Level Of Corporate Governance Research Articles

Corporate governance, technological innovation, and corporate performance: Evidence from China

Corporate governance plays an important role in achieving high-quality economic development and sustainable corporate development. In recent years, as listed companies face increasing challenges in social responsibility issues such as environmental pollution and financial fraud, corporate governance has received widespread attention from academics and practitioners. In particular, technological innovation has attracted much attention to the development of enterprises. This paper also explores the intermediary mechanism of technological innovation based on the output measurement method of technological innovation. This study selected data from companies listed on the A-share main board of the Shanghai and Shenzhen Stock Exchanges in China from 2012 to 2022, aiming to explore the relationship between corporate governance and corporate performance. At the same time, we further analyzed the impact of corporate governance on corporate performance based on the mediating role of technological innovation. The research results show that equity balance degree, board size, and executive incentives all have a positive impact on corporate performance. Technological innovation has a certain mediating effect on independent variables (equity balance degree, board size, and executive incentives) and corporate performance. This study clarifies the controversy about the relationship between corporate governance and corporate performance and deepens the understanding of this relationship. It also provides empirical support for listed companies to pay attention to and improve corporate governance levels and enhance innovation capabilities. By exploring the interplay between governance mechanisms, innovation processes, and performance outcomes, researchers can gain a deeper understanding of how organizations can leverage governance practices to drive innovation-led growth and sustainable success.

How does digital transformation affect corporate resilience: a moderation perspective study

ABSTRACT In the context of the accelerated development of the digital economy and the implementation of the innovation-driven development strategy, does digital transformation inevitably improve corporate resilience? Based on measuring the moderation of corporate digital transformation, this paper examines the dynamic relationship between digital transformation and corporate resilience using the theory of new structural economics and double machine learning methods. The results show that the more moderate the digital transformation, the higher the level of corporate resilience. Agency costs, financing constraints, and irrational decision-making bias constitute important influencing mechanisms. Further analysis reveals that the resilience-enhancing effect of moderate digital transformation is more pronounced among corporations with high levels of corporate governance, low levels of information asymmetry, more diverse executive backgrounds and in manufacturing corporates. The relevant findings of this paper provide guidance and decision-making references for promoting the high-quality development of corporates.

The Job Satisfaction Variation Due to Socio-Demographic Characteristics: An Indicator for CSR And Alignment with UN SDGs? Evidence in Healthcare Field in Turkey

This study seeks to examine the job satisfaction among different demographic groups of employees in the healthcare sector in Turkey. The study seeks to broaden the scope of job satisfaction by emphasizing its role as an indirect measure of the positive principles and practices that contribute to maintaining a high level of Corporate Social Responsibility (CSR) in line with the United Nations Sustainable Development Goals (UN SDGs) for groups of employees. This paper employed a survey to gather primary data. The survey forms utilized comprise two distinct sections. The initial section of the survey forms was determining the socio-demographic characteristics of the participants. The second portion of the poll utilized the Minnesota work satisfaction survey to measure job satisfaction. T-test and ANOVA are employed to detect disparities among separate employee categories. The findings suggest that there are disparities in the job satisfaction levels among employees belonging to at least two distinct groups with varying educational backgrounds (p > 0.040). Upon analyzing the job satisfaction of the staff based on their job positions, a notable disparity in job satisfaction was observed among at least two distinct employee groups in various roles (p > 0.009). No significant disparities in job satisfaction were seen across the employee groups based on age, marital status, parenting status, work experience, and monthly salary. Simultaneously, the paper establishes a connection between the job satisfaction and a more advanced level of corporate governance focused on CSR and aligned with the UN SDGs. This paper aims to explore the potential use of work satisfaction as an indicator in evaluating CSR and its alignment with the UN SDGs in the future. Received: 17 January 2024 / Accepted: 30 April 2024 / Published: 5 May 2024

Environmental Violations and Stock Price Crash Risk: Evidence from Chinese Listed Heavily Polluting Companies

ABSTRACT This paper examines the relationship between environmental violations and stock price crash risk, using the sample of Chinese A-shared listed firms and a comprehensive range of Chinese listed heavily polluting companies covering 2012 to 2021. We provide strong and robust evidence that environmental violations significantly increase future stock price crash risk for Chinese listed heavily polluting companies. Through the mechanism of internal control, our paper finds that environmental violations lead to the weakening of internal control, thereby exacerbating future stock price crash risk. We further find that the legal environment has a negatively moderating impact on the relationship. Additionally, heterogeneity analysis shows that the influence of environmental violations on stock price crash risk is more prominent when firms are smaller, have non-state ownership, and have a lower level of corporate governance and external monitoring.

Can retail investor activism inhibit corporate greenwashing behavior: Evidence from investor interactive platforms in China

Different from developed markets, China capital market is dominated by retail investors. In the digital age, retail investors are increasingly making their voice heard through online channels, which is a new form of shareholder activism in China. This paper examines the association between retail investor activism (RIA) and corporate greenwashing behavior (CGB) using the data of question raised by investors on official investor interactive platforms (IIPs) in China. We discover that the RIA on IIPs is negatively associated with CGB. The mechanism analysis shows that the RIA helps to curb CGB through promoting information transparency and improving internal corporate governance level. We also find that the association between RIA and CGB is strengthened in regions with weaker green finance and environmental regulation, and in industries with weaker product market competition. This indicates that the RIA, a type of private governance, can serve as a substitute to the governance effect of the government and the product market. Further studies show that RIA on unofficial channels such as stock forums or search engines can promote CGB, contrary to the conclusion about IIPs. Our research suggests that strengthening the rights of retail investors helps to reduce CGB and demonstrates the importance of official channels in the governance role of RIA in emerging markets.

Multiple large shareholders, earnings management, and operating risk: Empirical evidence from China

This study uses the annual financial data of Chinese A-share listed firms from 2010 to 2020 to investigate the relationship between multiple large shareholders (MLS) and earnings management (EM). After analyzing the samples using the Ordinary Least Squares (OLS) model and endogenous switching regression (ESR) model, the empirical results show that the presence of MLS can increase corporate EM activities and the MLS have a significantly positive effect on EM in both the treatment and control groups. In addition, this conclusion still holds after conducting multiple robustness tests. The cross-section analysis shows that the external audit supervision quality, institutional shareholders, and the uncertainty of the external economic environment have significant impacts on the baseline model results. Lastly, mediation effect analysis shows that the presence of MLS increases the corporate operating risk through EM activities. The conclusions of this paper are critical for policymakers to supervise China’s capital market, improve the level of corporate governance of China’s listed firms, and further promote reform of ownership structure.

A Study of the Relationship between Short-Selling and Audit Quality

This paper utilizes a least squares method to discover the influence of the short-selling mechanism implementation on audit quality, based on a sample of A-share listed companies from 2010 to 2022. It finds that the implementation of the short-selling mechanism encourages auditors to enhance audit quality. Further analysis reveals that the short-selling mechanism has a stronger impact on improving the audit quality of privately held businesses and those with a lower level of corporate governance. The paper’s conclusions offer empirical support for China’s full implementation of the shorting mechanism and the improvement of audit quality. The research findings also enrich the research on this topic in the field of auditing.

Digital transformation and supply chain efficiency improvement: An empirical study from a-share listed companies in China.

This article thoroughly examines the influence of digital transformation on the efficiency of corporate supply chains. As global economic integration accelerates and technological innovations deepen, digital transformation has become key to enhancing core corporate competitiveness. This research, utilizing data from A-share listed companies in China between 2007 and 2022, analyzes how companies improve supply chain efficiency through digital transformation. Furthermore, the study establishes a theoretical framework that demonstrates how digital transformation facilitates supply chain efficiency from the perspectives of internal governance and external competition. The research indicates that digital transformation plays a key role in significantly enhancing supply chain efficiency. Furthermore, the results of the mechanism analysis confirmed that digital transformation contributes to enhancing corporate supply chain efficiency by improving the level of corporate governance and the degree of market competition. The study also finds that the effect of digital transformation on supply chain efficiency varies with different corporate backgrounds, indicating its heterogeneous impact. Lastly, an analysis of economic consequences shows that the increased supply chain efficiency resulting from digital transformation can reduce future external transaction costs, strengthening the company's market position and financial performance. This research provides strategic guidance for firms to develop robust strategies amid the digital wave and offers strong policy recommendations for promoting digital supply chain management and enhancing market adaptability.

Research on the Influence of Equity Structure on Corporate Performance

Equity structure constitutes a crucial component of corporate internal governance. A scientifically and reasonably structured equity system aids in enhancing the level and efficiency of corporate governance. Through empirical analysis of data spanning from 2013 to 2022, the study aims to verify the influence mechanism of equity structure on corporate performance. The results indicate that enhancing equity concentration and balance positively impacts corporate performance, with this effect persisting over time. Consequently, optimizing the degree of equity concentration, shareholder types, and the board of directors’ structure can assist enterprises in maximizing long-term value.

АНАЛІЗ ЕФЕКТИВНОСТІ КОРПОРАТИВНОГО УПРАВЛІННЯ АГРОПРОМИСЛОВИМИ ПІДПРИЄМСТВАМИ

The article assesses the efficiency of corporate governance in the largest integrated enterprises of the agricultural sector of Ukraine. The research was conducted using the methods of induction and deduction, comparative analysis and theoretical generalization. The main provisions of large enterprises of the agricultural sector of Ukraine and their experience in implementing corporate governance were studied. The author has developed algorithms (methods) for assessing the corporate governance rating with the relevant classification areas of assessment and indicators for assessing the relevant areas, a four-level rating scale for assessing the level of formation of the corporate governance institution in integrated agricultural formations (agroholdings) of Ukraine. It is established that the main characteristic components of the assessment of the level of corporate governance are: supervisory board, board of directors, committees, corporate secretary, audit committee, charter, etc. It is determined that agriholdings whose shares are listed on international stock exchanges meet the highest level of corporate governance standards, the level of which reaches the maximum value. It is also established that this level is ensured mainly by compliance with corporate governance standards introduced by international stock exchanges (Warsaw and London). The weighted average level of corporate governance in integrated agrarian formations (agroholdings) of Ukraine is at an unsatisfactory level, which causes significant risks for shareholders and investors. It is proved that the existing theoretical and practical provisions and recommendations for the formation and development of the institution of corporate governance in integrated formations have been deepened and new theoretical and practical provisions and recommendations for the formation and development of the institution of corporate governance in integrated enterprises in the agricultural sector have been developed. The obtained practical results are a recommendation base and are aimed at solving the problems of formation and development of the institution of corporate governance of integrated enterprises in the agricultural sector, can be used by state institutions to improve the existing institutional support for the development of economic entities. The results of the research can be used by the legislative and executive bodies of the country, as well as by agrarian organizations engaged in production, harvesting and processing of products, and creation of a market system for dissemination of agricultural knowledge and information. Keywords: agrarian enterprise, corporate management, valuation of effectiveness, integrate formation, agroholdings, joint-stock company.

Exploring the Relationship between Corporate Governance, Corporate Social Responsibility and Financial and Non-Financial Reporting: A Study of Large Companies in Greece

Academics and professionals alike are highly interested in Corporate Social Responsibility (CSR), Corporate Governance (CG), environmental, social, and governance (ESG) and corporate non-financial reporting (CNFR) and how they can improve a brand’s reputation, financial efficiency, and sustainability within businesses and organisations. The main objective of our study was to examine whether the financial data of large companies can be correlated with the data in their non-financial reports and provide information on the level of corporate governance and corporate responsibility and to examine the correlation between them. For this purpose, we conducted research by examining the 100 largest companies in Greece, over a period of 3 years, collecting both financial and non-financial data from their official reports. Using appropriate quantitative tools such as similarity, classification and econometric methods (stepwise method and panel least-squares method), the correlations between the data for CSR, CG and non-financial actions and key financial performance ratios are evaluated. Our research has revealed a strong link between financial performance and ESG actions of large companies and, in particular, we demonstrated the positive correlation of CSR performance with their total assets and whether they are listed on the stock exchange, and of CG with CSR and EBITDA. This study adds to the existing academic discourse on the relationship between financial and non-financial information of corporations in the areas of Corporate Responsibility and Governance and provides a valuable way to assess the decisions of businesses.

Trust and inter-regional M&As: Evidence from China

This paper investigates the economic impact of trust on inter-region mergers and acquisitions (M&As) using a large sample of M&As in China. We find that trust distance among regions negatively predicts frequency of inter-region mergers, merger volume and synergy gains. Economic mechanism analysis shows that trust distance lowers merger gains through imposing transaction cost on the deal. The negative effects of trust distance on inter-region M&As activities and synergy gains are less pronounced when legal institution level distance between regions are smaller, consistent with trust being a substitute for formal institutions; it is less prominent when corporate governance and information disclosure level distance between regions are smaller, suggesting that trust is more important in transactions with higher information asymmetry; it is less salient when financial market development level distances between regions are smaller, consistent with trust is less important with repeated interactions between economic parties. Overall, our results highlight the role trust plays in shaping corporate decisions and economic outcomes.

Does the Average Age of Executives Affect the ESG Performance of Enterprises?

In today's global business environment, the importance of ESG has been widely recognized globally. This article uses data from 4578 A-share listed companies from 2015 to 2021 to study the impact of the average age of executives on ESG performance. The results show that the average age of executives is significantly positively correlated with ESG performance. For the three specific aspects of ESG, as the average age of executives increases, the performance of environmental (E) and social (S) also shows a better trend, but the performance of corporate governance level (G) is worse. This study suggests that companies should attach importance to the diversity of their executive teams, establish continuous training mechanisms, and develop clear ESG strategies and goals. This study provides more accurate guidance for enterprise decision-making, ESG management, and executive selection, and helps companies select and cultivate executives more accurately to ensure that the executive team is aligned with the company's ESG goals.

The Moderating Role of Corporate Governance in the Relationship between Leverage and Firm Value: Evidence from the Korean Market

This study examines the moderating function of corporate governance (CG) to the relationship between leverage and firm value (FV) using Korean market data. The study employs ordinary least-squares panel data regressions and two methods to manage endogeneity problems. The findings show a meaningful negative relationship between leverage and FV. This relationship, however, disappears, when the interaction variable of leverage × CG is included in the econometric model. These results indicate that an effective CG mechanism may lessen the probability of either the entrenched management-decision-making behavior or the agency costs of debt and, therefore, the negative effect of debt to FV diminishes. Moreover, our data show that the relationship between leverage and FV becomes positive, even though insignificant, for firms with a high level of CG, whereas it stays significantly negative for firms with a low level of CG. We also find that leverage for firms with a high level of CG is lower than those firms with a low level of CG. These additional findings support our conclusion of the moderating role of CG, which also influences the firms’ risk, leverage, and FV. The authors recommend the implementation of a robust CG plan to decrease the information asymmetry and the agency leverage problem.

Board characteristics, institutional ownership, and investment efficiency: Evidence from an emerging market.

This study investigates the impact of board governance mechanism on investment efficiency (IE) in PSX-listed firms. The study also examines the role of institutional ownership (IO) in board-IE relationships. In addition, we extend our analysis to re-examine this relationship by splitting the sample into two groups, i.e., the introductory phase of corporate governance (CG) i.e., 2004 to 2013, and revised codes of CG (2014 to 2018) to examine the impact of these separately on IE. The sample data comprises 155 non-financial PSX-listed firms from 2004 to 2018. IE is measured using firms' growth opportunities. The random effect model is used to test the study's hypotheses. A robustness test is also performed to validate the study's findings. The paired-sample t-test results show a significant improvement in IE after revising the CG codes in 2012. According to the regression results, board size has a significant direct, whereas board diversity has a significant inverse effect on IE. Regarding moderating effect, IO was found to moderate the relationship between board independence and IE significantly. Furthermore, it was discovered that following the issuance of revised CG codes-2012, the level of board independence and diversity increased in PSX-listed firms; however, only diversity positively impacted IE, and board independence had no impact on IE from 2014 to 2018. Despite the issuance of revised CG codes-2012, the level of CG among PSX-listed firms is low, which is a source of concern for regulators such as the Securities and Exchange Commission of Pakistan.

The effect of political influence on corporate social donations: Evidence from party-building reform in China

As a new exploration of corporate governance in China's non-state-owned enterprises (NSOEs), the effect of "Party Building into Articles of Association" (PBAA) in the decision-making of NSOEs has not yet been verified. Based on hand-collected data on PBAA in NSOEs, this paper investigates the impact and constraints of PBAA on decision-making in NSOEs by using the external event of corporate donations during the COVID-19 pandemic. The results show that PBAA has embedded the party organization into the corporate governance system of NSOEs, affecting the decision-making of NSOEs effectively, thus boosting the social donations of NSOEs during the epidemic period. Meanwhile, the extent of PBAA is constrained by the original level of corporate governance and entrepreneurial identification. These findings remain robust after controlling for possible endogeneity issues. In addition, further research suggests that the more detailed the content of PBAA is, the higher the probability of substantial donations in epidemic situations in NSOEs.

The Relationship between Spousal Co-ownership of Shares and Corporate Governance Level

Amid continual societal advancement, a growing number of women have assumed roles in the business realm, co-owning shares with their spouses and managing family businesses, which in turn exhibit varying qualities of operational administration. This study selects family businesses listed on A-shares between 2010 and 2021, with an initial sample studied extensively through multiple regression analysis. The empirical examination discerns the influence of spousal co-ownership of shares on corporate governance levels. The results indicate that businesses with spousal co-ownership tend to have a higher percentage of familial involvement, with suboptimal internal quality control, not conducive to the elevation of governance levels. In conclusion, the author provides policy recommendations for government entities and anticipates the future rationalization of corporate structures.

INCOME SMOOTHING AND CORPORATE GOVERNANCE

Income smoothing is a strategy aimed at altering accounting results in order to reduce fluctuations. In the other hand, by adopting corporate governance mechanisms it may be possible to reduce information asymmetry and, consequently, reduce the possibility of smoothing results. The general objective of the present study was to investigate the relationship between the adoption of corporate governance mechanisms and income smoothing. Financial data were selected from 211 Brazilian public companies between 2000 and 2015. The firms were separated according to whether or not they adhered to B3’s differentiated corporate governance segments. Income smoothing was measured using both the model by Eckel (1981) and a version of the model proposed by Leuz et al., (2003). The analysis was performed using non-parametric Wilcoxon rank sum tests and descriptive analyses. Based on the descriptive analysis, it was not possible to state that the group of firms adhering to the corporate governance levels had a smaller proportion of companies that smooth results; and the hypothesis that the degree of income smoothing is lower for such companies was not confirmed. The assumption that levels of corporate governance reduce the possibility of income smoothing was not validated based on non-parametric tests. Based on the descriptive analysis, it was concluded that both the proportion of companies that smooth results, and the degree of smoothing by organizations following the B3’s corporate governance levels are not lower than the ones shown by companies that do not follow the levels.

Can digital transformation in manufacturing enterprises mitigate financial distress?

ABSTRACTPurpose – The purpose of this paper is to help manufacturing enterprises seize the opportunities presented by the digital economy, enhance production efficiency and value creation capacity, and promote sustainable and high-quality development of China’s manufacturing industry. Design/methodology/approach – This study employs a sample of Chinese A-share listed manufacturing companies from 2016 to 2020, using text analysis to construct measurement indicators for digital transformation and examining the impact of digital transformation on financial distress. Findings – The findings indicate that digital transformation in manufacturing enterprises helps alleviate financial distress. Heterogeneity analysis suggests that state-owned enterprises, large-scale enterprises, and those located in economically developed regions experience more significant alleviation of financial distress through digital transformation. Moreover, the moderating effects reveal that corporate governance level and financing constraints, representing the comprehensive capabilities of internal operational costs, management efficiency, and structure, and the comprehensive strength of external financing resources, respectively, can help enterprises maximise the alleviating effect of digital transformation on financial distress. Originality/value – Based on Chinese manufacturing enterprise samples, this paper empirically tests manufacturing enterprises are essential components of the national economy. Promoting digital transformation in manufacturing enterprises is the best choice for integrating the real economy with the digital economy.

Analysis Of The Influence Of Company Size, Good Corporate Governance And Profitability On The Value Of Idx-30 Companies Listed On The Indonesian Stock Exchange

The purpose of this study is to determine whether a company's size, profitability, and level of corporate governance affect its overall value. The method that the researchers in this study have selected is called purposeful sampling. The IDX-30 enterprises that are listed on the Indonesia Stock Exchange comprise the population of this study. The data used in this study are secondary. Two methods are available to researchers for gathering the data for analysis: documentation and a review of existing literature. This study's analytical approach makes use of quantitative analysis methods that are handled by SPSS. This study employed traditional assumption test analysis, model testing, and hypothesis testing. The following conclusion can be drawn from the presented research results: The value of the corporation is unaffected by good corporate governance as demonstrated by independent commissioners. There is no correlation between management ownership and good corporate governance and the value of the company. There is no correlation between institutional ownership and good corporate governance and a company's worth. The ROA's projection of profitability affects the company's worth. The ROE's projection of profitability raises the value of the enterprise. The worth of a corporation is independent of its size.