Moderating Effect Of Corporate Governance Research Articles

Dividend policy, earnings management and the moderating effect of corporate governance in the French context

PurposeThe purpose of this paper is to examine the moderating effect of corporate governance on the impact of earnings management on dividend policy.Design/methodology/approachIn this paper, the authors selected French non-financial companies listed on the CAC All Tradable index during the 2008–2015 period. Feasible generalized least square regression method is used to estimate the econometric models.FindingsThe empirical results allowed the authors to confirm and/or reject certain hypotheses. First, the ownership concentration seems to positively moderate the impact of earnings management on dividend policy. Another conclusion that the authors have been able to draw is that the effect of earnings management on dividend policy is more favorable in the case of firms with a small director’s board.Practical implicationsOur results have shown that French firms run earnings to inform the market that they can distribute dividends. Therefore, we recommend that the various partners of the firm pay more attention to the governance mechanisms of these types of companies and, in particular, in countries where foreign investors suffer from weak legal protection (Easterbrook, 1984; Gomes, 2000; La Porta et al., 2000 and Athari et al., 2016). In fact, standardization bodies, the Ministry of Finance, external auditors and stock exchange organizer must focus on sophisticated governance mechanisms to ensure better quality of financial reporting.Originality/valueTo our knowledge, no other research has examined whether the impact of earnings management on dividend policy varies significantly with the moderating effect of certain governance mechanisms in France.

Product Market Competition, Corporate Governance and ESG

This paper examines whether product market competition is associated with Environmental, Social, and Corporate Governance (ESG) and whether corporate governance moderates the effect of product market competition on ESG. Analysis involving 22,897 firm-year observations from 37 countries shows that companies with higher product competition have lower ESG and those with higher corporate governance have higher ESG. The results also indicate the moderating effect of corporate governance, as the negative relationship between product market competition and ESG diminishes for companies with higher corporate governance. The results remain robust in additional analysis using alternative measures for product market competition and corporate governance. The findings support the joint effect of product market competition and corporate governance in determining corporate performance in ESG. The findings reflect the various pressures influencing ESG practices, and on how the strength of corporate governance plays a vital role in ensuring strategic ESG being employed for the sustainable performance of companies. The findings have implications on companies that want to factor ESG into their plans especially to reinvent their companies for the period that follows the COVID-19 pandemic.

Controlling shareholders' stock pledges and strategic change: the moderating effects of corporate governance

PurposeThe authors analyze the effects of controlling shareholders' stock pledging on firms' strategic change behavior, and investigate how the balance of power between shareholders and analyst coverage moderates those effects.Design/methodology/approachEmploying fixed effects models, the authors test hypotheses based on Chinese listed company data from 2011 to 2017.FindingsControlling shareholders' stock pledges has a negative effect on strategic change. As the balance of power among shareholders and/or analyst coverage increases, it mitigates the effect of controlling shareholder stock pledges on strategic change. In particular, the balance of power between shareholders and analyst coverage weakened the relationship between controlling shareholder stock pledges and strategic change. Lastly, after distinguishing family from nonfamily firms, the authors discovered that these findings only held for family firms.Originality/valueThis study makes important contributions to strategic change, stock pledge and family firm literature, and also provides guidance on firms' strategic change practices.

Pengaruh Intellectual Capital Terhadap Firm Performance Dengan Corporate Governance Sebagai Variabel Moderasi

The purpose of this study was to analyze the moderating effect of corporate governance on the relationship between intellectual capital and firm performance on consumer goods and trading companies listed on the Indonesia Stock Exchange in 2013-2018. This study using 44 companies that have been selected through a purposive sampling method with a total of 264 data for six years. The data used are secondary data in the form of financial statements which ends on 31 December ended period. Procesing data in this study using software Eviews version 10. The results of the study shows that intellectual capital have a positive effect on firm performance. However, corporate governance does not positively moderate the relationship between intellectual capital and firm performance.

Do CEO overconfidence and narcissism affect corporate social responsibility in the UK listed companies? The moderating role of corporate governance

Purpose This paper aims to examine the effect of two CEO characteristics, namely, narcissism and overconfidence on corporate social responsibility (CSR) and the moderating effect of corporate governance (CG) mechanisms in the UK. Design/methodology/approach Using a sample of 2,360 UK firms listed on the FTSE 400 index for the years 2010–2017, the feasible generalized least squares method was applied to test the hypotheses developed. Findings The finding argues that CEO narcissism and overconfidence positively affect CSR. In addition, this paper found that CG effectiveness moderates the CEO’s CSR behavior. Research limitations/implications This research is subjected to two limitations. First, this study used different measures to proxy for CEO narcissism and overconfidence. However, other measures are not included owing to the difficulty to collect data regarding these measures. Second, this study includes only CSR performance instead of all other dimensions and categories of CSR. These limitations do not change the conclusions of this research, and they may provide guidance for further investigations. Practical implications Given that the CEOs psychological and behavioral features are critical in understanding CSR, shareholders and boards of directors should incorporate the behavioral aspects of narcissistic and overconfident CEOs in the design of CSR strategy. Originality/value This study emphasizes the importance of top executives’ psychological characteristics for CSR, which is a key application and complements the “upper echelons theory” and fills the research gap in the literature. This is one of the few studies that investigate the interaction between CG, CEO profile and CSR.

The impact of the expected credit loss model under IFRS 9 on loan loss recognition timeliness: early evidence from the Egyptian banks

The central bank of Egypt (CBE) has obligated the Egyptian banks as of 2019 to apply IFRS 9 to provide more timely information about the expected credit losses (ECL). However, the implementation of IFRS 9 concerning the ECL requires a significant judgment that may lead to opportunistic accounting behavior. This research aims to examine the impact of the expected credit loss (ECL) model under IFRS 9 on loan loss recognition timeliness (LLRT) of the Egyptian banks, and also investigates the moderating effect of corporate governance (CG) efficiency namely: board size (BSIZE), board independence (BIND), institutional ownership (INSTIT), CEO duality (DUAL), and audit quality (AQ).The research uses data extracted from the quarterly financial reports for a sample of Egyptian banks from 2018 to 2019, the data were processed using the panel corrected standards errors (PCSE).The results reveal a significant positive effect of applying the ECL model on LLRT, also, the results show a positive effect of BIND on the association between ECL model and LLRT, conversely, there is a negative effect of DUAL, while, there is no effect for each of BSIZE, INSTIT, and AQ.This research introduces early empirical evidence from the emerging markets about the implications of the ECL model under IFRS 9, the research results are important for regulators and investors because it supports the effectiveness of the new model, also, the results are important for future reform programs undertaken by regulators in Egypt such as CBE, moreover, the research adds to the literature of LLRT, by providing evidence regarding the effect of applying the ECL model on LLRT.

Moderating effects of corporate governance mechanism on the relation between capital structure and firm performance

The purpose of this study is to examine the moderating effect of corporate governance on the relationship between capital structure and firm performance. This study uses secondary data in the form of financial reports at the end of 2019 from micro-financial institutions (rural banks) with a total of 506 units. Data were analyzed using the Moderated Regression Analysis. Results indicate that capital structure financing decisions have a positive contribution to financial performance. However, this only applies to short-term debt. Otherwise, long-term debt has a negative and insignificant effect on both return on assets and return on equity. These results support the view of the pecking order theory, as empirical evidence that the opposite effect between firm profits and capital structure. The results of the moderation analysis show that only the size of the board of commissioners can strengthen the relationship between capital structure and company performance, while board size and ownership concentration are not able to moderate the relationship between capital structure and company performance.

The moderating effect of corporate governance on the relationship between corporate sustainability performance and corporate financial performance

Corporate governance plays an important role in monitoring and counseling management’s decision making including strategic sustainability investing. Understanding the role of corporate governance may help top management of corporations allocate their limited resource in their strategic planning and decision making. This study examines the relationship between corporate governance and corporate sustainability performance (CSP) and whether corporate governance moderates the relationship between corporate sustainability performance and corporate financial performance (CSP–CFP). The study analyzes a sample of 456 top largest U.S. public companies to examine corporate sustainability performance and corporate governance jointly, particularly the moderating effect of corporate governance on CSP–CFP relationship. Lagged variables were used to address the endogeneity issue. Multiple regression methods were used. The results show that firms with stronger corporate governance are more likely to have higher CSP and that corporate governance contributes additional value to firm value. The impact of CSP on CFP is higher for firms with stronger corporate governance (moderating effect). Results are robust after using different regression methods and additional tests.

CEO Overconfidence and Corporate Investment: Moderating Role of Corporate Governance Practices

This paper examines the relationship between CEO overconfidence, corporate investment and firm performance along with moderating effect of corporate governance (CG) between them. We collected the data of Pakistani listed firms from 2010-2018. The findings suggest that the relationship between CEO overconfidence and corporate investment is significant and the corporate governance also moderates the relationship of CEO overconfidence and corporate performance. In addition, the authors report a significant substantial relationship exists between Tobin’s Q and CEO overconfidence and between ROA and CEO overconfidence. The moderator effect is also significant in the case of CEO overconfidence and Tobin’s Q, and in case of ROA and CEO overconfidence. This is the first empirical paper on CEO overconfidence, corporate investment and governance practices using data for the Pakistan.

Environmental disclosure quality and risk: the moderating effect of corporate governance

PurposeThe purpose of this article is to investigate the relationship between environmental disclosure quality (EDQ) and risk and to further examine whether corporate governance (CG) practices moderate this relationship.Design/methodology/approachThis study uses a set of unique, hand collected data (from 2011 to 2016) to measure EDQ for a sample of 762 firm-years Iranian listed companies. Ordinary least squares regression analysis is performed in testing hypotheses after controlling for a variety of firm, industry and year effects. Moreover, several analyses are performed to establish the robustness of the findings.FindingsThe results indicate a negative association between EDQ and firm risk. While board independence moderates this relationship, other CG practices such as CEO duality and board size do not show any effects on the relationship between EDQ and risk. The results remain robust after performing sensitivity tests and under various specifications, including the fixed-effects panel data and Heckman two-stage regressions.Research limitations/implicationsResults are from a sample of firms from one country.Practical implicationsThe results have implications for policymakers, legislators and corporate executives, as environmental initiatives are gaining more attention worldwide.Social implicationsSustainability initiatives in the areas of environmental and social performance and disclosure are gaining global attention. This study addresses the link between firm risk and EDQ.Originality/valueThis study contributes to the literature by shedding light on the relationship between corporate risk-taking and EDQ in the context of a developing economy.

Earnings management, corporate social responsibility and corporate governance in Indonesian banking industry

Abstract
 This paper describes the research which investigates the moderating effect of corporate governance (CG) on the relationship of earnings management (EM) practices and corporate social responsibility (CSR) disclosure in companies listed on the Indonesia Stock Exchange. EM used in this study is the different between discretionary realized security gain or loss and discretionary loan loss provition. Data is obtained by purposive sampling process with a total sample of 138 out of 46 banking sector companies. The results showed that EM had not effect on CSR and audit committee has a negative effect on CSR, but independent commissioner does not affect CSR if tested together with EM.

The Moderating Effect of Corporate Governance on the Relationship between Government Intervention and Bank Performance: A Proposed Conceptual Framework

The global financial crisis (GFC) of the last decade has placed enormous pressure on national governments to intervene in the banking sector crises. However, the empirical literature is inconclusive on what an optimal government intervention program should be applied to identifies the areas of improvement that can be addressed by managerial decisions or policy activities to mitigate the consequences of the banking sector crises. The purpose of this study is to propose a conceptual framework that will investigate the moderating effect of corporate governance between government intervention and the performance of the banking sector. This framework will apply a technique that will identify the areas of improvement that can be addressed by managerial decisions or regulatory authorities, by extending the application of partial least squares structural equation modeling (PLS-SEM) using an importance-performance map analysis (IPMA) to determine the priority factors that should receive management’s attention. Therefore, these have prompted scholars, experts, and authorities to re-examine the relationship between government intervention and the performance of the banking sector, which could be used by banks and other regulatory bodies. Furthermore, a recommendation for future research in this area also suggested.

The Effect of the Quality of Internal Accounting Control System on Executive Compensation : Focusing on the moderating effects of corporate governance

The Effect of the Quality of Internal Accounting Control System on Executive Compensation : Focusing on the moderating effects of corporate governance

THE EFFECT OF BANK RECAPITALIZATION AND CORPORATE GOVERNANCE ON PERFORMANCE OF BANKING SECTOR: A PROPOSED CONCEPTUAL FRAMEWORK

The global financial crisis of the last decade has been described as the most serious crisis that affects the world's economy since the Great Depression of 1940, which lead to the bank's recapitalization exercises in many countries. The purpose of this study is to propose a conceptual framework that will investigate the effect of bank recapitalization on the performance of the banking sector and to measure the moderating effect of corporate governance. However, the nature and existence of this relationship are found to be mixed and inconclusive (i.e., positive, negative, or no relationship at all). These have prompted scholars, experts, and authorities to re-examine the relationship between recapitalization and the performance of the banking sector. This study addresses the research deficit and proposes a conceptual and theoretical framework for measuring the effectiveness of bank recapitalization, corporate governance on the bank's performance, which could be used by banks and other regulatory bodies. Furthermore, a recommendation for future research in this area also suggested.Keywords: Recapitalization, Corporate Governance, Banks Performance, Debt Restructuring, Bailout, Blanket GuaranteeJEL Classifications: G01, G03, G21, G34, L25DOI: https://doi.org/10.32479/ijefi.8976

Ảnh hưởng của kiểm soát quản trị đến mối quan hệ giữa minh bạch trách nhiệm xã hội và hiệu quả tài chính: Bằng chứng thực nghiệm từ Việt Nam

The study is aimed to analyze the moderating effect of corporate governance on the relationship between corporate social responsibility tranparency (CSR) and financial performance. The data was collected from 323 non-financial listed companies listed on Ho Chi Minh and Hanoi Stock Exchange from 2013 to 2017. The results showed that there was positive influence of the total CSR transparency on return on total assets, but the composition aspects had different influences on financial performance. In addition, three intermediate variables including the Board independence, the foreign ownership, and the audit quality played positive moderating role in the relationship between CSR transparency and financial performance. Based on the results, some policy implications were proposed such as increasing CSR transparency, attracting foreign investment, increasing the level of independent supervision of the Board and gradually considering the use of audit service supplied by BIG4.

Corporate Governance, Financial Characteristics, Macroeconomic Factors and Performance of Manufacturing Firms Listed at the Nairobi Securities Exchange

Performance of manufacturing firms listed at the Nairobi securities exchange has been varied since the introduction of the corporate governance policies and practices in the year 2002. This has been blamed to a number of factors including financial characteristics and macroeconomic factors. The specific objectives were to establish the effect of corporate governance on performance of manufacturing firms listed at the Nairobi securities exchange; to determine the intervening effect of financial characteristics on corporate governance and performance of manufacturing firms; to establish the moderating effect of corporate governance and performance of manufacturing firm; and to determine joint effect of corporate governance, financial characteristics, macroeconomic factors and performance of listed manufacturing firms at the Nairobi securities exchange. This study was anchored on, agency theory, stewardship theory, stakeholders’ theory and resource dependence theory. The study used census approach and a target population of 10 manufacturing firms listed at the Nairobi securities exchange between 2002 and 2016 were incorporated. This study employed longitudinal descriptive research design to determine relationships amongst independent, intervening, moderating and dependent variables. A panel data regression analysis was conducted using random effects model. The study findings revealed that corporate governance had insignificant effect on performance of listed manufacturing firms in Kenya; investments, leverage and liquidity significantly intervene in the relationship between corporate governance and performance of listed manufacturing firms; interest rate, inflation rate and growth domestic product rate, significantly affect returns on assets and Tobin’s Q of listed manufacturing firms in Kenya; and corporate governance, financial characteristics and macroeconomic factors were good predictors of listed manufacturing sector firms’ performance. Keywords : Firm performance, corporate governance, financial characteristics, macroeconomic factors, manufacturing firms, Nairobi securities exchange DOI : 10.7176/RJFA/10-22-08 Publication date: November 30 th 2019

Does Corporate Social Responsibility Reduce Earnings Management? The Moderating Role of Corporate Governance and Ownership

The purpose of this paper is to investigate the relationship between corporate social responsibility and earnings management and the moderating effect of corporate governance and ownership structure on this relationship. Using panel data for a sample of French listed companies between 2010 and 2013, we find that CSR engagementconstrain earnings management practices suggesting that managers would comply with the ethical requirements and satisfy stakeholders’ interests. The results also show that the effect of CSR on earnings management is particularly stronger in more independent boards and with high institutional ownership structure. These corporate governance devices help mitigating managerial opportunistic behavior.

The Role of Corporate Governance in Moderating the Influence of Company Growth and Size on Corporate Social Responsibility Disclosure

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The Impact of Corporate Governance Moderating Effects on the Performance of REITs in Asia

Corporate governance can have an effect on the organizational behavior of real estate investment trusts (REITs). We examine the moderating effects of corporate governance on Asia REITs' performance. We find significant corporate governance moderating effects on the performance of Asian REITs. Corporate governance could either act as a positive or a negative moderator that could enhance and accelerate performance, return on assets (ROA), return on equity (ROE), and REIT return, and reduce agency costs in Asian REITs. The findings imply that there is a need for transformation and reform in REIT corporate governance. The findings contribute towards Asian REITs' public policy development as REIT corporate governance is found to complement the institutional legal setting and externally managed REITs in Asia. Regulatory bodies of Asian REITs should enforce mandatory and absolute stringent corporate governance regulations on REITs.

Macroeconomic uncertainty, corporate governance and corporate capital structure

PurposeThe purpose of this paper is to examine how corporate governance moderates the relationship between macroeconomic uncertainty and corporate capital structure.Design/methodology/approachThis paper employs the two-step system generalized method of moments regression, considering a sample of 907 listed non-financial firms from seven Asia Pacific countries during the period 2004-2014.FindingsThis study finds that macroeconomic uncertainty has a significant negative impact on the capital structure decisions of firms. The results also reveal that the overall effect of macroeconomic uncertainty on capital structure among firms with better governance quality is significantly negative. The evidence suggests that corporate governance acts as an effective mechanism to curb the usage of leverage during times of high volatility. Further analysis shows that board independence, the separation between the roles of CEO and chairman of the board and blockholders’ ownership are effective governance mechanisms, whereas similar observations do not hold for board size and institutional ownership.Research limitations/implicationsThe findings of this study may be useful to policy makers to formulate appropriate policies to mitigate the adverse effects caused by macroeconomic uncertainty. This is important because macroeconomic uncertainty may have potential destabilizing effects on a country’s or region’s development by jeopardizing the firms’ ability to formulate sound investment, production and financing decisions. Additionally, the results suggest that good governance quality can act as a check and balance to ensure that firms use less leverage when they are facing volatility in the macroeconomic environment. These findings could help to reinforce the importance of good governance among policy makers of a country as well as managers of firms.Originality/valueThe authors make the first attempt to examine the moderating effect of corporate governance on the relationship between macroeconomic uncertainty and corporate capital structure.