Earnings Management and Investor Protection: An International Comparison

Corporate governance in emerging markets: A survey

http://homepages.se.edu/cvonbergen/files/2012/12/The-Too-Much-of-a-Good-Thing-Effect-in-Management.pdf

The Too-Much-of-a-Good-Thing Effect in Management

Globalization, Corporate Finance, and the Cost of Capital

We examine the impact of board size on firm performance for a large sample of 2746 UK listed firms over 1981–2002. The UK provides an interesting institutional setting, because UK boards play a weak monitoring role and therefore any negative effect of large board size is likely to reflect the malfunction of the board's advisory rather than monitoring role. We find that board size has a strong negative impact on profitability, Tobin's Q and share returns. This result is robust across econometric models that control for different types of endogeneity. We find no evidence that firm characteristics that determine board size in the UK lead to a more positive board size–firm performance relation. In contrast, we find that the negative relation is strongest for large firms, which tend to have larger boards. Overall, our evidence supports the argument that problems of poor communication and decision-making undermine the effectiveness of large boards.

/pdf/the-impact-of-board-size-on-firm-performance-evidence-from-35qjwrn2mj.pdf

The impact of board size on firm performance: evidence from the UK

This study examines the impact of corporate governance mechanisms on the firm value of Singapore and Malaysia firms (as measured by Tobin's Q ) We find little evidence of relationships between most corporate governance mechanisms and Tobin's Q  However, consistent with Yermack [Higher market valuation of firms with a small board of directors J Financ Econ 40 (1996), 185–211] and Eisenberg et al [Larger board size and decreasing firm value in small firms J Financ Econ 48 (1998), 35–54], we find that there is an inverse relationship between board size and firm value in both countries This suggests that the negative relationship between board size and firm value transcends different corporate governance systems

Size really matters: Further evidence on the negative relationship between board size and firm value

We investigate the profitability of momentum investment strategy in six Asian stock markets. Unrestricted momentum investment strategies do not yield significant momentum profits. Although we find that a diversified country-neutral strategy generates small but statistically significant returns during 1981–1994, when we control for size and turnover effects we find that the country-neutral profits dissipate. Our evidence suggests that the factors that contribute to the momentum phenomenon in the United States are not prevalent in the Asian markets.

Momentum strategies: evidence from pacific basin stock markets

This paper examines the relationships between firm-level corporate governance mechanisms and cash holdings; along with their combined effects on firm value for a sample of firms listed in Singapore and Malaysia. Firms with less effective governance attributes are found to be more inclined to accumulate cash than those with more effective governance. The results support the flexibility hypothesis in that an increase in agency conflicts between managers and minority shareholders leads to entrenched managers having more discretion to hoard cash reserves. In addition, the incremental value of holding excess cash is shown to be negative for firms with a single leadership structure, firms with a pyramidal ownership structure, as well as family-controlled firms. The discounts associated with these firms may reflect investors’ recognition of the possibility of managerial entrenchment.

Do Corporate Governance Mechanisms Matter for Cash Holdings and Firm Value

This study examines the impact of corporate governance mechanisms of Singapore and Malaysian firms on the Tobin's Q of these firms. We find little evidence of relationships between most corporate governance mechanisms and Tobin's Q. However, consistent with Yermack (1996) and Eisenberg et al. (1998), we find that there is an inverse relationship between board size and Tobin's Q in both countries. This suggests that the negative relationship between board size and firm value transcends different corporate governance systems.

https://papers.ssrn.com/sol3/Delivery.cfm/SSRN_ID303505_code020318670.pdf?abstractid=303505&mirid=1

Size Really Matters: Further Evidence on the Negative Relationship Between Board Size and Firm Value

We examine the determinants of corporate cash management policies across a broad sample of international firms. We document that firms in countries with strong legal protection of minority investors are more likely to decrease their cash holdings in response to an increase in cash flow than are firms in countries with weak legal protection. This relationship is most pronounced for firms that are financially constrained and those with high hedging needs. More importantly, we do not find evidence that financial development plays an incremental impact on the cash flow sensitivity of cash, after controlling for the effect of legal protection. Therefore, we argue that the legal protection of investors (rather than financial development) represents the first-order effect in influencing international firms' cash management policies. The results are robust to alternative specifications. In general, our findings reinforce the importance of country-level legal protection of investors in mitigating the effects of firm-level financial constraints and hedging needs on corporate cash management policies.

Yuanto Kusnadi

Papers

Size really matters: Further evidence on the negative relationship between board size and firm value

Momentum strategies: evidence from pacific basin stock markets

Do Corporate Governance Mechanisms Matter for Cash Holdings and Firm Value

Size Really Matters: Further Evidence on the Negative Relationship Between Board Size and Firm Value

The determinants of corporate cash management policies: Evidence from around the world