested with certain controlling powers. It is assumed that these agents will not be directly related to the operational management of the corporation, and thus they become the defenders of the interests of the owners. It is found that there is a direct relationship between agency conflicts and corporate governance mechanisms. The result of the study is the identification of positive and negative aspects of capital concentration in a corporation. This leads to the conclusion that with an increase in the manager's shareholding, the level of agency conflicts decreases. The authors propose a detailed model of corporate governance that takes into account the interests of all participants. The conflict of interests between owners and managers of a corporate structure is investigated. The peculiarities of functioning of the external mechanism of control by the financial market in the corporate governance system and their shortcomings are highlighted. The institutional factors influencing the corporate governance system of an integrated agricultural enterprise are demonstrated. Keywords: corporate governance, agricultural enterprise, integrated structure, financial market, control mechanism.

Influence of Financial Performance, Company Size and Company Age on Disclosure of Sustainability Reports in Non-Financial Companies on IDX 2019-2021

Most companies prioritize the interests of shareholders, while other parties do not receive special attention. In these conditions, many business world phenomena often ignore environmental and social problems. To support this problem, a concept is needed. This concept is called a sustainability report. The aims of this research is to analyze the influence of financial performances, firm size, and company age on the disclosure of non-financial companies' sustainability reports. This research uses a quantitative data in the form of secondary data: financial reports of companies obtained from the IDX. The sample was selected using purposive sampling method and the sample for this research includes 10 companies. This hypothesis testing uses multiple linear regression tests using SPSS version 26 software. The partial test results show that profitability has an influence on sustainability report disclosure, while firm size and company age do not influence sustainability report disclosure.

Exploring Ethical Issues in Pharmaceutical Marketing’s Strategies: A Critical Marketing Perspective

This study empirically explores the ethical issues with pharmaceutical marketing, which acts as a transgressor to increase inappropriate prescriptions from physicians. Marketing is used to safeguard the interests of shareholders and indoctrinate materialism in target audiences. The inquiry aims to critically examine the marketing strategies and make some drastic changes to put them on humanistic lines to produce salutary benefits to society and the public health sector. The inquirers deploy qualitative methods to scientifically understand the behaviors of marketers and physicians. They used the stratified purposive sampling technique to get data from those who had it. The constructivist grounded theory is used as a strategy of inquiry to explore the different concepts and ideas that are interconnected to form a social phenomenon. They conducted ten in-depth interviews with the selected samples. The researchers developed categories through initial coding and established relationships among them through axial coding. The analysis and interpretation of data produce a single theme, "Deceptive Marketing Strategies," which has two main categories. Each of them has three sub-categories: (unnecessary prescriptions, drug incentivization, unethical practices) and (non-adherence to clinical practice guidelines, physicians’ materialistic approach, and indiscriminate use of antibiotics) respectively. The consequence of these unethical practices is the emergence of antibiotic resistance. The study found transgressions in pharmaceutical marketing and its deceitful and unscrupulous promotional strategies, which have a compounding effect on the misuse and abuse of pharmaceuticals.

The impact of corporate social responsibility on the performance of mergers and acquisitions: European evidence

Corporate social responsibility (CSR) and its impact on corporate value has been widely debated. Two opposing views have emerged: stakeholder value maximization and shareholder expense. In this study, we explore these perspectives within the realm of mergers and acquisitions (M&A), one of the most important and far-reaching corporate decisions. Specifically, we examine whether the CSR of the acquiring company impacts M&A performance by analyzing a European sample of 1549 M&A deals announced between 2005 and 2019. Our findings indicate that CSR has a negative effect on stock performance around the M&A announcement, which aligns with the shareholder expense view. We argue that in Europe, where corporate social responsibility (CSR) is already elevated as a result of EU policies and regulations, additional CSR investments may not align with the best interests of shareholders. This serves as an illustration of a Too-Much-Of-A-Good-Thing Effect. However, we also see that CSR has no significant effect on operating performance, which may indicate a financial bias of capital market participants or suggests that investors weigh their own cost-benefit considerations when assessing acquirers' CSR performance.

Relationship Between Ownership Concentration, Firm Size, and Earnings Quality in Indonesian Companies

This study aimed to investigate the influence of ownership concentration and firm size on earnings quality in Indonesian companies. Research about the influence of ownership concentration and firm size on earnings quality still provides mixed results. Therefore, it became important to conduct research about it, especially in the context of Indonesian companies. This study used the alignment effect hypothesis as a basis for hypothesis development. The sample of this study consists of 92 Indonesian companies from 2013–2018, with a total of 522 observations. The data analysis technique is multiple regression analysis. The result of this study showed that ownership concentration had a positive influence on earnings quality. In contrast, firm size had no influence on earnings quality. In conclusion, the result of this study supported the alignment effect hypothesis, stating that the interest of the majority shareholder is aligned with that of the minority shareholder, therefore improving earnings quality.

The practice of applying the squeeze-out procedure and its impact on the introduction of escrow accounts as a new type of bank accounts in Ukraine

The article deals with the peculiarities of the squeeze-out procedure in Ukraine within the framework of European integration and implementation of European corporate governance standards. The author analyzes the positions of European courts on the legality and constitutionality of the squeeze-out procedure in the context of violation of minority shareholders’ property rights. The author ivestigates the grounds for declaring squeeze-out unconstitutional in Georgia, in particular, the procedure for determining the price of shares, that resulted in an imbalance of interests of the participants in the procedure. Taking into account the Court’s position, a new entity was involved in the process of share buyback – a court which, upon the application of the majority shareholder, appoints an independent expert or a brokerage company to price the shares and fixes the price of shares and the date of their compulsory buyback in its decision. It is found out that the main interests of a majority shareholder in the squeeze-out procedure are to reduce administrative costs of holding a general meeting, to get rid of passive shareholders and to minimise opposition from minority shareholders, and to avoid free-ridering. At the same time, the interests of minority shareholders in the implementation of this mechanism are to obtain favourable terms from the sale of the shareholding. It is found out that most of the lawsuits of minority shareholders in Ukraine were related to the underpricing of alienated shares. The method of determining the price of shares was to establish the market value of the company’s shares by a valuation entity. However, due to the lack of effective regulatory framework for this procedure, such a price often did not meet the fairness criterion. The author examines the position of the Commercial Court of Cassation as part of the Supreme Court of 2022 regarding the understanding of the fair price of shares, which means not a specific amount of money (value), but compliance by the issuer (supervisory board) with the procedure for determining the market value of shares provided for by law. The author analyzes the implementation of an escrow account contract into the legislation of Ukraine. The author clarifies the procedure for paying the price of shares to minority shareholders by transferring funds to the bank where the claimant has opened an escrow account in accordance with the Law of Ukraine “On Joint Stock Companies”.

Analysis of the Impact of Dual Shareholding Structures on the Governance of Technology-Based Firms

As a matter of fact, since the technological revolution, the use of dual shareholding structures has become more and more widespread in technology-based companies as the number of technology-based companies has increased. These start-ups with dual shareholding structures have grown rapidly and have been able to grow into large corporations in a relatively short period of time. On this basis, dual equity structure seems to be a perfect match for many technology-based companies. In order to explore the positive effects and risks of dual equity structure on the corporate governance of technology-based companies, this paper investigates, studies as well as analyzes the issues. According to the analysis, it is concluded that dual equity structure is favorable to consolidate the founder's control over the company, expand financing, but harms the interests of small and medium-sized shareholders, and is detrimental to the equality of shareholders. Overall, these results shed light on guiding further exploration of firm governance.

A Study of Controlling Shareholds' Tunneling Behavior

Since the establishment of the Shanghai Stock Exchange and the Shenzhen Stock Exchange in the 1990s, China's capital market has emerged. Over the years, the domestic capital market has achieved certain results, but negative phenomena have gradually emerged, and the problem of tunneling is one of the representative issues. A concentrated ownership structure is prone to breed tunneling behavior, which results in a decrease in company value, damage to the interests of minority shareholders, and a reduction in market efficiency. This paper, through the study of relevant literature, summarized the behaviors of controlling shareholders' asset-stripping companies that harmed people's interests, listed different methods used by controlling shareholders for asset stripping, explored the causes of controlling shareholders' asset-stripping behavior, and examined the consequences of controlling shareholders' asset stripping methods.

Principles of Good Corporate Governance in Conflict of Interest Transactions between Public PT and Minority Shareholders

The research entitled Good Corporate Governance Principles in Conflict of Interest Transactions Between Public Limited Companies and Minority Shareholders aims first to know and understand and analyze the arrangements related to the implementation of good corporate governance principles towards minority shareholders. Second, to know, understand and analyze conflict of interest transactions that occur between publicly listed public limited companies and minority shareholders. The research method used in this thesis uses Normative research methods which are library research, namely research on laws and regulations and literature related to the material discussed. Based on the research results, it can be concluded First: the principles of good corporate governance in conflict of interest transactions between publicly listed public limited companies and minority shareholders. Decisions in the GMS made by the majority are not entirely fair to minority shareholders. Conflicts of interest that occur in the Company are often detrimental to the interests of minority shareholders. Second: shareholder protection is still not properly implemented by the board of directors because it violates the principles of fiduciary duty and statutory duty. This can be seen from the violation of the rights of minority shareholders, namely the failure to conduct an assessment, the failure to disclose information and the failure to hold an Independent GMS. On the other hand, OJK through its authority has protected the interests of minority shareholders by imposing administrative fines.

Board independence, CEO tenure, and private firm performance in Nairobi, Kenya

Governing board members includes a mix of non-executive and executive members who seek the best interests of shareholders. Non-executive board members relay on independence to execute their responsibilities and enables better firms’ performance. The independent board members are vetted in by shareholders to reduce agency problems. The study aims to establish how Chief executive officer tenure influence independent board members on decision making to enhance firm performance. Agency theory and stewardship theory were utilized in the study. The explanatory research design was used 371 private firms were the sample size. Data was collected using structured questionnaires. Hierarchical multiple regression models were used to test for direct effect and moderation effect. According to the findings, board member independence is critical for monitoring the CEO and reducing principal-agent conflict, hence enhancing business performance. The independence of board members is critical for organizations to remain inventive and competitive in order to improve firm performance.

Does parenting daughters increase corporate cash dividends? Evidence from Chinese family firms

Research in the social sciences has shown that interactions with biological daughters are potent catalysts for instilling and nourishing parents' social values, preferences, and behaviors. Drawn on the female socialization hypothesis, we investigate the impact of ultimate controlling owners’ offspring gender on corporate dividend policy. Based on data from Chinese family-owned listed companies, our empirical results document a “daughter effect” in cash dividends. That is, ultimate controlling owners shaped by daughters are more altruistic and less likely to exploit the interests of minority shareholders, which leads to more dividend activities. The results remain robust when considering endogeneity. Moreover, the “daughter effect” is more pronounced when the ultimate controlling owner is male, has a higher education background, and has been influenced by the daughter for a longer time. This paper contributes to the growing literature on female socialization and the determinants of dividend payments.

Implementasi Penerapan Good Corporate Governance Pada PT. Bank Muamalat KCP Stabat

This research explores the implementation of Good Corporate Governance (GCG) at Bank Muamalat KCP Stabat. The findings show that the bank has succeeded in establishing a strong corporate governance structure, with the active involvement of the supervisory board and audit committee, which reflects a commitment to transparency and accountability. Bank management is considered as a reliable agent, in accordance with the principles of Agency Theory, creating positive tendencies in policies that support the interests of shareholders. In the dimensions of Stewardship Theory, banks actively integrate the interests of customers, employees and society into their GCG policies, showing the importance of a corporate culture that supports management's stewardship role. The success of GCG implementation is realized in achieving compliance with regulations and standards, with transparent financial reports. Bank Muamalat KCP Stabat, through its GCG practices, has a positive impact on shareholders and other stakeholders.

A comparison of analysts’ and investors’ information efficiency of corporate social responsibility activities

Purpose This paper aims to examine the extent to which sell-side analysts efficiently incorporate firms’ corporate social responsibility (CSR) activities into their earnings forecasts. In addition, this paper also investigate the CSR information efficiency of analysts vis-à-vis that of investors. Design/methodology/approach This paper measures CSR activities by using CSR strength and CSR concern scores from the Morgan Stanley Capital International Environmental, Social and Governance database. This paper uses analysts’ earnings forecast errors and dispersion as proxies for their information efficiency. To compare the CSR information efficiency of analysts to that of investors, this paper uses the Vt/Pt ratio, which is the equity value estimates inferred from analysts’ earnings forecasts (a proxy for analysts’ CSR information efficiency) to the stock price of the focal company (a proxy for investors’ CSR information efficiency). Findings The regression analysis indicates that analysts’ earnings forecasts are optimistically biased and more dispersed for firms with positive CSR activities. The paper also finds that analysts’ forecasts are more optimistically biased than investors in interpreting CSR activities. Practical implications The lack of standardized protocols in CSR reporting and activities has raised the risk of mispricing by analysts, threatening the stability of sustainable investments. This paper suggests that regulators and standard-setters should establish a uniform framework governing firms’ CSR activities, along with their reporting and measurement, to ensure more consistent and reliable evaluations of CSR practices. Social implications Analysts’ mispricing of CSR activities may distort sustainable investing, as it can overly focus on the positive impacts of stakeholder theory, overlooking agency theory’s warnings about managerial self-interest. Investors need to assess CSR efforts with a dual perspective, acknowledging their societal value but also examining their alignment with shareholder interests. Originality/value To the best of the authors’ knowledge, this research is the first to assess the efficiency of analysts versus investors in processing CSR information amidst growing sustainable investment interests. Furthermore, building on Dhaliwal et al. (2012), which found that voluntary CSR disclosures correlate with more accurate analyst forecasts, this research provides fresh perspectives on the evolving nature of how analysts assimilate CSR information over time.

Impact of Outside Blockholders Over Link between Independent Directors and the Normal and Abnormal Related Party Transactions

This study examines the effect of independent directors on related sales and related purchases using the normal and abnormal values from 2003 to 2022 of the total sample of 13,789 firms representing 89% of the total Taiwanese listed firms. As a second tier of independent external mechanisms, impact of outside blockholders, on the association between independent directors and related party transactions is examined. This study hypothesizes that the level of related party transactions varies with independent directors. Further, the connection between related party transactions and independent directors varies with the impact of outside blockholders. This study finds that a greater number of independent directors is significantly linked with lesser levels of normal related sales, lower levels of normal related purchases, and higher levels of abnormal related purchases. Thus, the hypotheses are confirmed. This study also finds that the extent of impact of outside blockholders supports a lower level of normal related purchases but higher abnormal related purchases, thus, the hypotheses are supported. Implications include that firms should strengthen their monitoring mechanisms to oversee both normal and abnormal related transactions, emphasizing the importance of regular board reviews. Additionally, the influence of outside blockholders on purchasing decisions underscores the need for companies to engage with these stakeholders to align strategies with shareholder interests.

Profits Before Patients? Rethinking the Shareholder Primacy Model of Corporate Governance for Health Care

Concerns about the ballooning cost of health care and medicine are at the heart of perpetual debate about the corporate accountability of health care corporations. This essay critiques the shareholder primacy model of corporate governance for health care enterprise using the American pharmaceutical company Merck as a small sample case study that might be indicative of broader corporate governance issues generally, that deserve further research. In 2009 an Australian Federal Court class action was led by Merck product patient users against Merck’s Australian subsidiary, for allegedly failing to withdraw the drug Vioxx from the market. The patient group claimed that Merck insiders knew Vioxx increased the risk of heart attacks, yet persisted to manufacture and market the drug to secure profits for shareholders. At first instance, the trial judge awarded damages in favor of the original plaintiff claimant, finding that the drug had caused the claimant's alleged heart risk injury. However that decision was overturned on appeal, with further leave to appeal to the High Court of Australia being refused on 11 May 2012. Simultaneously, settlements between the company and other groups of claimants involving the same drug, have been and are continuing to be reached in other jurisdictions around the world in 2013.The case more generally evokes a familiar normative question of to whom a duty of care is and should be owed by health care corporate decision makers: shareholders, patients, or both? This paper briefly answers that question by critically analysing the market impact of the shareholder primacy model of corporate governance, on end user health care patients by transforming them from patients into consumers. The paper then constructs a potential solution in the form of an evolved shareholder primacy model of corporate governance which encompasses a value duty of virtue to shareholders that potentially meets the interests of both shareholders and patients.

Corporate governance and board conflict solution: The case of Lebanese family healthcare businesses

This study examines the intricate relationship between corporate governance mechanisms and the performance of family-owned hospitals in Lebanon. Specifically, it examined the impact of various governance factors, including board size, independence, duality, meeting frequency, and ownership structure, on the financial performance of these hospitals. By employing agency theory as the conceptual framework and qualitative methodology, which involves interviews with managers from three distinct hospitals in Lebanon, this study sheds light on the dynamics of conflicts between shareholders and managers within the context of family-owned hospitals. This study also explores how corporate governance mechanisms can effectively mitigate these conflicts and enhance shareholder value. The significance of this study lies in its contribution to the understanding of corporate governance practices within the Lebanese healthcare sector, offering valuable insights that extend to developing countries across the Middle East and North Africa (MENA) region. These findings suggest that fostering a more autonomous board structure can play a pivotal role in controlling top management and aligning the interests of shareholders and managers within the Lebanese healthcare landscape. Through a nuanced exploration of governance dynamics and their implications for financial performance, this study underscores the importance of robust governance frameworks for ensuring the sustainable success of family-owned hospitals. Ultimately, by elucidating the mechanisms by which governance practices influence organizational outcomes, this study offers practical implications for healthcare practitioners, policymakers, and stakeholders seeking to enhance governance effectiveness and performance in similar contexts.

The “No Reflective Loss” Principle: Towards to the “Priority Rule”

This essay discusses how the “no reflective loss” principle has developed and its current problem. “No reflective loss” principle, introduced in Prudential Assurance Co Ltd v Newman Industries Ltd (No.2), developed in Johnson v Gore Wood & Co, is gradually becoming unreasonable, since the application of it has expanded to an exaggerated extent. In the case Sevilleja v Marex Financial Ltd, “no reflective loss” principle was been narrowed, but its fundamentalism brought other issues. Because of the poor policy considerations of “no reflective loss” principle, cases concerning reflective loss are more suitable to be resolved using the “priority rule”. The "Priority rule" not only protects the autonomy of corporate governance, but also protects the interests of shareholders who are overlooked in "no reflective loss" principle and also prevents the problem of double recovery, so the future of this principle is brighter than that of “no reflective loss.” Although this essay has discussed the "priority rule" mainly in two scenarios, there are certainly some refinements to applying it in practice. Further studies should be carried out on a practical level, relating to specific cases, by implementing this principle in existing cases.

Banking Governance: An Internal Mechanism Approach

The banking governance is determined by a set of mechanisms which get at once the external level which that interns to the organization. These mechanisms conjugate to guide the behavior and the decisions of the leader so that he works in interest of stockholders as well as that of the organization. We suggest in this article focusing on the internal mechanisms of the governance through a presentation of the main works which treat with this subject and in case those who approach the systems of control and incitement of the leader set up by the board of directors within banks.

Stock Market Development and Economic Growth of Nepal

The development of Nepal’s stock market and economic growth are examined in this study since several factors, including stock market development, affect economic growth. The stock market development indicators are market capitalisation, trading turnover, NEPSE index, gross capital formation, and gross national savings. This research is based on secondary data (1995 to 2022) extracted from the Quarterly Economic Bulletin of Nepal Rastra Bank in mid-July 2023. The econometric methods such as the Johnson cointegration test, Granger causality test, and VAR model were used to assess the nexus between the stock market development and economic growth in Nepal. Long-term cointegration has been observed between the stock market development indicators such as gross national savings, market capitalisation, gross capital formation, trading turnover, stock market index, and economic growth. Likewise, economic growth and stock market development are shown to be causally related in a unidirectional manner by the Granger causality test. It concludes that stock market development matters for economic growth in the short and long run. The regulatory authority may adopt an appropriate policy for sustained growth of the stock market through (i) improving disclosure and transparency, (ii) enhancing investor awareness and education, (iii) safeguarding the interest of shareholders, (iv) diversifying the trading opportunities, and (v) maintaining the macroeconomic stability.