Previous Governance Research Articles

Bank intervention and firms’ earnings management: evidence from debt covenant violations

Earnings management has long been one of the main concerns in accounting and management literature, and the extent to which corporate governance mechanisms can discipline management behaviour and prevent earnings management has attracted increasing interest among policy makers and academic researchers. Differing from previous corporate governance literature that focuses mainly on the board and auditors, we explore the role of creditors in corporate governance. In particular, we examine the effect of bank intervention on earnings management via the lens of debt covenant violations, where control rights are transferred to creditors (banks). Using a Difference-in-Difference approach, we find that firms reduce both their accruals-based and real earnings management following debt covenant violations. The negative effect on earnings management is more prominent when banks possess greater bargaining and monitoring power and when firms are more financially constrained. By identifying a specific channel through which debt providers influence corporate financial reporting, our findings suggest that creditors can play an important role in governing organisations and disciplining management behaviour.

Public health policy and political contestation in Indonesia.

Public health issues should be a focal concern for public leaders. A critical moment for articulating intended policies is during elections. At this time, candidates present significant ideas and proposals derived from the evaluation and reflection on the previous administration's governance. This approach ensures that the proposed programmes are grounded in evidence. In 2024, Indonesia conducted general elections, amid significant public health challenges such as the persistently high prevalence of stunting and poor maternal and child health outcomes. The Prabowo-Gibran, who then won the election, focused their campaign on providing free food and milk. This campaign appears to be unsupported by a comprehensive improvement plan, leading to the impression that public health issues are merely used to enhance electoral appeal.

Integrated construction consulting project performance improvement in China using network structure and team boundary-spanning behavior: a configurational analysis

PurposeThe consulting team intervenes in the integrated construction consulting (ICC) network structure centered on “client-contractor-consultant.” Team boundary-spanning behavior (TBB) driven by the network structure is crucial to project performance. This article investigated how to stimulate the consulting project performance (CPP) improvement by considering the interactive effect of network structure and TBB. To be specific, this paper explored the configuration between structural characteristics of project networks, the dimension of TBB, and project performance in ICC projects.Design/methodology/approachNetwork density and centrality were used to reflect network structure. This study collected 216 valid responses from construction professionals (including project managers, department managers, and project engineers) via a questionnaire survey and analyzed the data using fsQCA.FindingsCombining with the corresponding typical project case and analysis, the results concluded four types of configurations for achieving high performance in the ICC projects. Meanwhile, network centrality, density, ambassadorial behavior, coordination behavior, and detection behavior significantly impact high consulting project performance. Matching ICC network characteristics with the TBB is important. There are also three low performance configurations for the ICC projects. Low performance state also occurs when network centrality or density and coordination behavior is simultaneously low. Only the right match between the network characteristics and TBB can produce high consulting project performance.Research limitations/implicationsThe network centrality and density, the implementation of TBB vary, and the paths to achieve high consulting project performance are different. Clients, ICC projects, and consulting teams should choose the appropriate development paths according to the actual situation. (1) Clients should commit to applying the ICC project model with high network centrality, density, and coordination behavior of ICC enterprises to promote project performance. (2) Consulting enterprises should carry out ICC business based on detecting behavior and coordinating behavior. (3) The market should cultivate head consulting enterprises with independence and integration, and bring into play the effectiveness of consulting team ambassadorial behavior.Practical implicationsComparing the results of the four high CPP configurations, the network structure characteristics are essential, which means that in the Chinese consulting practice between the owner and the consulting firm pay attention to the use of appropriate ICC organizational structure model and arrange the degree of centralization of authorized responsibilities. Coordination behavior is necessary to achieve high CPP. Therefore, Chinese consulting firms should pay attention to effective communication and exchange with project contractors in order to get high CPP in conducting business; meanwhile, enabling behavior can achieve high CPP both in the presence and absence of configuration H1 and H4, which indicates that enabling behavior has substitution effect. Comparing the three low CPP configurations also contrarily confirms the indispensability of coordinating behavior. Comparing the results of high and low CPP configurations, the TBB is seriously missing and not properly applied in CPP enhancement. In detail, Chinese consulting firms have been regarded as independent third parties providing services, and less attention has been paid to the TBB of Chinese consulting firms in past practice, thus leading to the dilemma of inadequate empowerment of consulting firms due to their unclear status. To solve this dilemma, the findings of this paper offer a solution at the micro level to change the previous perception of consulting and demonstrate that Chinese consulting practice needs to pay attention to TBB with owners and contractors, and apply it well to enhance the reputation, management consulting level and capability, and experience and expertise of consulting firms to achieve high CPP.Originality/valueThe research results changed from the previous bilateral project governance to a new perspective of network embedding. It provided a theoretical basis for the improvement path of high consulting project performance, as well as providing ideas for clients on the organizational design of ICC projects. On the other hand, it provided a practical reference for TBB positioning of ICC enterprises for transformation and upgrading development.

Defense and Economy in the Border Areas of the Country in the Framework of National Welfare

This study explains the condition and urgency of welfare development in Indonesia's border areas from a defense and economic perspective. This research is aimed at determining the previous government's actions from centralization to shifting towards a more decentralized direction, as well as governance characterized by previous bad governance shifting towards governance characterized by good governance and clean governance in order to achieve a national defense and also increase the economy in the region. border. The method used to write the article relates to the dialectic of descriptive-qualitative research aimed at obtaining an empirical picture of infrastructure, economic and service development in border areas. The results of this paper show that with a development in the border area, it must prioritize a prosperity approach, which in this case is complemented by an economic approach that can encourage an investment in a border area that is in accordance with several the potential and opportunities that the region has.

Sustainability governance indicator-based framework for public transport companies in developing countries

This paper aims at creating a sustainability governance framework to assess the public transport companies in developing countries. In contrast to previous research studies, governance criteria, namely transparency and accountability, are involved in the sustainability assessment. Eventually, four dimensions of key performance indicators are suggested: economic, environmental, institutional and social. Each of them describes a completely different perspective of sustainable development. A numerical illustration is provided at the end to evaluate three public transport companies from a developed country to give an overview of the framework implementation using simple additive weighting method.

Water governance diversity across Europe: Does legacy generate sticking points in implementing multi-level governance?

The Water Framework Directive (WFD) aims to protect and improve water quality across Europe through an integrative and multi-level water governance approach. The goal is to ensure that water quality in Europe meets good ecological status by 2027. Whilst the WFD has been hailed as a cornerstone for governance innovation in water management, most EU member states (MS) still struggle to achieve good ecological status of their waters. The realignment to a multi-level governance structure under the WFD is discretionary, and has generated diversity in WFD multi-level governance implementation approaches and final governance arrangements across MS. This diversity may contribute to low goal achievement and weak compliance. This paper investigates how visual impressions of legislative structure across nine MS can illustrate and contribute to understanding the differences in multi-level implementation of WFD and associated water protection directives. We explore, in-depth, the drivers of visual differences in Portugal, Germany (Lower Saxony) and France. We hypothesise that many of the challenges of WFD implementation, and resulting governance arrangements can be explained in terms of the legacy effects of previous water governance choices. With this conceptual framework of investigating the history and legacy, we found the three in depth studies have had different starting points, paths, and end points in their water governance, with sticking points influencing the decision-making processes and compliance required by the WFD. Sticking points include the complexity of existing water governance structures, lobbying by different sectors, and the mandatory WFD timeline for implementation. Portugal had to resolve its focus on water infrastructure and engineering to enable a re-focus on water quality. France and Portugal experienced 'top down' governance at different points in time, slowing the shift to a multi-level governance system. Lower Saxony, representing just one of 16 federal state systems in Germany, highlighted the complex historic governance structures which cannot easily be restructured, generating a layering effect where new governance systems are fitted to old governance systems. We conclude that there is a need to implement a hybrid approach to water governance and WFD implementation including decentralisation (discretionary) to ensure collaboration and engagement of stakeholders at the local level. This hybrid governance system should run in parallel with a centralised (mandatory) governance and regulatory system to enable national environmental standards to be set and enforced. Such systems may provide the best of both worlds (bottom-up involvement of stakeholders meeting top-down goal achievements) and is worthy of further research.

The EU Accession Process, Chinese Finance and Rising Corruption in Western Balkan Stabilitocracies: Serbia and Montenegro

As front runners in the EU accession process, Serbia and Montenegro have failed to control corruption yet managed to advance along the path to EU integration. Although they have stronger state capacity compared to other Western Balkan countries, the two have recently reverted to previous poor governance practices after initial headway meeting EU good governance conditions. An in-depth analysis of the two countries explains this paradox as the result of the combination of the EU accession process and increasing Chinese finance. While the EU’s stability-oriented strategy helped to consolidate these authoritarian regimes, Chinese funding policies have further strengthened patronage networks, fuelling corruption in the EU’s ‘stabilitocracies’.

The Context of Sexual Exploitation of Children by Tourists and Travelers: A Cross-National Comparison of Destination Countries and Non-Destination Countries

Certain countries are well known for being destination countries for sexual exploitation of children in the context of travel and tourism (SECTT). Various factors are assumed to be at play to increase the vulnerability of countries, and the children that live within them, to being destinations for SECTT. The current study uses a cross-national, quantitative approach to examine these assumptions, by investigating macro-level factors relating to tourism, children's living conditions, governance, and economic development that may account for the variation in SECTT occurrence. Our findings indicate that destination countries are, on average, characterized by lower economic wealth and are located closer to the equator. Unlike assumed in previous literature, governance and tourism are not significantly related to destination countries for SECTT. The results for children's living conditions are unexpected: while bivariate analyses show that destination countries have poorer children's living conditions, a positive relation emerges in multivariate models when controlled for economic development. More specifically, we find that within the group of countries with poor economic conditions, SECTT is more likely to occur in countries with better protection of children's rights to life and education. We explore potential explanations for this finding.

A cognitive and participative decision-making model for transportation planning under different uncertainty levels

Decision-making processes related to transportation systems are often very complex, belonging to the class of “wicked problems” in social studies. The literature and the media abound in examples of transportation planning “failures” including decisions made, delayed or withdrawn without any traceable motivations, public opposition, public opposition, extra costs/implementation times and outright cancellation, wrong traffic/revenue forecasts. Planning failures stem from several causes, including technical errors in forecasting predictable effects, lack of consensus, new governance cycles and inability to recognize the intrinsic uncertainty affecting some key variables. The underlying assumption of this paper is that the quality of the decision-making process critically depends on how the process is structured and managed. The paper proposes a conceptual model to represent and organize transport planning as a cognitive decision-making process with strong involvement of different stakeholders in various stages, accounting for different levels of uncertainty and including short- and long-term decisions options. The result is a planning process that allows for changes in objectives, strategies and decisions during different stages of the process itself, as is usually the case when different governance and socio-economic cycles succeed over time. However, the process maintains a form of procedural consistency and is intended to counteract the “Penelope syndrome”, whereby decisions made under previous governance cycles are undone regardless of their merits and costs. The real-life implementation of the proposed model requires strong “political commitment” to an open and accountable decision-making process, a technical structure able to act as “process owner” coordinating technical and engagement activities, and a general societal attitude towards organized participation to public decision making. The proposed model was applied to the Regional Transportation Plan of Veneto in Italy where the above conditions applied. A number of lessons were learnt from that exercise: i) stakeholders’ engagement revealed an important potential to manage uncertainty and increase consensus; ii) flexibility and robustness with respect to medium–to–high uncertainty levels already recognized at the time of the plan (immediately before the COVID-19 crisis) were an appreciated feature of the plan; iii) separation between mature decisions and those needing further analysis was a success strategy, reducing political “decision costs” (from naysaying) by delaying decisions still recognizing underlying needs; iv) reduced decision time (a largely bi-partisan vote in less than one year).

What Shall We Do With a Sea of Plastics? A Systematic Literature Review on How to Pave the Road Toward a Global Comprehensive Plastic Governance Agreement

In February 2022, the United Nations Environmental Assembly (UNEA) is expected to mandate negotiations for a legally binding plastic agreement. In preparations for such discussions, it is important to understand the academic research behind what a global treaty on plastic will require to succeed. Therefore, a systematic literature review was conducted on 64 peer-reviewed articles published before July 4th, 2021, that focused on global plastic governance and avenues to mitigate our pollution crisis. Once reviewed, the articles were organized into a series of four main categories: (1) plastic pollution overview articles, (2) top-down solutions, (3) bottom-up solutions, and finally a (4) global treaty as a solution. The analysis of these articles enabled an overarching review and discussion of what the literature suggested is required for the creation of a global plastics agreement. First, the researchers argued that previous global plastics governance literature is characterized by an optimist governance perspective, i.e., a view of governance as a problem-solving mechanism. Second, global plastics governance as a research field could make headway by engaging in further empirical investigation of current negotiations and solutions at the national level, especially in developing nations. In the end we found that a global agreement is feasible if it allows for multi-stakeholder solutions involving industry, governance, stakeholders, and citizens.

Smart city community governance system based on online and offline aggregation services.

This paper takes smart city as an example, combining with online and offline aggregation services to explore the possible way out of county community governance innovation. In this white paper, community governance of online and offline aggregate services depends on the various assets and functions of the community, acts in collaboration with community stakeholders, and prevents and resists contingencies. Defined as a community with the ability to self-organize, self-adapt, and self-heal Interference or disaster to achieve sustainable development. This paper puts forward the benefit evaluation method of community governance, which is used to evaluate the implementation effect of online and offline community governance system. Taking a county as an example, this paper analyzes the impact of the challenge and novelty of this model on urban construction. Research shows that in the previous community governance model, about 50% of the people think that the managers of all institutions related to public welfare should not take management as the purpose, and even nearly 70% of the respondents also stressed that these institutions should not be allowed to collect legal management fees or commission fees. At the same time, 40% of respondents admitted that they did not trust the quality of free services provided by public welfare agencies. The online and offline aggregate service modes adopted by the city not only work well in the city's economy, but also increase the city’s GDP by 12%. This is 3.6% higher than in the previous mode. In addition, this model will accelerate the process of democratic construction and improve people's happiness index.

THE EFFECTS OF BOARD STRUCTURE ON THE FIRM FINANCIAL PERFORMANCE OF TANZANIAN LISTED FIRMS

This paper examines the effects of the board structure variables of board size, outside directors and CEO duality on firm financial performance of the listed firms in Tanzania. This study uses a sample of listed Tanzanian firms from 2006 to 2018 and uses balanced panel data Ordinary Least Square (OLS) regression analysis of 120 firms-year observations obtained from the firms’ audited annual reports and the OSIRIS database. Furthermore, in order to address the endogeneity problem, this study uses the Random effect regression model and the Two Stage Least Square (2SLS) regression model as a robustness test. The results show that the smaller the board size with a higher proportion of outside directors and no CEO duality, the greater the firm’s financial performance. This study contributes to the understanding of the relationship between board structure and financial performance and it provides academic evidence to Tanzanian policy makers of current and future Corporate Governance reforms. First, dissimilar to most previous Corporate Governance literature that relates to developed countries, this study examines the effects of the board structure variables of board size, outside directors and CEO duality in Tanzania which is a developing country where very few Corporate Governance research studies have been conducted. It addresses the endogeneity problems between board structure and firm financial performance using Random effect regression and Two Stage Least Square (2SLS) regression models

FOREIGN DIRECTORS AND FIRM FINANCIAL PERFORMANCE: EVIDENCE FROM THE TANZANIAN LISTED COMPANIES

This study investigates the impact of foreign directors on the financial performance of the Tanzanian listed firms. The study applies balanced panel data Ordinary Least Square (OLS) regression analysis on 120 firm-years observations obtained from the firms’ audited annual reports and from the OSIRIS database from 2006 to 2018. The study findings support agency and resource dependence theories that foreign directors have a positive relationship with the firms’ financial performance. The findings indicate further that foreign directors enhance firm performance by providing the firm’s Board of Directors with effective and efficient overseeing and advice to the CEO and the top management. This study contributes to the understanding of the impact of foreign directors on firm performance and provides researched based evidence to Tanzanian policy makers on the importance of foreign members on the firm’s Board of Directors. Unlike the previous corporate governance studies, which focused on developed countries, this study examines the effects of foreign members on the Boards of Directors of listed firms in Tanzania, a developing country where very few corporate governance studies have been conducted. The study recommends policy makers in Tanzania to use the results of this original study while preparing or reviewing Corporate Governance Regulations.

Board governance, ownership structure and foreign investment in the Saudi capital market

PurposeThis paper aims to examine whether board governance mechanisms and ownership structure play a role in foreign investors’ decisions when buying shares in Saudi listed companiesDesign/methodology/approachForeign investment in the Saudi capital market started in 2015 and reached a peak in 2019, with corporate governance regulations having been updated in 2017. The authors tested the proposed relationships using hand collected data for all Saudi non-financial firms in 2019.FindingsThis study found that it does not play a role in attracting foreign investment in the Saudi capital market. Foreign investors also seem to avoid firms with concentrated ownership that either have high government or director ownership; however, accounting and market variables show significant impact on foreign investors' decisions. The outcomes of this study provide empirical evidence that current foreign investors in the Saudi stock market do not place enough merit on board governance and their investment decisions tend to depend on share performance. Thus, the results show that the current governance changes and capital market regulations in Saudi Arabia may not have been sufficient to stimulate the inflow of institutional foreign investment to the country to date, but rather they have attracted individual retail foreign investors.Originality/valueThis empirical study is one of only a small number of studies to investigate the impact of internal corporate governance on foreign ownership in developing countries and the first in the Saudi context. In fact, most previous governance research in Saudi Arabia focused on how board governance and ownership structure influences firm performance. A review of the prior studies found that only Badawi et al. (2019) examined the determinants of foreign ownership among Saudi listed firms. Thus, the present investigation extends that study by examining the role of board governance in attracting foreign investors.

Corporate Governance Research in Nigeria: A Review

This paper is a literature review of the recent corporate governance research in Nigeria. It identifies the recent advances and challenges in the literature and suggest some directions for future research. A comprehensive review of the recent corporate governance literature is important because it provides a basis to compare the corporate governance experience in Nigeria with the corporate governance experience in other African countries and developing countries. The findings from the literature review reveal that the board of directors is the most explored corporate governance determinant in the Nigerian corporate governance literature. Most studies focus on some corporate governance determinants, and ignore other corporate governance determinants in firms. There is some consensus that corporate governance failure in Nigeria is caused by multiplicity of factors such as lack of political will by the government to enforce corporate governance laws, deliberate refusal to comply with existing corporate governance laws by politically connected firms, weak compliance by firms, weak enforcement by regulators, and conflicting codes in the country’s corporate governance codes. Also, recent corporate governance studies do not systematically build on previous corporate governance studies. Regarding methodology, most Nigerian corporate governance studies are merely experimenting different methods of analyses without advancing the literature in a significant way. The study also finds that the 2018 Nigerian code of corporate governance (NCCG) solves some problems and create new problems for Nigerian firms.

Public-Private Partnership Evaluation Models: Perspectives from the Public Governance to Defend the Public Interest

The widespread use of Public Private Partnerships (PPPs) has resulted in the identification of a number of issues related to lack of governance and inefficient assessments of the quality of service provided. In this context, the objective of this research is to identify the characteristics and conditions used to implement governance mechanisms that ensure the public interest in existing PPP contracts. Based on previous governance research, this study integratively categorized nine governance mechanisms based on the three principles established by the OECD (2012): Clear and Legitimate Institutional Framework; Rationale for proper VfM assessment and Transparent and Healthy Budget Process. The contribution of this research is to systematize the relevant literature on the subject, clarifying the complexity of these issues and offering new theoretical insights to identify the characteristics and conditions used as Value for Money governance and valuation mechanisms, capable of making a difference in the success and evaluation of PPPs in the public interest aspect.

Network market orientation as a relational governance mechanism to public-private partnerships

Despite the increasing relevance at the professional level and although the complexity of its configuration and implementation keeps growing, the existing research about public-private partnerships (PPP) remains embryonic. This paper focuses on three complementary fields of study for its understanding: risk management, governance management and private participants’ behaviour. A causal model is proposed, in which network market orientation acts as a previous relational governance mechanism enabling, as a result, a better perception of risk by the private agents involved. The model was tested using structural equation modelling on a sample of 180 agents involved in PPP projects in China. Results confirm this assumption: by placing inter-organisational trust as a central variable, the effect had by network market orientation upon companies’ perceived risk occurs through the reinforcement of their particular entrepreneurial orientation. Findings provide researchers and managers with practical insights into the development of PPP projects from a relational perspective.

Building biosecurity for synthetic biology.

The fast-paced field of synthetic biology is fundamentally changing the global biosecurity framework. Current biosecurity regulations and strategies are based on previous governance paradigms for pathogen-oriented security, recombinant DNA research, and broader concerns related to genetically modified organisms (GMOs). Many scholarly discussions and biosecurity practitioners are therefore concerned that synthetic biology outpaces established biosafety and biosecurity measures to prevent deliberate and malicious or inadvertent and accidental misuse of synthetic biology's processes or products. This commentary proposes three strategies to improve biosecurity: Security must be treated as an investment in the future applicability of the technology; social scientists and policy makers should be engaged early in technology development and forecasting; and coordination among global stakeholders is necessary to ensure acceptable levels of risk.

Transforming institutional design in addressing sludge oil in Bintan seawater, Kepulauan Riau, Indonesia

The primary purpose of this study is to fill out the gap in the current research of environmental policy because the conventional approach still dominates it. By using soft-systems methodology based action research, problem-solving, the present study seeks the institutional design in overcoming the problem of sludge oil in Bintan seawater, Kepulauan Riau. Field research was conducted in several villages in Bintan coastal area, such as Pengudang, Tanjung Berakit, and Trikora. Participants in this study involved state and non-state actors, in particular, the Indonesian Coast Guard, Indonesian navy, environmental agency of provincial and municipal government, fisherman, and village government. Data were gathered with an in-depth interview, observation, and secondary resources. In summary, we offer a new institutional design to replace previous governance of the issue. This study contributes not only to add our understanding of the governance of marine waste, but also the practical solutions to address it.

Роль громадянського суспільства у проєктуванні публічної політики в Україні

The process of institutionalization of civil society in Ukraine as one of the main actors in the public field of politics has its own specific features that affect the quality of public capital and the state of the political system. The crises in the political system of Ukraine, which led to a change of government, a surge in civic activity and the emergence of new forms of interaction between public actors, raised the issue of analysis and monitoring of the civil sector in the country and determining its role in public policy. The process of institutionalization of civil society in the Ukrainian public sphere takes place in close cooperation with state institutions, which are also structurally and functionally changing, losing traditional functions and succumbing to innovations. Institutional transformations trigger mechanisms of change in the system of actor relations and form new practices of cooperation. Complex and fragmented interactions of state and non-state institutions (new and reforming) of public policy create a multitude of network practices of cooperation and form the public capital of the modern political system of Ukraine. The formation of a new model of public policy in Ukraine on the trajectory of bottom – up (civil society institutions) is in line with global trends of change of institutions and practices of interaction of actors in political processes, but has significant features and difficulties. The uniqueness of the Ukrainian version is that civil society is faster and more effectively institutionalized as a public actor than a state that does not have time to institutionally adapt to change and due to the limited tradition of the previous governance model inhibits public sector participation in political life.