Number Of Non-executive Directors Research Articles

Corporate Governance and Performance of Listed Firms in Nigerian Exchange Group

The performance of listed firms in Nigeria is a topic of significant concern and interest among stakeholders, including investors, regulators, and policymakers. Despite the considerable growth and development of the Nigerian economy in recent years, some persistent challenges and issues affect the performance of listed firms, hindering their ability to achieve optimal results and contribute effectively to economic prosperity. There is a growing need to explore the relationship between corporate governance mechanisms and firm performance in Nigerian firms.The study adopted an ex-post facto research design, extracting secondary data from the annual reports of 153 companies listed on the Nigerian Exchange Group (NGX) that made up the study's population. Using a purposive sampling approach, 10 firms were chosen across different industries as the sample size. The scope spanned from 2013 to 2021, a period of nine years, and data underwent descriptive and inferential statistical analyses. The empirical investigations found that board size had a positive significant effect on return on assets, while the number of non-executive directors had a negative significant effect on return on assets. The overall results demonstrated that corporate governance had a significant effect on the firm performance. The findings suggest that companies adhering to robust corporate governance standards tend to excel across various performance metrics compared to those with weaker governance practices. This study recommends that Policymakers of Nigerian firms should consider optimizing board size to enhance performance, ensuring a balance between diversity and efficiency.

The Impact of BOD Characteristics considering the Rules of the Egyptian Corporate Governance Guide on the Financial Performance of Egyptian Companies: A Case Study on Industrial Sector’s Companies

The current study aimed to reveal the impact of the characteristics of the board of directors, which were (the number of non-executive directors – the number of board members – the number of board meetings) on the financial performance in Egyptian joint-stock companies in the industrial sector by measuring (return on assets – return on equity – return on sales – earnings per share). The study adopted the descriptive analytical approach based on analyzing data obtained from (5) companies listed on the Egyptian Stock Exchange in official databases during the period from (2018-2022), and the study used a linear regression model to analyze financial data as a statistical method. This study concluded many results as follows: There is no statistically significant impact at the significance level (0.05) of the characteristics of the board of directors in light of the rules of the Egyptian Guide to Corporate Governance on the financial performance of Egyptian joint-stock companies in the industrial sector. There is no statistically significant impact at the significance level (0.05) of the characteristics of the board of directors on the return on assets considering the rules of the Egyptian Guide to Corporate Governance. There is no statistically significant impact at the significance level (0.05) of the characteristics of the board of directors on return on equity considering the rules of the Egyptian Guide to Corporate Governance. There is no statistically significant impact at the significance level (0.05) of the characteristics of the board of directors on return on sales considering the rules of the Egyptian Guide to Corporate Governance. There is no statistically significant impact at the significance level (0.05) of the characteristics of the board of directors on earnings per share considering the rules of the Egyptian Guide to Corporate Governance. The study recommended several recommendations, the most important of which are issuing a more stringent application of corporate governance legislation and activating the board of directors’ supervisory responsibility over management’s performance and behavior in managing the company’s financial operations by government and regulatory agencies. Keywords: BOD Characteristics – Corporate Governance Guide – Financial Performance

The Impact of BOD Characteristics considering the Rules of the Egyptian Corporate Governance Guide on the Financial Performance of Egyptian Companies: A Case Study on Industrial Sector’s Companies

The current study aimed to reveal the impact of the characteristics of the board of directors, which were (the number of non-executive directors – the number of board members – the number of board meetings) on the financial performance in Egyptian joint-stock companies in the industrial sector by measuring (return on assets – return on equity – return on sales – earnings per share). The study adopted the descriptive analytical approach based on analyzing data obtained from (5) companies listed on the Egyptian Stock Exchange in official databases during the period from (2018-2022), and the study used a linear regression model to analyze financial data as a statistical method. This study concluded many results as follows: There is no statistically significant impact at the significance level (0.05) of the characteristics of the board of directors in light of the rules of the Egyptian Guide to Corporate Governance on the financial performance of Egyptian joint-stock companies in the industrial sector. There is no statistically significant impact at the significance level (0.05) of the characteristics of the board of directors on the return on assets considering the rules of the Egyptian Guide to Corporate Governance. There is no statistically significant impact at the significance level (0.05) of the characteristics of the board of directors on return on equity considering the rules of the Egyptian Guide to Corporate Governance. There is no statistically significant impact at the significance level (0.05) of the characteristics of the board of directors on return on sales considering the rules of the Egyptian Guide to Corporate Governance. There is no statistically significant impact at the significance level (0.05) of the characteristics of the board of directors on earnings per share considering the rules of the Egyptian Guide to Corporate Governance. The study recommended several recommendations, the most important of which are issuing a more stringent application of corporate governance legislation and activating the board of directors’ supervisory responsibility over management’s performance and behavior in managing the company’s financial operations by government and regulatory agencies. Keywords: BOD Characteristics – Corporate Governance Guide – Financial Performance

Applying Polynomial Regression Modeling to Highlight the Relation Between Corporate Governance Characteristics and Performance

The entities that carry out their activity in today's business environment, characterized to a great extent by uncertainty, are constantly facing new challenges. Whether they react to external stimuli or global pandemics, to new technologies or anticipate new trends, their ability to change or to be reactive or proactive is tested every day. In order to achieve performance and to ensure a sustainable development through an effective governance, the Corporate Governance Code provides support. In this context, the purpose of our research was to investigate the influence of corporate governance attributes on performance. Hence, the research question of our study aimed to determine the extent to which: (1) board size, (2) the number of non-executive directors, (3) CEO duality, (4) companies size, (5) gender diversity, (6) the existence of the audit committee, and (7) the qualified opinion expressed by the external auditor influenced firm performance measured through market capitalization indicator. We included in our study 102 entities, listed on two stock markets, namely Bucharest Stock Exchange (BSE) and ATHEX from two countries, namely Romania and Greece that registered in 2019 the highest growth from the European Union, taking into account the evolution of markets from 87 countries with available data. The econometric model developed in our study reflects the fact that non-executive directors, companies size and board sizes influenced performance measured through market capitalization indicator.

The impact of healthcare board characteristics on NHS trust performance

IMPACT This article provides insights for NHS foundation trusts (FTs) that have adopted, or are planning to adopt, changes to their boards’ style and structure to improve their governance and performance. Results revealed that, to improve performance, FTs should try to minimize turnover on the board of directors; improve attendance at board meetings; and increase the number of non-executive directors on the board. Further, increasing clinical expertise on the board would benefit financial performance and produce a better Care Quality Commission (CQC) score. Such implications are also relevant to other healthcare settings which have similar institutional setups, particularly those in Europe.

Audit Committee and Tax Planning Of Listed Firms: Evidence from Nigeria

This study investigates the effect of audit committee on tax planning of listed non-financial firms in Nigeria. It aims at finding out the audit committee structure that improves tax planning thereby reducing tax liability of the firms. Data for the study were extracted from annual reports and accounts of the sampled non-financial companies for a period of ten years (2008 – 2017). The data collected were analysed using descriptive statistics to provide summary statistics for the variables, and correlation analysis was carried out using Pearson product-moment correlation to determine the relationship between the dependent and independent variables. Regression analysis was also conducted. The study reveals that the audit committee's compositions, frequency of meetings, and financial expertise have a negative effect on tax planning of listed non-financial firms in Nigeria. In addition, profitability shows a positive and significant effect on tax planning, and leverage has a negative effect. Theoretically, the study is significant for its contribution to agency and stakeholder theories as they explain relationship between corporate governance and tax planning. The findings have implications for the various stakeholders of listed non-financial firms in Nigeria. They should be assured of tax planning for companies who have a good number of non-executive directors in audit committees, frequent meetings which are attended by members, and financial experts. Keywords: Tax planning, audit committee, corporate governance, tax expenses, non-executive directors.

The Link between Board Structure, Audit, and Performance for Corporate Sustainability

The economic and social transformations, the bankruptcies recorded, and the financial crisis affecting all economies have increased the interest for the corporate governance concept. Our intention in this paper was to study the impact of corporate governance attributes on performance given the information published by the entities listed on five stock exchanges from Europe, namely the main market from Bucharest Stock Exchange (BSE) in Romania, the Athens Stock Exchange(ATHEX) main market in Greece, Financial Times Stock Exchange 100 Index (FTSE 100) from Great Britain, Spanish Stock Exchange 35 Index (IBEX 35) from Spain, and Warsaw Stock Exchange 20 Index (WIG 20) from Poland, between 2016–2018. Through mathematical modeling and multiple linear regression, we aimed to determine the extent to which corporate governance characteristics, firm characteristics, industry and stock market fixed effects, and random effects influence the performance of 226 entities included in our sample. The empirical findings revealed that CEO duality, the number of non-executive directors and women on board, audit committee, and audit opinion influenced performance measured by the Return on Assets (ROA) and Return on Equity (ROE) indicators. The ideas highlighted and the results obtained in this research contribute to the literature that analyzes the extent to which an effective governance determines the increase in performance, needed for a sustainable development.

Corporate governance indicators as determinants of bank efficiency: the case of the UK listed banks

This paper investigates the impact of a variety of corporate governance mechanisms on the performance of banks listed on the London Stock Exchange (LSE), by utilising data collected for 52 banking institutions for the period 2012 to 2017. Exhaustive results derived from multi-model applications document the superiority of GMM models to examine these relationships. Based on robust empirical findings, we support that increasing board size, especially the number of non-executive directors, and the frequency of board meetings up to a certain point could prove to be beneficial for the listed banks on the LSE. Moreover, our findings imply that simply complying with the Governance Code including independent board members or following the trend of gender diversity without proper evaluation of executives’ skills could damage bank efficiency. Finally, this study fails to discern significant links between the number of foreign directors and CEO-Chairman duality with the performance of UK banks.

Corporate governance indicators as determinants of bank efficiency: the case of the UK listed banks

This paper investigates the impact of a variety of corporate governance mechanisms on the performance of banks listed on the London Stock Exchange (LSE), by utilising data collected for 52 banking institutions for the period 2012 to 2017. Exhaustive results derived from multi-model applications document the superiority of GMM models to examine these relationships. Based on robust empirical findings, we support that increasing board size, especially the number of non-executive directors, and the frequency of board meetings up to a certain point could prove to be beneficial for the listed banks on the LSE. Moreover, our findings imply that simply complying with the governance code including independent board members or following the trend of gender diversity without proper evaluation of executives' skills could damage bank efficiency. Finally, this study fails to discern significant links between the number of foreign directors and CEO-Chairman duality with the performance of the UK banks.

What Determines Executives’ Remuneration in Malaysian Public Listed Companies?

This paper examines the impact of executives’ ownership, firm profitability, board size and its components, as well as some other financial factors, on executives’ remuneration in the context of Malaysia. Using a sample of 2403 firm-years during 2006-2014 among listed companies in Bursa Malaysia, the findings show that firm profitability, leverage and number of non-executive directors have negative effects on executives’ remuneration. Conversely, dividends, percentage of executives’ directors, board size and size of firms have positive effects on executives’ remuneration. There is no evidence that executives’ ownership has significant effects on their remuneration. From the viewpoint of the agency theory about the effects of larger boards, firm profitability, and executive percentage on executives’ remuneration, it is perceived that the weak governance exists among listed companies in the Malaysian market. The insignificant impact of executives’ ownership on their remuneration is an important finding of this research.

The effect of remuneration committees, directors’ shareholding and institutional ownership on the remuneration of directors in the top 100 companies in South Africa

Executive directors’ remuneration of leading South African companies often attracts the attention of the press, shareholders and unions. The research on which this article is based investigated whether executive directors’ remuneration of the Top 100 companies listed on the Johannesburg Securities Exchange (JSE) is influenced by the implementation of certain corrective corporate governance measures. The remuneration of executive directors was regressed on a number of firm and corporate governance characteristics to determine whether these characteristics have an influence on executive directors ’remuneration. It was found that corporate governance reforms relating to institutional ownership, the number of non-executive directors on the remuneration committee, shareholder voting on the remuneration policy and the number of remuneration committee meetings act as an effective governance tool to protect shareholders’ interests with regard to some of the elements of executive directors’ remuneration.

Appointment of Directors and Performance of Deposit Money Banks in Sub Saharan Africa: Do We Need More Executive or Non-Executive Directors?

This study mainly examined the effect of Corporate governance on the performance of deposit money banks in Sub Saharan Africa (SSA). Specifically, the effect of appointment of more non- executive directors-BNEDDUM on return on assets (ROA) and net interest margin (NIM) of the banks in SSA was determined. Conversely, the work examined the effect of appointment of more executive directors on the ROA and NIM of the banks. Secondary data on six SSA countries and twelve banks collected for the period 2004 to 2016 were used. Panel data regression approach was employed to analyze the data. Fixed effects and Random effects models were adopted based on the results of Hausman tests. The study revealed among others that appointment of more number of non-executive directors has a positive but insignificant effect on ROA. It also indicated a strong positive correlation with both ROA and NIM. A hypothetical appointment of more executive directors showed a positive and significant effect on NIM while indicating the negative and insignificant effect on ROA. The positive effect of BNEDDUM on ROA coupled with its strong positive correlation with ROA and NIM seem to strongly suggest that appointment of more non-executive directors in deposit money banks in SSA is more beneficial to the banks than the appointment of more executive directors. However, the global conflict in the findings associated with appointment of directors is not yet fully resolved. The study recommends that while more non-executive directors may be appointed, banks in SSA must put in place internal control systems which promote a culture of professionalism in management.

Board Characteristics, Audit Committee and Audit Quality: The Case of Indonesia

The purpose of this research is to examine the relationship between board size, number of non-executive directors, the financial expertise of the non-executive directors representing the audit committee and the audit quality.Data from non-financial firms listed in the Indonesian Stock Exchange have been used. To achieve the research objectives, we have used the logit regression. The data of 121 listed firms in a five-year period from 2012 to 2016 is collected from the printed audit accounts available on companies‘ websites. The emergence of corporate governance phenomena has brought upon many structural changes in firms‘ governance structure such as the audit committee role and the audit quality.The second decade which starts with the warmth of subprime crisis has seen a significant development in the code of corporate governance. The role of the audit committee is now significant and being recognized as the solution of prevention of internal fraud.The findings of the study have shown that in non-financial firms listed in the Indonesian Stock Exchange audit committee and board characteristics have significant effect on audit quality. This study will be helpful for students, auditors, policymakers and researchers to understand the impact of corporate governance in audit quality.

The Impact of Corporate Governance on Financial Performance: The Case of Listed Companies in the Consumer Services Sector in Botswana

The concept of corporate governance relates to the procedures and practices that are implemented to run a company in such a way that its objectives are achieved. It is the mechanism and process to control and direct a business enterprise, which would result in appropriate balancing of the varied interests of the stakeholders and that of the organization. This study focused on the effect of corporate governance of listed companies in the consumer services sector in Botswana for the period 2012-2016. Financial statements of the listed consumer services companies were used as the main source of data. Return on Assets was taken as the dependent variable to measure profitability and Board size, gender diversity, male-female representation in the board, composition of executive and non-executive directorship, number of sub-committees and frequency of board meetings as independent variables. The findings indicated significant positive relationships between board size and the number of male board members and between board size and the number of non-executive directors; significant positive relationships between the number of non-executive members and the number of male board members and with the number of sub-committees; between female board representation and gender diversity and between the number of board sub-committee and the frequency of board meetings. Negative significant relationships were identified between male board representation and female board representation and between the number of executives and gender diversity. Return on assets, which measured the performance of the selected companies showed a strong negative relationship with number of sub-committees. Further analysis also revealed a significant impact of the number of subcommittees on the financial performance of the listed companies in the consumer services sector. None of the other independent variables showed any significant impact on the profitability of the selected firms. The study will be useful to the stakeholders to appreciate various dimensions of corporate governance and their influence in the financial performance of business enterprises.

A STUDY ON THE IMPACT OF CORPORATE GOVERNANCE ON FINANCIAL PERFORMANCE

The Cadbury Report defines Corporate Governance as the system by which businesses are directed and controlled (Cadbury, 1992). Corporate governance refers to generally accepted norms, customs, laws, habits and regulations determining the manner of running the company. Though concrete evidence does not substantiate the relationship between good corporate governance and creation of value for an organization, there is strong evidence in the past to affirm the destruction of good values by bad corporate governance. This descriptive research endeavours to establish the relationship between financial performance of firms and corporate governance of 30 Indian companies, listed on the BSE. Data pertaining to Return on Assets and Corporate Governance variables of Board Size (number of directors in board), Duality (if chairman and managing director are same), Remuneration to the board of directors, independence (Number of non-executive directors) and Board Ownership (Shareholding pattern of promoter and promoter's group) of these companies have been collected for the five year period of 01/04/2009 to 31/03/2014 from moneycontrol.com and CMIE data source and analysed using SPSS, employing the statistical tools of correlation, regression and Mean. Results reveal that the two Corporate Governance variables of Board Ownership and Duality are exerting a significant impact on ROA at 5% level.

Corporate governance and earnings quality: the Iranian evidence

Purpose - The main question in this study is whether there is any relationship between corporate governance variables and earnings quality. The size of the board and audit committee, the number of stockholding managers and non-executive directors, and management quality are considered as independent corporate governance variables in the hypotheses. Research design, data, and methodology - Earnings quality is used as the dependent variable. Input from the abovementioned variables are drawn from 94 listed companies in the Tehran Stock Exchange for the period between 2006 and 2010. Results - This study examines corporate governance aspects such as the size of the board of directors, the number of shares held by the board, the board’s independence, and the percentage of nonexecutive directors. The results show that establishing an audit committee has a significant role in ensuring higher quality reported earnings. Conclusions - The regression statistics output reveals a meaningful relationship between earnings quality and the size of the board of directors, the number of non-executive directors, and the size of the audit committee. This result indicates that improving earnings quality requires that the size of the board of directors be taken into account.

Independence of Non-Executive Directors in Public Limited Companies in Malawi

The role of Non-executive directors in public limited companies has been gaining eminence in the global perspective. Non-executive directors are seen as counter-balancing elements to the immerse powers of the executive directors who have long been accused of abusing their vested powers for their own benefits thereby bringing issues of agency costs.Malawi Stock Exchange – the sole capital market in Malawi, adopted The Code of Best Practice for Corporate Governance in Malawi based on Cadbury Report (1992) formulated by public and private groups led by Society of Accountants in Malawi in 2001. Subsequent codes developed in Malawi in 2010 and 2011 mirrored Higgs Report (2003) and Combined Code (2003) on the roles and independence of the Non-executive directors. Consequently, Malawian listed companies provide full disclosure on the roles and independence of their Non-executive directors.Findings in this study however depict that a substantial number of Non-executive directors are not independent emanating from conflict of interest as a result of significant shareholding in companies they represent, interlocking directorships and longevity in their current directorship. The debacle of this matter is that some Non-executive directors are too powerful such that Corporate Governance Principles alone cannot resolve current deficiencies in the independence of Non-executive directors. The capital market regulators should explore issuing strong directives or seek statutory provisions to redress current gaps in the roles and independence of Non-executive directors.

Board Structure, Ownership, and Voluntary Disclosure in Ireland

ABSTRACTManuscript Type:EmpiricalResearch Question/Issue:This is a cross‐sectional study of the relation between corporate governance and voluntary disclosure in Ireland.Research Findings/Results:We report clear evidence that voluntary disclosure increases with the number of nonexecutive directors on the board. Firms that have a nonexecutive chairman make greater voluntary disclosures than other firms. This finding is not robust to the inclusion of other explanatory variables. We find no evidence that ownership structure is related to voluntary disclosure.Theoretical Implications:The results regarding nonexecutive directors are interpreted as independent boards facilitating a reduction in information asymmetry between owners and managers. While this supports the predictions of agency theory, the absence of evidence that ownership structure influences voluntary disclosure does not. It is posited that sociological and organizational factors (e.g., informal networking) that pervade the Irish market mitigate against our disclosure measure capturing all aspects of voluntary disclosure. Furthermore, indirect evidence is provided that there are other costs and benefits to disclosure that vary across firms and may outweigh agency costs in many situations. We conclude that while agency theory has some explanatory power for voluntary disclosure, it cannot explain all the cross‐sectional differences in voluntary disclosure by Irish public limited companies.Practical Implications:The results support the attention paid by regulators to the proportion of nonexecutive directors on the board. However, the costs and benefits to disclosure vary across firms. Regardless of agency considerations and regulatory guidelines, firms will ultimately formulate their disclosure policy with reference to overall marginal costs and marginal benefits.

How part-time directors create exceptional value: New evidence from the non-executive director awards

Theory suggests that non-executive directors (NEDs) can add significant value to the governance of companies, yet many empirical studies have failed to find evidence for this. One reason is that research has focused on studying issues that are easy to measure, such as the number of NEDs on a board and their relative proportion to the executive, rather than studying what really happens in the boardroom. This study fills the gap by analysing 75 in-depth case studies of NED performance. It found that NEDs contributed significantly to the performance of the board. In particular the dynamic role of the NED is highlighted, in which the NED can play different roles dependent upon the lifecycle of the company.

Disclosure of Governance Information by Small and Medium-Sized Companies

Purpose: This paper examines the extent of compliance with the governance regulatory requirements by small and medium-sized companies (SMEs) listed on the Alternative Investment Market (AIM). Considering the declining investor interest in AIM-listed companies coupled with the increasing attention investors pay to the presence of a sound and transparent governance mechanism, the paper seeks to identify those corporate governance and firm structure-specific characteristics that are positively associated with and affect the extent of compliance with the governance regulatory requirements, in an attempt to present recommendations that would make AIM-listed companies more attractive as investment opportunities. Design/Methodology/Approach: The paper focuses on AIM-listed companies over a period of three years (2002, 2003 and 2004) and concentrates on their extent of compliance with the corporate governance disclosure guidelines set out by the regulatory bodies. To measure the extent of disclosure, we compiled a checklist based on the Combined Code (2003) and FSA listing rules. Having reviewed the literature on large companies (as there were no studies on SMEs), we selected a number of governance and firm structure-specific characteristics. The relationships between the level of governance disclosure and the chosen characteristics were examined in order to highlight those factors that are associated with and affect the level of governance disclosure. Findings: On average about 50% of governance items required to be disclosed had been reported by AIM-listed companies. As for large companies, there is a positive relationship between the number of non-executive directors in governance mechanisms and the extent of disclosure. Unlike large companies, firm structure-specific characteristics were neither associated with nor had any impact on the extent of governance disclosure. Considering that there has been a declining interest in AIM-listed companies, we recommend the presence of more non-executive directors as this would ultimately mean more compliance with the governance disclosure requirements and could result in restored investor interest and confidence. Our findings also indicate that SMEs are more likely to have adopted a stakeholder approach when concentrating on their governance arrangements. Originality/Value: This is the first study to present evidence on the state of compliance with the governance regulatory requirements by AIM-listed companies. The study presents evidence on governance disclosure practices of SMEs and indicates that in spite of a less stringent regulatory regime set up within AIM, non-executive directors, who bring in an element of independence to boards, play a significant role in elevating corporate transparency.