Corporate Governance Process Research Articles

Global Social Movements and the Governance of the Firm: Past, Present, and Future

ABSTRACTResearch Question/IssueThe objective of this special issue (SI) is to galvanize research that examines the impact of different kinds of global social movements (GSMs) on the practice of international corporate governance.Research Findings/InsightsThe articles included in this SI provide unique insights into how various GSMs, including the feminist, #blacklivesmatter, and climate movements, influence and are influenced by corporate governance actors and practices across different institutional contexts.Theoretical/Academic ImplicationsExecutives and boards face increasing pressures to make corporate decisions that consider the demands emerging from different GSMs. This SI uncovers how and why some social movements weigh heavier in corporate decision‐making. This SI uncovers the implications of GSMs for corporate governance actors and processes in different institutional contexts.Practitioner/Policy ImplicationsEquipped with the power of the internet, recent social movements have become more global in character. The rising power, reach, and prominence of large corporations have made them a common target of GSMs that aim to influence not only societal values but also corporate values. The articles in this SI provide useful insights into how GSMs engage with corporations and corporate actors and assess their impact on the governance of the firm in different countries.

CEO financial background and corporate financialization

Corporate financialization has become increasingly predominant; however, the impact of chief executive officers’ (CEOs’) characteristics on this trend remains underexplored. Although past studies have examined executive backgrounds, the effect of CEOs’ financial expertise on entity enterprises’ financialization levels is unclear. This study examined how CEOs’ financial backgrounds affect corporate financialization in Chinese A-share listed companies from 2008 to 2022. Using panel data and statistical techniques, we found that CEOs with financial backgrounds significantly promote corporate financialization. This effect is primarily mediated through increased managerial overconfidence and mitigated corporate financing constraints. The impact is more pronounced in non-state-owned and low-cash-flow firms. Our findings contribute to understanding how executive characteristics shape corporate financial strategies and offer insights for optimizing corporate governance and decision-making processes in an increasingly financialized business environment.

THE POSSIBILITIES OF APPLYING ARTIFICIAL INTELLIGENCE FOR THE PURPOSE OF DEVELOPING INTERNAL CORPORATE CONTROL

Internal corporate control is one of the important components of effective corporate governance. Its mechanisms are designed to serve the internal objectives of the company and its internal stakeholders. As a general rule, internal corporate control should contribute to safeguarding the company's assets by preventing errors and inappropriate actions through the appropriate promotion of policies, procedures and technical safeguards. Artificial intelligence has become a natural attribute of the post-industrial age and its application in the area of internal corporate control has become welcome. These include data analytics, predictive analytics, automation of routine tasks, fraud detection, artificial intelligence processing, continuous monitoring and customisable alerts. Harnessing them tends to substantially elevate the corporate governance process. Corporate governance is an attempt to implement systems of risk analysis, verification, evaluation and control that contribute to the effective management of their operation. Therefore, the concept of corporate governance will need to be addressed in conjunction with risk management throughout the organisation and the evolution of the financial management and internal control system. The purpose of the research is to investigate the mechanisms of internal corporate control efficiency in the Republic of Moldova, to substantiate the directions and strategies for organizing internal control of corporate financial resources.

TRANSPARENCY IN CORPORATE GOVERNANCE: ITS ROLE IN MITIGATING FINANCIAL RISKS AND IMPROVING PERFORMANCE METRICS

In-depth analysis of the vital role that openness plays in corporate governance is provided in this paper, with particular attention to how it improves organizational performance measures and reduces financial risk. Transparent corporate governance processes are more important than ever in a time of growing complexity in global business operations and elevated stakeholder expectations. Using a mixed-methods approach, this study combines qualitative insights from in-depth interviews with business executives, regulators, and governance experts with quantitative analysis of financial data from 500 publicly traded companies across several industries. The study's five-year duration, from 2019 to 2023, enables a thorough analysis of trends and causal connections. Based on reduced stock price volatility, fewer substantial financial restatements, and improved credit ratings, our results show a clear positive association between more corporate transparency and better financial risk management. Additionally, the study shows that businesses with more open governance processes routinely beat their less open competitors on a number of important performance criteria, such as customer happiness, employee productivity, and return on equity (ROE). The study also reveals complex connections between particular transparency metrics and performance results, emphasizing the necessity of customized strategies for improving openness depending on organizational and industry-specific factors. These revelations aid in the creation of an all-encompassing framework for putting corporate transparency into practice and gauging its effectiveness, offering practitioners, legislators, and scholars studying corporate governance useful direction.

Research on Corporate Governance and Efficiency Evaluation Based on DEA Model

Based on the DEA model, this paper constructs a mathematical model representing the process of corporate governance from the perspective of input-output, from the point of view of exploring the essence of corporate governance and improving the efficiency of corporate governance, taking Chang ‘an group from 2016 to 2020 as the research sample, this paper calculates the value of Chang ‘an company’s governance efficiency, evaluates the level of Chang ‘an company’s governance and gives some relevant suggestions. The empirical results show that from 2016 to 2020, the corporate governance efficiency of Chang ‘an company shows a trend of decreasing first and then increasing, and there are still some problems. Finally, the paper puts forward some optimization suggestions to provide reference for other enterprises to improve corporate governance efficiency, at the same time, it provides a new idea for the state-owned enterprises how to evaluate the efficiency of corporate governance objectively.

The Role of Financial Audit in the Corporate Governance Process: An In-depth Analysis

The Role of Financial Audit in the Corporate Governance Process: An In-depth Analysis

Creating sustainable public private partnerships through corporate governance in the Sub-Saharan Africa (SSA)

Governments of Sub Saharan African (SSA) countries have struggled to successfully invest in capital intensive projects. As such, public private partnerships play a key role in redefining the role of Government in the context of infrastructure projects, by focusing on supervision and regulation and moving away from direct ownership and management. Sub Saharan African countries have seen such inclusive partnerships yielding some numerous benefits in different sectors. However, despite the salubrious benefits that PPPs have brought in different projects, PPPs in SSA countries are still dogged by a myriad of administrative, technical, financial and legal challenges. These corporate governance related challenges have made it difficult for these SSA governments to glean the full benefits of PPPs. The study is informed by the qualitative methodology with an extensive review of literature. Data was gathered from purposively selected written documents and these documents were analysed using thematic and content analysis techniques. The study established that there are some corporate governance deficiencies in most PPP projects in the SSA countries. Additionally, most of these public projects in the SSA lack adequate good corporate governance attention that is given to the PPP procedures and processes involved. The study therefore recommends that there is need for the full adoption of good corporate governance systems, practices, processes and procedures in the PPPs designing, financing, implementation and operationalisation in SSA.

A Study of Executive Compensation Incentives and Firm Performance

Proper executive incentives alleviate agency conflict and improve firm performance. This study examined the pertinent literature on the recent study of executive compensation incentives and company performance. Through the literature analysis method, the last five years of relevant literatures were classified according to monetary pay incentives, equity pay incentives and pay gap incentives. This paper summarized the common conclusions that were obtained from the current researches and discussed some deficiencies of current researches. At the same time, this paper also put forward suggestions on sample selection, research methodology and other shortcomings in the current researches. By analyzing and integrating the literature from 2018 to 2023, it helps company owners to improve company performance starting from executive compensation incentives in the corporate governance process. At the same time, this paper will provide an outlook on the possible directions of future related research and provide new ideas for future research.

COMPANY VALUE IN KOMPAS 100 INDEX PERIOD 2017-2021: THE ROLE OF GOOD CORPORATE GOVERNANCE, CORPORATE SOCIAL RESPONSIBILITY, AND FINANCIAL PERFORMANCE

The objective of this study is to investigate the impact of Good Corporate Governance (GCG), Corporate Social Responsibility (CSR), Enterprise Risk Management (ERM), and Financial Performance on Company Value. The samples included in this study comprised of companies that were listed in the KOMPAS100 index for the period spanning from 2017 to 2021. The sampling methodology employed in this study was the use of simple random sampling, resulting in a sample size of 40 companies. The employed analytical framework is multiple linear regression analysis, enabled by the application of SPSS software. The findings of this study indicate that the variables of GCG (Good Corporate Governance), CSR (Corporate Social Responsibility), ERM (Enterprise Risk Management), and Financial Performance collectively exert a substantial and favorable impact on the value of a company. To a certain extent, the variables of GCG (Good Corporate Governance) and Financial Performance exhibit a notable and favorable influence on the valuation of a company. Conversely, the factors of CSR (Corporate Social Responsibility) and ERM (Enterprise Risk Management) do not show a statistically significant impact on the magnitude of Company Value. Thus, investors may take into account the inclusion of data pertaining to a company's Good Corporate Governance (GCG) policies and Financial Performance when making investment choices. Company management must acknowledge the significance of implementing efficacious corporate governance processes and augmenting financial performance as strategic measures to enhance the value of the organization.

Online voting and minority shareholder dissent: Evidence from China

AbstractUsing proposal‐level data in China, we document that online voting significantly increases minority shareholders’ participation in voting, and online voting is related to more dissenting votes. The association between online voting and minority shareholders’ participation and dissent is stronger in underperforming firms, indicating that minority shareholders tend to participate and dissent to express dissatisfaction. The association is stronger for shareholders with stronger voting power. Finally, we find that when minority shareholders’ dissent fails to veto a proposal, dissenting minority shareholders are less likely to participate and vote again the following year. Our results suggest that mechanisms designed to facilitate minority shareholder voting lead to greater and more informed participation in the corporate governance process.

Empowering Whistleblowing Policy within Public Listed Companies: Current Practice in Malaysia

Whistleblowing is an act of disclosing any unethical or questionable act within an organization by disclosing them to individuals, the public or authorities that could influence the wrongdoing. It became an important part of the corporate governance process as such action would benefit society and the organization. With the increase in whistleblowing cases involving publicly listed companies (PLCs) by the mass media in Malaysia, there is a dearth of information on to what extent these PLCs manage whistleblowing matters. As a general practice, albeit not compulsory, many publicly listed companies disclose whistleblowing statements in their annual report. As this aspect of corporate governance for the employees is still unexplored, this study purports to explore the form of disclosure on whistleblowing policy by publicly listed companies in Malaysia for the financial year ending 2021. This study is a content analysis of 918 annual reports of companies listed in Malaysia. The findings reveal that most of the companies disclosed matters relating to whistleblowing policies in their Statement of Corporate Governance section, established whistleblowing policies, and mentioned the importance of whistleblowing activities within sections in their annual reports. This study focuses on companies’ annual reports. Future studies could be conducted to assess whistleblowing disclosure in other mediums such as the official websites of the companies. The study explored the aspect of corporate governance for the employee as practiced within publicly listed companies in Malaysia. The findings revealed the companies’ best practices for promoting transparency and accountability within organizations.

CORPORATE GOVERNANCE STRATEGIC PERFORMANCE AS A SIGNIFICANT STRATEGIC MANAGEMENT TO PROMOTING PROFITABILITY: A STUDY IN UAE

The aim of this study is to objectively investigate how board size, firm size, and firm age impact the financial performance of organizations listed in Dubai. A quantitative technique was employed using a sample of 40 non-financial firms listed on the Dubai Stock Exchange for the fiscal year 2022. This selected group of businesses is expected to provide valuable data to achieve the study's objectives and address the relevant research questions. The results of the research shed light on the relationship between the variables of interest through data analysis and statistical testing. It was found that the size of the board has minimal to no influence on the financial performance of the sampled companies. However, the study revealed a significant and positive correlation between company age and size and firm performance, as measured by ROA. It suggests that as businesses develop over time and increase in size, they tend to demonstrate higher levels of profitability. These findings emphasize the importance of considering factors other than board size when examining the connection between corporate governance characteristics and firm performance. Other organizational attributes, such as age and size, exert a more substantial influence on financial performance, even if board size may not be a significant driver. Within the context of Dubai-listed companies, these findings provide valuable insights into the nature of corporate governance and its impact on firm performance. The results of this study underscore the need for a comprehensive understanding of corporate governance processes and their effects on financial outcomes.

Organizational foundations of the legal category «compliance» in the banking system of Ukraine

Purpose. The purpose of the article is to analyze the organizational foundations of the legal category «compliance» in the banking system of Ukraine. Methodology. The methodology includes a comprehensive analysis and a synthesis of available scientific and theoretical information. It is includes the formulation of relevant conclusions and recommendations. Such methods of scientific knowledge were used: terminological, functional, systemic-structural, logical-normative. Results: compliance is by the bank with legislative acts, market standards, as well as internal standards, procedures and documents of the bank. Compliance is a tool of the internal control system and an element of the bank's corporate governance process. Scientific novelty. In the process of research is established that compliance-control is the foundation on which the security of business, its economic activity, the trust of customers and counterparties, business reputation and the success of doing business in the relevant market are based. In turn, compliance control, which is usually identified with the concept of compliance, should be understood as a complex system of supervision to ensure that the bank acts in accordance with its own rules (internal regulations), current legislation, principles of business ethics, in order to protect against compliance risks and the risk of violation functioning of the bank as a whole. The implementation of a qualitatively new approach to the management of functional risks through compliance control is expedient from the point of view of efficiency and profitability, since the introduction of complex management systems will avoid duplication of functions and ensure the full implementation of the tasks set to minimize the manifestation of risks, significantly reducing the bank's operational costs. Practical significance. The results of the research can be used in legislation and law-enforcement activities.

Risk Management Committee, Company Complexity, Public Accounting Firm Size and Audit Fees

This study aims to empirically examine the relationship between the risk management committee, company complexity, and public accounting (PA) firm size and audit fees. This study uses panel data with a span of 9 years of observation. The sample for this research is a non-financial company registered on the Indonesian capital market in 2012-2020. The results of purposive sampling showed that the number of samples in this study was 414 firm-year observations. The results of panel data regression analysis with the fixed effect model and clustered standard error show that risk management committee and PA firm size are positively related to audit fees, while company complexity is not related to audit fees. An important implication of the results of this research is that it is important for companies to have a risk management committee that stands alone in order to improve the corporate governance process.

The socioemotional wealth of leaders in family firm succession and corporate governance processes: a systematic literature review

PurposeAdopting the research concept of socioemotional wealth (SEW) as applied to family firm leaders, this study aims to analyse the literature on succession and corporate governance processes in family firms in keeping with this still developing concept and thereby not only contributing to advancing knowledge on this field but also proposing a conceptual model of analysis and a future research agenda.Design/methodology/approachThe authors carried out a review and systematisation of the literature according to its different thematic groups through recourse to VOSviewer software and content analysis to establish a systematised and integrated structure of the reference literature based on a sample of 218 studies published and indexed on the Web of Science and SCOPUS databases between 2010 and 2021.FindingsThe results portray five leading clusters, specifically, (1) SEW and family firm performance; (2) SEW and the focus on leadership as a precursor to succession; (3) family firms, SEW and corporate social governance; (4) family firm innovation and performance; and (5) family ownership and management. The authors then put forward a conceptual model of analysis both to better integrate these topics and as a proposition for application in future research projects.Originality/valueThe study provides a new and solid systematisation of the literature and supports the argument that family firms concentrating on developing the leader's SEW increase the probability of structuring a successful succession process as well as the likelihood of achieving higher quality corporate governance.

The Role of Gender Diversity in Corporate Governance for Quality Assurance of Financial Reports with Audit Fees as Moderating Variables

This study used audit fees as a moderating variable to examine how gender diversity on the board of directors, board of commissioners, and audit committee affects the quality of financial statements. In this study, financial statements for a sample of LQ 45 companies listed on the Indonesia Stock Exchange from 2019 to 2021 were employed to collect the data, which were then analyzed using Eviews 9. Gender diversity of the board of commissioners, board of directors, committee board audit, employed the percentage of the number of the board of directors, board of commissioners, female audit committee compared to the total number, audit fee to logarithmic audit fee, and quality of financial statements to proxy for Discretionary Accrual modified by Jones model. The findings demonstrate that gender and women play a key role in the Corporate Governance process, particularly on the board of directors, board of commissioners, and audit committee. The role of women in supervision, such as the board of commissioners and audit committee, was able to enhance the quality of the company's financial statements, despite the inability of the board of directors' to increase the quality of financial statements when examined. The role of women in supervision, such as the board of commissioners and audit committee, was able to improve the quality of the company's financial statements, despite the board of directors' ability to increase the quality of financial statements in their function not being examined. The role of audit fees also appeared to be pivotal in overseeing the quality of the presentation of the financial statements of the company. Service fees are procured for carrying out financial statement audit services and detecting the possibility of fraud committed by the board of directors. If the audit fee is compensated highly, it tends to be more professional, therefore minimizing Discretional Accrual and strengthening the supervision carried out by the board of commissioners and female audit committee. Similarly, it can enhance the quality of financial reports. The findings of this study will: (1) give investors, professionals, and stakeholders’ information about the factors that affect gender diversity; (2) give capital market authorities guidelines for taking into account gender diversity on corporate boards of directors, commissions, and audit committees while taking into account the effect on the quality of financial reports; and (3) help accountants in developing countries like Indonesia develop more suitable accounting guidelines. This study contributes to the gender diversity literature. Additionally, this study adds to and broadens the literature by presenting empirical data from a single emerging market, such as Indonesia, on the impact of audit fees and gender diversity between gender diversity and financial reporting quality, as this relationship has not previously been studied.

Voting on Auditor Ratification by Shareholder Type: Impact of Institutional Shareholder Dissent on NAS Fees and Audit Quality

Institutional investors have a better understanding of corporate performance than non-institutional investors, and their presence tends to improve the overall governance mechanism of a company and discipline top management against taking self-serving or myopic decisions. In this study, we examine shareholder voting patterns on auditor reappointments in Indian companies and examine whether institutional shareholder dissent on auditor reappointment acts as a disciplining mechanism on subsequent auditor actions and leads to improvement in audit quality. Our results indicate that institutional shareholder dissent on auditor reappointment is positively related to relative magnitude of non-audit services (NAS) fees in the previous year. More importantly, we observe that auditors are sensitive to institutional dissent and respond by charging a lower amount of NAS fees and providing superior audit quality in the subsequent year to signal increased independence and objectivity. Similar results are not observed in the case of retail shareholders. Our findings reinforce the role of institutional shareholders as important monitors in the corporate governance process and call for regulation to mandate the participation of shareholders in the auditor appointment process.

Corporate Governance and the Management of Public Corporations: A Study of Akwa Ibom Water Company Limited

This study examined the corporate governance process and management of public corporations in Akwa Ibom State regarding Akwa Ibom Water Company Limited (AKWCL), its problem of non-compliance with Codes of Corporate Governance which resulted in low performance of the company and its inability to meet the MDGs 50% targeted access to water needs of the citizens. Stakeholder and Structural Functionalism theories were adopted to analyze the functional roles of the managers and stakeholders towards improving performance. Descriptive research was employed and secondary data were analyzed contextually. The study, among others, revealed that: non-compliance to the codes/principles of corporate governance in AKWCL impacted negatively its performance in terms of the volume of water supply. Data showed 66.01% population of the state had no access to water in 2015 while 65% population had no access to water in 2021; weak internal control mechanisms such as auditing, monitoring and evaluation committees contributed to rent-seeking activities by the board of directors/managers which negatively affected access to safe water supply, profitability and investment in AKWCL. The study concluded that a good corporate governance process guarantees high performance, and recommended strict enforceability of codes of corporate governance practice in AKWCL; policy review by the board of directors of AKWCL to improve access to safe water in the state; the creation of more water distribution points and revitalisation of abandoned ones; training and re-training of the board of directors and managers on new management skills; strengthening of auditing, monitoring and evaluation committees to ensure public accountability and disclosure.

GOOD CORPORATE GOVERNANCE, AUDITOR REPUTATION, AND COMPANY SIZE: ITS IMPACT ON THE TIMELINESS OF OF FINANCIAL REPORTS

The effectiveness of good corporate governance (GCG) processes, auditor reputation, and firm size are examined with regard to the timely submission of financial reports in this study. All trading firms listed on the Indonesian Stock Exchange (IDX) between 2017 and 2019 made up the study's population. The sample was selected using the purposive sampling method. The model chosen in this study was 44 companies selected based on the criteria. Logistic regression is the method used in the data analysis. According to the findings, the audit committee, independent commissioners, managerial ownership, and firm size had a big impact on how quickly financial statements were submitted. The institutions, ownership, and KAP's reputation, nevertheless, have no appreciable impact on how quickly financial reports are submitted

Internal Factors Affecting Competitiveness in Agribusinesses: ACase Study in the Hazelnut Sector in Ordu and Giresun Provinces of Turkey.

The study's primary purpose is to reveal the factors affecting the competitiveness of hazelnut agribusiness enterprises. The data used in the research were obtained from surveys with 51enterprises in Ordu and Giresun provinces, Turkey. The enterprises were divided into competitive and non-competitive with atwo-step cluster analysis. Indices were calculated to measure enterprises' competitiveness, and the t‑test was used to compare enterprises' characteristics and competitiveness values. The research results indicated that the size of the enterprises, implementation of corporate governance processes, support for personnel development, employment of qualified personnel, differentiated process management, robust information technologies infrastructure, and using e‑commerce applications increased the competitiveness. The research results confirmed that the competitiveness of enterprises was affected not only by financial indicators but also by internal factors within the enterprise. The non-competitive enterprises focused on low-cost production and overlooked other internal and external factors necessary for competitiveness. The hazelnut enterprises could increase their competitiveness by investing in e‑commerce and information technologies infrastructure by prioritizing personnel and corporate management processes.