Corporate Governance Practices Research Articles

The Relationship between Corporate Governance and Sustainable Financial Practices

This research examines the relationship between corporate governance practices and the adoption of sustainable financial practices in private banks operating in Erbil, Iraq. A quantitative research approach was employed, using a structured questionnaire to collect data from 268 employees across various private banks. The questionnaire focused on dimensions of corporate governance (transparency and disclosure, risk management and internal controls, performance measurement and accountability) and their impact on sustainable financial practices. The findings reveal a significant positive relationship between all three dimensions of corporate governance and sustainable financial practices, highlighting the importance of effective governance in promoting financial sustainability. The study provides insights for policymakers, regulators, and bank management seeking to enhance corporate governance practices and promote sustainable financial practices within the Iraqi banking sector. Future research could explore causal relationships and conduct cross-cultural studies to further enhance our understanding of corporate governance and its impact on financial sustainability.

Corporate governance disclosure and stock price among listed consumer goods firms in Nigeria

This research investigates the impact of corporate governance disclosure on stock price reaction of consumer goods firms listed on the Nigeria Stock Exchange (NSE). The study involved 16 consumer goods firms listed on the NSE. Secondary data for the study was collected from the annual reports of the sample companies, for the period 2014 to 2022. The panel data regression analysis, particularly the feasible generalized least square regression (FGLS) method was used because it has inbuilt mechanism to control for the existence of heteroskedasticity and accommodate non-normally distribution, which was discovered in the data. Data analysis revealed that the rate of corporate governance disclosure influences the stock prices of firms, even though profitability, leverage, firm size, and industry did not have any moderating effect on this relationship. These findings show that corporate governance disclosure is a very relevant factor in the decision making of investors in consumer goods firms, which makes it essential for these firms to build trust and display transparency by always disclosing their corporate governance practices in their annual reports, their websites, and other channels.

The Mediating Role of Financial Performance in the Impact of Corporate Governance on the Market Share in the Iraqi Listed Companies

This study examines how financial performance moderates the effect of corporate governance on the market share of Iraqi companies. The study examines companies found on the iraqi Stock Exchange employing multiple regression and panel data analysis over 2012-2022. After the data were systematically removed, 33 companies were selected from 130. The study reveals that corporate governance positively impacts market share, and financial performance moderating this relationship. The findings suggest that Financial performance could indefintely intermediate the impact of good corporate governance proxied by corporate secretary on Market Share, and it ultimately could be determined that the corporate secretary has an indirect effect on the Market Share through financial performance. The study highlights. The research underscores the significant impact of corporate governance on market power and financial performance, while also emphasizing several important implications for management. Corporate governance has a crucial part in boosting brand reputation and market positioning. Evidence suggests that organizations that are dedicated to implementing strong corporate governance practices are able to positively influence consumer perceptions, thereby expanding their customer base. The alignment of strategic initiatives enhances market power and establishes a sustainable competitive advantage.

Are Environmentally Sensitive Firms More Likely to Release Corporate Environmental Disclosures? Evidence From Environmental Risk Management

ABSTRACTThis study examines the environmental risk management practices of US firms operating in environmentally sensitive industries. Using two proxy variables for ex ante environmental policy risk—firm‐level toxic chemical emissions and climate‐related keywords in annual financial statements—we demonstrate that firms facing high ex ante environmental policy risk tend to increase the frequency and length of their voluntary sustainability reports. Additionally, we find that proactive sustainability disclosures significantly mitigate firm‐level systematic risk (beta) and associated litigation risk. This risk reduction is more pronounced among firms with substantial green innovations and stronger corporate governance practices. Overall, this study highlights the causes and consequences of voluntary sustainability reports, focusing on how environmentally sensitive firms manage environmental risk through these publications.

Promoting Sustainable Economy by Integrating Tri Hita Karana Concept in The Bank's Ownership Structure as Inclusive and Sustainable Risk Mitigation

Objective: Bank ownership structure can influence corporate governance and risk management. Risk Mitigation as a comprehensive effort to identify, measure, and reduce various types of risk impacts faced by the banking industry. Theoretical Framework: The concept of tri hita karana rooted in Balinese philosophy offers a holistic framework to achieve balance and harmony in three aspects that emphasise harmony between man and God, man and man, and man and his environment. Studies on the integration of the tri hita karana concept in the context of bank ownership structure and its implications for risk management are limited. This article aims to explore the potential synergies between bank ownership structure, tri hita karana principles, and risk mitigation strategies that can be applied. Method: This research uses a qualitative approach based on a literature study, by reviewing various sources related to banking ownership structure, tri hita karana concept, and risk management in the banking industry. Results and Discussion: The results of the analysis show that the integration of the tri hita karana concept in the ownership structure of banks can contribute to more comprehensive risk mitigation. The balance between parhyangan, pawongan, and palemahan can encourage better corporate governance practices that are sustainable, an organisational culture of integrity, and have environmental social responsibility. Research Implications: This article can provide recommendations that in the preparation of policies and procedures need to integrate the values of Tri Hita Karana, develop a monitoring and evaluation system based on the concept of balance, provide training and socialisation to all employees based on the concept of tri hita karana and conduct regular control and evaluation of the effectiveness of its implementation. Originality/Value: This article offers a new conceptual framework in understanding the relationship between ownership structure, tri hita karana concept as an effort of risk mitigation strategy in the banking sector.

How the Corruption and Predictors of Audit Structure Impact the Firm Performance in Developing Economy?

Corruption remains the core issue in developing economies. In the last decade of the 20th century three elected governments were dismissed in Pakistan on account of malpractices and corruption. Present study evaluated the effect of corruption on performance of listed firms first time in the context of Pakistan. The results showed that corruption positively affects the performance of the firm measured by Tobin’s Q. The results revealed that payment of extra money to corrupt government officials to enter social networks and to enjoy the tax benefits, speedy transaction processes and relaxed regulator supervision have positive effect on firms’ performance. The results support the corruption theory of ‘Grease in Wheels’. This study also examined the impact of Audit Independence and External Audit Quality on performance of listed firms. The results showed that audit committee independence has a statistically significant and positive impact on firm market value whereas the impact of external audit quality is insignificant on market performance of the firm. The results necessitate anti-corruption measures for the development of the performance of the listed firms. Results also suggest the presence of good corporate governance practices improve the firm’s performance. The present study used data of 86 companies of commodity sectors listed on Pakistan Stock Exchange for 13 years from 2008 to 2020. Generalized Method of Moments (GMM) is used for analysis.

Environmental Performance, Financial Constraints, and Tax Avoidance Practices: Insights from FTSE All-Share Companies.

Through its initiative known as the Climate Change Act (2008), the Government of the United Kingdom encourages corporations to enhance their environmental performance with the significant aim of reducing targeted greenhouse gas emissions by the year 2050. Previous research has predominantly assessed this encouragement favourably, suggesting that improved environmental performance bolsters governmental efforts to protect the environment and fosters commendable corporate governance practices among companies. Studies indicate that organisations exhibiting strong corporate social responsibility (CSR), environmental, social, and governance (ESG) criteria, or high levels of environmental performance often engage in lower occurrences of tax avoidance. However, our findings suggest that an increase in environmental performance may paradoxically lead to a rise in tax avoidance activities. Using a sample of 567 firms listed on the FTSE All Share from 2014 to 2022, our study finds that firms associated with higher environmental performance are more likely to avoid taxation. The study further documents that the effect is more pronounced for firms facing financial constraints. Entropy balancing, propensity score matching analysis, the instrumental variable method, and the Heckman test are employed in our study to address potential endogeneity concerns. Collectively, the findings of our study suggest that better environmental performance helps explain the variation in firms' tax avoidance practices.

Ex-Military Commissioners and Firm Performance: The Case of Indonesia Manufacturing Companies

This investigation relates to the new corporate governance (CG) suggestions that using ex-military commissioners can lead to better firm performance. Quantitative analysis was used to analyze the sample of manufacturing sector public companies. The data comprised 906 firm-years (from 2016 to 2021). This study shows that companies whose CG practices involve employing ex-military officers exhibit high firm performance levels. This study emphasizes the value of using a configurational analytical approach to explore firm jointly- and country-specific CG practices that engage firms to achieve the necessary level of performance. The current study calls policymakers’ attention to evalu- ating the current state of regulatory and competitive development in their countries and establishing policies in line with that assessment. The methodology provides connec- tions between firm performance and CG with retired military commissioners. This study broadens the focus of CG studies to provide effective solutions for practitioners, especially Indonesian manufacturing firms. It also highlights the importance of ex-military commis- sioners in a particular company sector and CG procedures specific to a particular nation. It encourages enterprises to reach the desired level of performance. The research impli- cation relates to good governance in board diversity using ex-military as independent commissioners for supervisory roles.

The board gender, audit committee features, and social disclosure: Corporate governance practices from emerging markets

This study aims to analyze the empirical testing of four hypotheses, i.e., the influence of the independent board of directors, the board gender, the independent audit committee, and the audit committee features on the extent of social disclosure. This study was conducted on companies listed on the Indonesia Stock Exchange (IDX) in the mining and energy industries, totaling 63 companies. Out of these, 55 companies met the criteria to be included in the unit of analysis. The data analysis then used ordinary least squares (OLS). The study results found that independent board of directors, independent audit committee, and audit committee features have a significant effect on the extent of social disclosure. Meanwhile, board gender has no significant effect on the extent of social disclosure. The results of testing this hypothesis also imply that the existence of an independent party, both on the board of commissioners and the audit committee, is urgently needed. They use an independent, professional, and non personal interest attitude in their assignments. In addition, the existence of gender in the audit committee is essential to improve oversight of disclosure.

Guardians of integrity: Exploring the role of corporate governance in preventing financial statement fraud

Financial statement fraud (FSF) is a significant contributor to losses and has persisted for several years (Association of Certified Fraud Examiners [ACFE], 2022). Previous studies concluded that corporate governance (CG) can significantly reduce FSF (Mangala & Kumari, 2015; Rostami & Rezaei, 2022; Velte, 2023). However, while the literature study acknowledges that CG plays an important role in fraud prevention and emphasizes the importance of effective board composition, effective audit committees, independent commissioners, gender diversity, ownership structure, and engagement with Big 4 accounting firms to the occurrence of FSF, the empirical evidence in Indonesia suggests inconsistent results. This research investigates the role of CG in preventing FSF in Indonesia. The study tested a sample of 72 companies sanctioned by the Financial Services Authority (Otoritas Jasa Keuangan, OJK), Republic of Indonesia, in 2019–2021 and another 72 control sample companies from similar sectors and equivalent market capitalization. A total of 144 data units are analyzed using panel data regression and independent t-test. The study results show that the frequency of audit committee meetings and institutional ownership positively affect the indication of FSF. The study result also shows significant mean differences in the frequency of audit committee meetings and institutional ownership between companies indicated and not indicated to commit FSF. Besides enriching the global discourse on best CG practices, this study provides actionable recommendations for enhancing the integrity and transparency of financial reporting.

The Watchful Eye: How Does the Prominence of Chief Audit Executives Curb Financial Misconduct?

ABSTRACT Financial misconduct is a significant threat to capital markets, with severe negative consequences for stakeholders. This study explores the role of Chief Audit Executives (CAEs) in mitigating financial misconduct, highlighting their importance in enhancing internal audits and governance processes. Using hand-collected data from S&P 500 companies’ corporate leadership teams, we find that firms with prominent CAEs are less likely to engage in financial misconduct. This relationship is especially pronounced in companies with strong teamwork culture. Entropy balancing, two-stage least-squares (2SLS) procedure, and placebo tests support our results, underscoring the robustness of the findings. This study provides significant implications for corporate governance practices and regulatory policies. Data Availability: Data are available from the public sources cited in the text. JEL Classifications: M14; M42; G34.

The effect of board of director diversity on company performance and the mediating role of director remuneration: Malaysia public companies’ evidence

Introduction: The board of director diversity plays a critical role in developing strategic options to improve company performance. The appropriate remuneration package for the director might bridge between the effectiveness of diversity of board and enhancing company performance.Objective: The study aims to examine the effect of board of director diversity on company performance, with a particular focus on the mediating role of director remuneration. Methodology: The nature of the study is quantitative. The current study focuses on the Malaysia public listed companies. The study used panel data from period 2015 to 2021 using secondary data which extracted from Bloomberg database and company annual report. The study utilized 601 sample observation. Result: Data was analysed through Stata software and the findings reveal a significant positive relationship between board diversity (gender, ethnicity, tenure) and company performance measured by Economic Value Added (EVA) and Environmental, Social and Governance (ESG) scores. Additionally, director remuneration is found to significantly mediate the impact of board diversity on EVA, although its mediation effect of ESG performance is less pronounced. These results highlight the importance of fostering diverse boards and implementing fair remuneration practices to enhance both financial and non-financial performance in companies. Conclusion: this study provides valuable insights for policymakers, stakeholders and investors aiming to improve corporate governance practices in Malaysia public listed companies

THE EFFECT OF PROFITABILITY, CORPORATE SOCIAL RESPONSIBILITY, CORPORATE GOVERNANCE MECHANISMS, AND FIRM SIZE ON DEBT POLICY

Good corporate governance practices can provide additional trust to external parties and investors, especially in corporate debt policy. This research aims to investigate the relationship between profitability, corporate social responsibility, corporate governance mechanisms, and firm size on corporate debt policy. The research method used is quantitative analysis using ordinary least squares and robust regression on data from companies listed on the Jakarta Islamic Index from 2017 to 2022. The results showed that profitability and an independent audit committee significantly negatively affect debt policy, while corporate social responsibility, independent commissioners, and firm size have a positive impact on debt policy. These findings provide important insights for companies in making smart debt policy decisions by business dynamics. The study also confirms the importance of agency theory in explaining how such elements help resolve conflicts of interest between management and shareholders, as well as enhance honesty, transparency, and better risk management in financial decision-making. By strengthening corporate governance and enhancing corporate social responsibility, companies can reduce the risk of conflicts of interest, increase integrity, and promote transparency in financial decision-making. This not only creates a more ethical working environment but also strengthens relationships with investors and society.

A literature review of corporate governance

Corporate governance is a set of rules, practices and laws that guide companies to operate in an ethical and responsible manner. In the process of corporate operations, shareholders and management make decisions and supervise through clear rules, procedures and structures. Modern corporate governance emphasizes separation of duties and effective supervision. The separation of duties within the company helps to prevent conflicts of interest and unethical behavior. Its core lies in the allocation of power and the coordination of interests, avoiding conflicts of interest between shareholders and management, thereby improving the financial performance and market competitiveness of the company. This article combs through a large number of corporate governance practice literature to find out the effectiveness of corporate governance mechanisms in companies and institutions. This article also looks at reducing agency problems through effective corporate governance mechanisms.

The Role of Corporate Governance Practices on Saudi Stock Exchange Voluntary Disclosure

This study examines the impact of corporate governance practices on voluntary disclosure among non-financial firms listed on the Saudi Stock Exchange (Tadawul) from 2011 to 2022. The research focuses on key governance variables, including board size, board independence, CEO duality, audit committee effectiveness, ownership structure, and board diversity, to understand their influence on transparency and information sharing. Employing panel data analysis, the study utilizes fixed effects, random effects, and pooled OLS models, with the fixed effects model emerging as the most robust. The findings reveal that board size, board independence, audit committee effectiveness, ownership structure, and board diversity significantly enhance voluntary disclosure, whereas CEO duality and firm-specific factors such as firm age and leverage show limited influence. The results highlight the importance of strong corporate governance frameworks in fostering transparency and aligning with Saudi Arabia’s Vision 2030 goals to attract foreign investment and boost market confidence. This study contributes to the literature on corporate governance and disclosure in emerging markets, offering practical insights for policymakers and corporate leaders to improve governance structures and reporting practices.

AI in Corporate Governance: Navigating Critical and Comfortable Aspects

Today Artificial Intelligence (AI) and related technologies have become a disruptive force in the market, impacting every aspect of a business. AI's roles in corporate governance (CG) practices are important; it, however, has to be seamlessly integrated for the desired outcomes. This research aims to assess the critical and comfortable aspects of AI for CG in organisations, specifically in the manufacturing sector. The research employed a qualitative strategy since the strategy aids in exploring a phenomenon comprehensively. In line with the qualitative strategy, semi-structured interviews with experts from the manufacturing industry were conducted as subject of this research. Thematic analysis was done on data using ten experts, ranging from China’s manufacturing industry. The findings reveal that AI is quite important for CG since it can improve all the parts of CG, focusing on risk management and decision-making. Interviews with experts emphasised that AI has facilitated rational decision-making and risk management in organisations. Yet the findings also showed that AI in CG was not quite without challenges, such as data quality, ethics and employee resistance. Nonetheless, appropriate mitigation strategies can be implemented, like robust data governance frameworks and training programs for employees that can make AI a critical aspect of CG and ensure that it is comfortably integrated into business operations. Overall, this research has significant managerial implications since it highlights the need for AI in CG by addressing the challenges faced with AI integration.

The Legal Framework for Corporate Governance Under Saudi Law and United States Law

Objective: This study aims to conduct a comparative analysis of the legal frameworks of corporate governance in Saudi Arabia and the United States of America. Theoretical Framework: The study's theoretical framework is based on institutional theory, and the research addresses the regulatory rules and formal structures of corporate governance. Method: The qualitative methodology adopted for the study is a comparative case study approach where relevant laws and regulations are reviewed as academic literature in both countries. Results: The findings highlight that although Saudi Arabia and the United States have established a legal framework for corporate governance, their approaches differ significantly. These differences are manifested in regulatory mechanisms, institutional structures, and implementation strategies. Research Implications: The implications of this study are to improve the understanding of how national legal systems shape corporate governance practices; Offering insights into the complex interactions between institutional environments and governance mechanisms. Originality/Value: This research provides a refined comparative perspective that corporate governance reduces corruption, helps achieve justice, protects a company’s financial resources, and creates attractive investment opportunities.

Effect of Firm Size, Profitability and Leverage on Voluntary Disclosure of Insurance Companies in Nigeria

The level at which listed firms in Nigeria disclose voluntary information is at an increasing rate yearly. This therefore, led to this research as to what factors influence this voluntary disclosure by insurance companies. This study primarily tries to determine the effects of firm size, profitability, and leverage on the content and degree of voluntary disclosure by insurance companies in Nigeria. All 15 insurance companies listed on the Nigerian Stock Exchange were used as the study's population, and a census sampling technique was applied to arrive at a sample size of ten (10) insurance companies. Data were collected from the insurance companies’ annual reports and accounts. Multiple regression analysis was used to investigate the effects of firm size, leverage, and profitability on voluntary disclosure. The results indicated that leverage and company size have a positive but insignificant effect on voluntary disclosure. Indeed, profitability has a negative but significant effect on voluntary disclosure. It is, therefore, recommended that insurance companies should embark on good corporate governance practices such as the voluntary disclosure of information in order to attract investors and improve their performance.

Integrating theories for insight: corporate governance and environmental disclosure practices in the UAE

Purpose The purpose of this paper is to systematically review how agency and stakeholder theories are integrated within corporate governance and environmental disclosure practices in the UAE, highlighting their relevance and adaptation to a distinct economic and regulatory environment. Design/methodology/approach Using a comprehensive qualitative methodology, this study synthesises a broad spectrum of existing theoretical and empirical research to explore the dynamics of corporate governance mechanisms regarding environmental sustainability. This approach enables a detailed examination of how agency theory’s focus on principal–agent relationships complements stakeholder theory’s broader view of corporate responsibilities. Findings This research uncovers significant insights into corporate conduct and responsibility, emphasising the need to balance shareholder objectives with broader stakeholder interests. It identifies key challenges in this integration, such as managing the complexities and potential conflicts between different stakeholder demands. The findings underscore the crucial role of specialised governance mechanisms, like board characteristics and committees, in enhancing environmental transparency and accountability. Originality/value This study contributes to the academic discourse by shedding light on the interplay between corporate governance frameworks and environmental disclosure practices within the UAE. It offers fresh insights into applying established theories in a non-Western context. These insights are precious for academics, practitioners and policymakers interested in refining corporate governance and promoting environmental responsibility. The practical implications drawn from the findings empower stakeholders to implement effective strategies that can enhance a firm’s reputation, legitimacy and long-term viability.

Pengaruh Good Corporate Governance terhadap Manajemen Laba pada Perusahaan Sektor Kesehatan

Good corporate governance (GCG) is an important aspect in corporate management, especially in the healthcare sector. This is because good Good corporate governance (GCG) practices can affect the transparency and accountability of financial reports, as well as reduce the tendency of earnings management. The risk of earnings management is often used in the face of pressure to maintain stable and attractive financial performance for stakeholders. This study aims to analyze the effect of good corporate governance on earnings management in healthcare sector companies. This study uses a quantitative approach with an explanatory research to test the effect of Good corporate governance (GCG) on earnings management in health sector companies listed on the Indonesia Stock Exchange (IDX) in 2021-2023. The results obtained from this study are independent commissioners, managerial ownership, institutional ownership do not have a significant effect on earnings management. While the audit committee has a significant effect on earnings management. Independent commissioners, managerial ownership, institutional ownership and audit committees simultaneously have a significant effect on earnings management.