National Governance Quality Research Articles

Is national governance quality a key moderator of the boardroom gender diversity–firm performance relationship? International evidence from a multi-hierarchical analysis

This research argues that the inconclusive evidence on the board gender diversity–firm performance relationship across nations may be due to the moderating effect of national governance quality. Applying a multi-hierarchical modeling technique on a dataset containing 15,051 firm-year observations from 2931 companies in 46 countries, the results generally confirm this Hypothesis. Specifically, board gender diversity only seems to positively affect the performance of companies operating in countries with above-average levels of national governance quality. The effect of gender diversity on firm performance decreases and turns negative as national governance quality drops. The results are robust to different measures of national governance quality and firm performance, changes in methods of estimation, changes in sample structure, and tokenism.

Corporate cash holdings, firm performance and national governance: evidence from emerging markets

PurposeThis paper aims to document the impact of corporate cash holdings on firm performance in Middle East and North African (MENA) emerging markets. The authors also examine how the quality of national governance shapes the interaction between corporate cash holdings and firm performance.Design/methodology/approachThe authors employ data from non-financial firms listed on the stock markets of twelve MENA countries between 2004 and 2018. The empirical model avoids the shortcomings of the prior literature by applying a dynamic framework to the relationship between cash holdings and firm performance.FindingsThis research reports a significant positive relationship between corporate cash holdings and firm performance. The results appear to be more pronounced in countries with strong national governance and more developed institutional settings. The findings demonstrate that most benefits of corporate cash holdings can be achieved under strong institutional settings. The authors argue that the positive impact that national governance has on individual firms by reinforcing investors' protection and lowering agency problems increases the added value of cash holdings.Practical implicationsThe findings should encourage local authorities and policymakers to reinforce the law and instigate new regulations to strengthen the quality of national governance and restore the integrity of local markets.Originality/valuePrior studies have largely been silent on how national governance can shape the relationship between corporate cash holdings and firm performance. This paper draws attention to this issue within the context of MENA emerging markets. To the authors' best knowledge, this is the first study that explores the interaction between cash holdings, firm performance and national governance in MENA emerging markets.

Political dynamics and governance of World Heritage ecosystems

Political dynamics across scales are often overlooked in the design, implementation and evaluation of environmental governance. We provide new evidence to explain how interactions between international organizations and national governments shape environmental governance and outcomes for 238 World Heritage ecosystems, on the basis of a new intervention–response–outcome typology. We analyse interactions between the United Nations Educational, Scientific and Cultural Organization and 102 national governments responsible for implementing ecosystem protection under the World Heritage Convention between 1972 and 2019. We combine data on the reporting, deliberation and certification of individual ecosystem-level threats, with data on national governance quality, economic complexity and key stakeholder perspectives. We find that the extent of threatened ecosystems is seriously underestimated and that efforts to formally certify threatened ecosystems are often resisted by national governments. A range of responses to international intervention, including both productive and counterproductive responses, generates material impacts at the ecosystem level. Counterproductive responses occur in nations dependent on limited high-value natural resource industries, irrespective of overall level of economic development. We identify new political approaches to improve environmental governance, including how to overcome the problem of regulatory capture. Our findings inform how we can better anticipate and account for political dynamics in environmental governance.

Corporate social responsibility strategy and corporate environmental and social performance: The moderating role of board gender diversity

AbstractDrawing on upper echelons and resource dependence theories and using data of European listed companies over the period 2009–2016, we examine the effects of corporate social responsibility (CSR) strategy and board gender diversity on environmental and social performance. In particular, we investigate whether CSR strategy contributes to improving corporate environmental and social performance, and whether this relationship is moderated by board gender diversity. Our empirical findings suggest that firms with more effective CSR strategies exhibit better environmental and social performance. The results also show that board gender diversity is positively associated with environmental and social performance, thus supporting the notion that board gender diversity promotes sustainable development. Furthermore, the findings reveal that the positive relationship between CSR strategy and environmental performance is negatively moderated by board gender diversity. Finally, the results show that that national governance quality and firm size are important underlying factors affecting corporate environmental and social performance.

Credit information sharing and loan default in developing countries: the moderating effect of banking market concentration and national governance quality

Departing from the existing literature, which associates credit information sharing with improved access to credit in advanced economies, we examine whether credit information sharing can also reduce loan default rate for banks domiciled in developing countries. Using a large dataset covering 879 unique banks from 87 developing countries from every continent, over a nine-year period (i.e., over 6,300 observations), we uncover three new findings. First, we find that credit information sharing reduces loan default rate. Second, we show that the relationship between credit information sharing and loan default rate is conditional on banking market concentration. Third, our findings suggest that governance quality at the country level does not have a strong moderating role on the effect of credit information sharing on loan default rate.

Perceived Quality of Governance and Trust in Government in Rural China: A Comparison Between Villagers and Officials

ObjectiveThis research examined the relations between perceived quality of governance and trust in government in China.MethodsUsing nationally representative data collected in rural China, we compared the varying degrees of trust in different levels of government (central, provincial, county, and town), and the varied effects of perceived quality of governance on trust in different levels of government between general villagers and local officials.ResultsThis study found that although officials showed higher degrees of trust in government, they demonstrated no significant difference from the general villagers on their perceived quality of national governance. Also, the effects of perceived quality of governance on trust in most levels of government have no significant differences between local officials and villagers.ConclusionThese findings were discussed in the broader contexts of economic development in China.

Internal capabilities, national governance and performance in African firms

We explore the relations between firms’ internal capabilities, national governance quality (NGQ) and performance in the African context using a dataset comprised of 11,183 firm-year observations (1490 unique firms from 15 African countries over a 17-year period). Our study offers new insights into how interlinkages between firms’ internal and external environment, shape corporate success. Specifically, we find that (1) firms’ internal capabilities (captured by financial resource-availability and growth prospects) are critical enablers of performance in both weak and strong institutional environments, (2) individual firms perform well in environments where their peers performs well, (3) NGQ directly enhances aggregate firm performance, and in tandem, the performance of individual firms, and (4) NGQ moderates the capability-performance nexus, by enhancing the translation of growth opportunities into profitability. The results highlight the critical role of firm-level financial resource availability and growth prospects in shaping corporate success in this challenging institutional environment.

Well-being, Political Decentralisation and Governance Quality in Europe

European nations allocate public sector resources with the general aim of increasing the well-being and welfare of their citizens through a fair and efficient distribution of these public goods and services. However, “who” delivers these goods and services and “how well” they are delivered are essential in determining outcomes in terms of well-being. Drawing on data from the European Social Survey database, this paper uses Amartya Sen’s social welfare index framework—accounting for the trade-off between the maximization of public sector resources and an equitable distribution of these resources—to examine the influence of political decentralisation (“who” delivers the resources) and whether this influence is moderated by governance quality (“how well” they are delivered) on individual subjective well-being. The findings of the econometric analysis reveal that decentralisation does not always lead to higher well-being, as the benefits of political decentralisation are highly mediated by the quality of national governance. In countries with high governance quality, political decentralisation results in a greater satisfaction with health provision, while in lower quality governance countries, a more decentralized government can increase the overall satisfaction with life, the economy, government, democracy and the provision of education, but not necessarily with health-related services.

Credit Information Sharing and Loan Default in Developing Countries: The Moderating Effect of Banking Market Concentration and National Governance Quality

Departing from the existing literature, which associates credit information sharing with improved access to credit in advanced economies, we examine whether credit information sharing can also reduce loan default rate for banks domiciled in developing countries. Using a large dataset covering 879 unique banks from 87 developing countries from every continent, over a nine-year period (i.e., over 6,300 observations), we uncover three new findings. First, we find that credit information sharing reduces loan default rate. Second, we show that the relationship between credit information sharing and loan default rate is conditional on banking market concentration. Third, our findings suggest that governance quality at the country level does not have a strong moderating role on the effect of credit information sharing on loan default rate.

The Corporate Governance Practices: Evidence from MENA Countries

This study investigates the level of compliance and disclosure of corporate governance mechanisms in Middle East and North Africa countries. The study uses a panel data of 250 companies from MENA countries between 2009 and 2016. The ordinary least square multiple regression analysis technique is used to examine the relationships. Additionally, to alleviate the concern of potential endogeneity, we use fixed effect regression, two-stage least squares using instrumental variables. The results show that the level of voluntary compliance with and disclosure of corporate governance mechanisms among MENA countries varies substantially across countries and is low. The result is consistent with the neo-institutional theory. Future research could investigate more sets of firm-level internal CG mechanisms and country-level variables and use of weighted index. This study extends, as well as contributes to the extant CG literature by offering new evidence on the effect of corporate governance mechanisms among listed firms in ten different MENA countries within a neo-institutional theoretical perspective. The findings will help regulators and policy makers in their countries to pursue reforms to improve national governance quality.

The Low Quality of National Governance and Unevenness in the Economic Competitiveness of Regions: The Case of Russia

Strong institutions and good governance are instrumental for success in the global economy. While the quality of national governance has positive effect on a country’s economic performance, it is not a necessary condition. Poor governance can be offset with the country’s comparative advantages; however, such advantages are likely to be geographically concentrated. We argue that in present-day Russia weak institutions and low quality of national governance make most regions unable to compete in the global economy.

Development Communication and Politics in Sub-Saharan Africa: Analyzing Media’s Impact on Governance and Political Participation

Development Communication and Politics in Sub-Saharan Africa: Analyzing Media’s Impact on Governance and Political Participation Ephraim Okoro, PhD Abstract A number of mass media scholars observe that development communication has taken new directions since the beginning of the twenty-first century, and they are reconceptualizing a range of variables associated with development, including interdependence between media and politics, new media and diffusion of innovation, and sustainability of political development, communication ethics and its impact on democratization, re-examination of media objectivity, role of the media in disseminating information, and agenda-setting process for effective citizens’ participation in the political process. This reconceptualization is increasingly attracting the interest of academics, practitioners, and independent consultants around the world, which is leading to a rethinking of current media perspectives and theoretical frameworks guiding development communication debates. With increasing globalization and nations of the world have become interconnected because of global markets and investments, it is important that countries understand one another’s need for development communication to ensure continuing growth and sustainability. Recent media studies have traced the slow growth of political development to a lack of development communication, inadequate strategic communication skills, unwillingness of citizens to engage in democratic debates, and unawareness of the consequences of political apathy. This chapter is focused on development communication contexts, issues, and theoretical frameworks in sub-Saharan Africa. It then provides conclusion and recommendations for effective utilization of development communication to enhance political participation, generate a keen interest in the political process, and ultimately increase the quality of national governance. Full Text: PDF DOI: 10.15640/ijll.v6n2a19

Islamic Governance, National Governance, and Bank Risk Management and Disclosure in MENA Countries

We examine the relationships among religious governance, especially Islamic governance quality (IGQ), national governance quality (NGQ), and risk management and disclosure practices (RDPs), and consequently ascertain whether NGQ has a moderating influence on the IGQ–RDPs nexus. Using one of the largest data sets relating to Islamic banks from 10 Middle East and North Africa (MENA) countries from 2006 to 2013, our findings are threefold. First, we find that RDPs are higher in banks with higher IGQ. Second, we find that RDPs are higher in banks from countries with higher NGQ. Finally, we find that NGQ has a moderating effect on the IGQ–RDPs nexus. Our findings are robust to alternative RDP measures and estimation techniques. These results imply that the quality of disclosure depends on the nature of the macro-social-level factors, such as religion that have remained largely unexplored in business and society research, and, therefore, have important implications for policy makers.

Ownership concentration and corporate performance from a dynamic perspective: Does national governance quality matter?

In this paper, the relationship between ownership concentration and financial performance of companies in Singapore and Vietnam is investigated in a dynamic framework. By focusing on two different types of national governance systems (well-developed vs. under-developed), we observe how the relationship is moderated by the national governance quality. We find that the performance effect of concentrated ownership persists in these markets even after the dynamic nature of the ownership concentration–performance relationship is taken into consideration. Our finding supports the prediction of agency theory about the efficient monitoring effect of large shareholders in markets with highly concentrated ownership. In addition, we find that national governance quality does matter when explaining the ownership concentration–performance relationship. The positive effect of concentrated ownership on performance of firms operating in the under-developed national governance system (Vietnam) tends to be stronger than that in the well-established system (Singapore). This finding is consistent with the argument that ownership concentration is an efficient corporate governance mechanism which can substitute for weak national governance quality. Econometrically, our findings still hold even after controlling for dynamic endogeneity, simultaneity, and unobserved time-invariant heterogeneity, inherent in the corporate governance–performance relationship.

Low Quality of National Governance and Uneven Economic Competiveness of the Russian Regions

Most scholars agree that strong institutions and better governance are instrumental for success in the global economy. However some political regimes fail to improve governance but attract significant volume of foreign direct investments and demonstrate high rates of economic growth. We argue that when quality of national governance low, investments and economic growth are likely to be associated with significant regional differentiation. Low quality of national governance is a serious obstacle to competiveness but it could be compensated by locally unique comparative advantages. We illustrate the argument focusing on the Russian experience with highly unequal distribution of regional economic competiveness.

Factoring in governance is not enough. Mining codes in Africa, policy reform and corporate responsibility

One of the main hypotheses underlying much of the discussion and certain of the recommendations made by the World Bank Group's Extractive Industries Review suggests that the quality of governance of a country is a key determinant for the development outcomes of extractive industries activities. While undoubtedly of central importance, a recent comparative study of mining codes in Africa suggests that while the quality of national governance is undoubtedly a key ingredient, no amount of local governance is sufficient if not accompanied by legal and fiscal frameworks designed to meet development objectives and which are implemented in the context of good international policies and rules. Based on this study, the article suggests that the reform measures introduced largely at the recommendation of multilateral financial institutions over the last twenty years have entailed a redefinition of the role of the state that is so profound that it has no historical precedent and that this situation has not received ...