Showing papers in "Corporate Governance in 2018"

Multiple pathways linking environmental knowledge and awareness to employees’ green behavior

Abstract: Purpose The purpose of the present research is to investigate the impact of environmental knowledge and awareness on green behavior with respect to behavioral intentions, environmental attitude and green commitment as mediator variables. Design/methodology/approach The statistical population included the managers of Esfahan Mobarakeh Steel Company in Iran. In total, 135 questionnaires were distributed among relevant managers, out of which 120 questionnaires were returned and analyzed using structural equation modeling method. Findings The findings of the study showed that environmental knowledge and awareness has a significant direct effect on managers’ green behavior (β = 0.42). Also, environmental knowledge and awareness has a significant indirect effect on managers’ green behavior through behavioral intentions (β = 0.34), environmental attitude (β = 0.19) and green commitment (β = 0.33). Originality value This study is among the first to simultaneously investigate the multiple pathways from environmental knowledge and awareness to green behavior. The second contribution of the present study is considering green behavior of personnel in the iron and steel industry in a developing country.

The impact of board characteristics on the financial performance of Tanzanian firms

Abstract: Purpose - This study investigates the impact of board characteristics on the financial performance of listed firms in Tanzania. Board characteristics, including outside directors, board size, CEO/ Chair duality, gender diversity, board skill and foreign directors are addressed in the Tanzanian context by applying two corporate governance theories: namely, agency theory; and resource dependence theory. Design/methodology/approach - The paper uses balanced panel data regression analysis on 80 firm-years observations (2006-2013) from annual reports and semi- structured interviews were conducted with 12 key stakeholders. The study uses also a mixed methods approach and applies a convergent parallel design (Creswell, 2011) to integrate quantitative and qualitative data. Findings - It was found that in terms of agency theory, while the findings support the separation of CEO/Chairperson roles; they do not support outside directors-financial performance linkage. With regard to resource dependence theory, the findings suggest that gender diversity has a positive impact on financial performance. Furthermore, the findings do not support an association between financial performance and board size, PhD qualification, and foreign directors. Theoretical and Practical Implications - The study contributes to the understanding of board-performance link and provides academic evidence to policy makers in Tanzania for current and future governance reforms. Originality/value - The findings contribute to the literature by providing new and original insights that, within a developing setting, extend current understanding of the association between corporate governance and financial performance. This is predicated, also, on the use of uncommon mixed methods approach.

The effectiveness of internal corporate governance and audit quality: the role of ownership concentration – Malaysian evidence

Abstract: This study is motivated by the competing views on whether internal governance mechanisms complement or substitute for external auditing, and how this association is affected by ownership concentration. The complementary view predicts that good internal governance mechanisms are related to high-quality audit. On the other hand, corporate governance mechanisms may be substituted for each other, so more investment in governance mechanisms leads to less investment in external auditing. Therefore, this study aims to examine the association between internal governance mechanisms and the demand for audit quality.,Data from Malaysian listed companies during the period 2009 to 2012 are used. Ordinary least square (OLS) regression is applied to analyse the data.,Companies with a higher concentration of ownership are less likely to demand extensive auditing. In addition, the study provides supporting evidence for the complementary association between a company’s governance and audit fees. However, the ownership concentration plays a minor role in the positive association between internal corporate governance and audit quality. Further tests are conducted and support the main findings.,Significant implications are provided for the audit profession in emerging economies, where concentrated ownership is common, to help policymakers and regulators in determining the power of controlling shareholders on audit quality and firm’s governance. The study’s findings open up avenues for further research.,This is the first work to address the role of ownership concentration in the association between corporate governance and audit quality; it suggests that the ownership structure must be considered in examining the effectiveness of corporate governance. The study also provides a comprehensive combination of internal governance mechanisms.

Corporate governance mechanisms and accounting conservatism: evidence from Egypt

Abstract: The purpose of this paper is to investigate the effect of corporate governance (CG) mechanisms (board size, board independence, separation of chairman and chief executive officer (CEO) roles and external auditor type) on accounting conservatism in Egypt.,Archival data relating to CG and accounting conservatism are collected and analysed using multivariate regression techniques.,The findings indicate that board independence is positively associated with accounting conservatism. By contrast, board size and auditor type are negatively associated with accounting conservatism, while separating the chairperson and CEO roles has no significant relationship with accounting conservatism.,To the best of the author’s knowledge, this is one of the first empirical attempts at providing evidence on the relationship between CG and accounting conservatism in Egypt.

Board involvement in corporate sustainability reporting: evidence from Sri Lanka

Abstract: The purpose of this paper is to explore the role played by the board of directors in corporate sustainability (CS) disclosure within the Asian context in which sustainability reporting (SR) is an emerging phenomenon.,Data are collected from a sample of 100 listed Sri Lankan companies over a period of four years (2012-2016), representing practically all the business sectors. This study draws on both agency and resource dependence theories, while binary logistic regression is performed for the data analysis.,The results point out that firms that follow a sustainability disclosure policy have larger boards, a higher proportion of independent directors and more female directors. Contrary to certain common assumptions, firms that practice sustainability disclosure are not influenced by dual leadership, board ethnicity and board ownership. This study helps firms to understand whether their boards can influence the sustainability disclosure choice or not and further, to validate the appropriateness of the agency theory and the resource dependence theory for examining issues of this nature.,This study contributes significantly to the extant literature on this subject by broadening the geographical coverage, which has generally been limited to the West in corporate disclosure studies.

Corporate risk-taking and performance in Malaysia: the effect of board composition, political connections and sustainability practices

Abstract: This paper aims to examine how board composition, political connections and sustainability practices affect risk-taking and performance of firms.,This paper used secondary data and regression technique to analyse the relationship. A sample consisting of 290 firm-year observations was applied in the analysis.,The findings show that a larger board size contributes to greater financial risk; however, this risk can be reduced with more independent directors in the boardroom. An optimal board size with appropriate number of independent directors is desired, as a large board size can be harmful to firm performance. Politically connected firms also generate lower risk-taking and performance, and the double-edged sword effect of political connections needs to be considered. In terms of sustainability practices, firms have to engage in sustainable development to maximise the firms’ value, not ignoring the vital role of women in strategising business performance. However, the effect of sustainability practices on firms’ risk-taking is still not noticeable.,Even though the sample size is not large because of the limited availability of data, the findings, to a certain extent, could be generalised to emerging markets, as most emerging markets do have similar financial and economic developments.,The findings from this paper can be used to support the implementation of sustainability practices, especially in those countries where sustainability initiatives are yet to be widely accepted.,This is one of the first few studies that examined the effect of non-financial information on risk-taking and performance of firms. This study concludes the positive effect of sustainability practices on firm performance.

Corporate governance and firm value: a comparative analysis of state and non-state owned companies in the context of Pakistan

Abstract: The purpose of this paper is to examine how corporate governance instruments impact firm value in the context of Pakistan. This paper considers state- and non-state-owned enterprises and examines whether the influence of corporate governance on firm value varies across firms having different nature of ownership.,This study opts for an unbalanced sample of state- and non-state-owned enterprises for the period 2010-2014. Panel data regression is adopted for estimation of main results. The suitable model, i.e. fixed and random effect model, is selected using Hausman specification test.,The notable findings show that board independence has a significant and positive relationship with firm value only for state-owned companies. Furthermore, the results show that market capitalization and return on assets have a significant and positive association with firm value for both state- and non-state-owned enterprises. All other variables are found insignificant for both state- and non-state-owned companies, but the results are consistent with those reported in previous studies.,The findings of the study suggest that fair induction of independent directors, appropriate board size and cost-benefit analysis to conduct frequent meetings can help corporations to improve their performance.,This study is adding to the current literature by providing new insights and shows that the impact of corporate governance on firm value varies across firms of different types of ownership, i.e. state- and non-state-owned enterprises.

Corruption and earnings management in developed and emerging countries

Abstract: Purpose The purpose of this study is to examine whether firms from countries presenting higher levels of corruption are more likely to have higher levels of earnings management than their counterparts from countries with lower levels of corruption It also explicitly examines how this relationship compares between emerging and developed economies Design/methodology/approach Using multiple regression analysis, this study tests the hypothesis of positive association between the countries’ level of corruption and the level of earnings management using a sample of foreign firms with American Depositary Receipts in the US market Findings Findings indicate that higher corruption perception is related to higher incentives for firms to manipulate earnings in the case of emerging countries Such results are not identified in developed countries where the level of minority investors’ protection is higher Findings also indicate that in developed countries earnings management is negatively related to investor protection, which is not the case for emerging countries Originality value As far as the authors are aware, this study is the first to examine the effects of corruption on earnings management on the basis of accounting firm-level data

The impact of board characteristics and ownership identity on agency costs and firm performance: UK evidence

Abstract: This paper aims to provide a twofold empirical comparison: first, a comparison between the impact of corporate governance mechanisms on agency costs proxies and firm performance measures, and second, this comparison was used before and after the 2008 financial crisis, capturing two different economic states,Panel regression methods were applied to two data sets of non-financial firms incorporated in the FTSE ALL-Share index over the period 2005-2011,The results provide evidence that not all mechanisms lead to lower agency conflicts and/or higher firm performance Ownership identity has a significant impact and the role of the governance mechanisms changes with the changes in the economic conditions surrounding the firm,The results lend support to the notion that forcing a certain code of practice on firms to follow could compel them to move away from conflict reduction governance structures,To the best of the authors’ knowledge, this is the first paper to provide a comparison of empirical evidence for the impact of board characteristics and ownership identity on agency costs and firm performance by using a comprehensive set of corporate governance mechanisms This comparison challenges the prior studies that use performance as an indirect proxy for lower agency costs Additionally, it compares the impact of the governance mechanisms during two different economic conditions

Are female leaders more efficient in family firms than in non-family firms?

Abstract: Purpose: The aim of this study is to investigate whether female leaders are more efficient in family firms than in non-family firms.Design/methodology/approach: This paper uses a unique database of ...

Management control systems and corporate social responsibility: perspectives from a Japanese small company

Abstract: Purpose Corporate social responsibility (CSR) has become part of daily business for small- and medium-sized enterprises (SMEs) in Japan. The purpose of this study is to explore how management control systems (MCSs) can support the translation of activities into CSR actions using a case study of a SME in Japan. Design/methodology/approach The case is based on an interview with a CEO of a SME in Japan. The paper contributes to the discussion on CSR and MCSs and investigates the integration of CSR activities in SMEs in Japan through MCSs. Findings The case company’s formal control systems incorporate environmental and social aspects that are reflected in its top-down, stakeholder-centered approach into CSR through a formal CSR policy. An informal control system is evident and reflected in the CEO’s emphasis on creating shared value by implementing CSR. An interactive control system, a type of formal control system, is useful in the interactions between CEOs and employees and in translating the opinions of stakeholders into CSR actions. Formal control systems can be supported by informal control systems in the implementation of CSR activities. Originality/value This research contributes to the management accounting literature by showing that formal and informal control systems can support the motivation of employees and the integration of stakeholders’ opinions on the implementation of SMEs CSR activities in Japan. The MCS approach also contributes to SMEs in Japan that seek to address the demographic and economic challenges.

Ownership structure, board gender diversity and charitable donation

Abstract: Purpose This paper aims to examine the effect of ownership structure and board gender diversity on charitable donations for a group of listed electronics companies in Taiwan. Design/methodology/approach Using linear regression analysis, this paper analyses the ownership structure, board gender diversity and charitable donations of 380 Taiwanese electronics companies (2011-2013). Findings While domestic institutional investors, such as domestic mutual funds and corporate investors, take more of agency logic view, it negatively impacts on charitable donations. However, the empirical findings of this paper indicate that board gender diversity with the critical number of female directors was positively related to charitable donation. Thus, it is clear that female directors reaching critical numbers were taking more of a stakeholder view of institutional logic, emphasizing the balance of interests of internal and external stakeholders. Research limitations/implications This paper is limited to selected Taiwanese electronics companies over a two-year time frame, and charitable donations are the only proxy of corporate social responsibility (CSR) activity. The paper suggests that, as predicted by stakeholder theory and critical mass theory, companies with boards composed of at least three female directors make higher charitable donations. Practical implications This paper indicates that female directors on the board should have more voices on the board regarding the necessity and importance of CSR. Originality/value The paper contributes to existing literature by looking into the effects of ownership structure and board gender diversity on charitable donations.

Trustee board diversity, governance mechanisms, capital structure and performance in UK charities

Abstract: This paper aims to investigate the association among trustee board diversity (TBD), corporate governance (CG), capital structure (CS) and financial performance (FP) by using a sample of UK charities. Specifically, the authors investigate the effect of TBD on CS and ascertain whether CG quality moderates the TBD–CS nexus. Additionally, the authors examine the impact of CS on FP and ascertain whether the CS–FP nexus is moderated by TBD and CG quality.,The authors use a number of multivariate regression techniques, including ordinary least squares, fixed-effects, lagged-effects and two-stage least squares, to rigorously analyse the data and test the hypotheses.,First, the authors find that trustee board gender diversity has a negative effect on CS, but this relationship holds only up to the point of having three women trustees. The authors find similar, but relatively weak, results for the presence of black, Asian and minority ethnic (BAME) trustees. Second, the authors find that the TBD–CS nexus depends on the quality of CG, with the relationship being stronger in charities with higher frequency of meetings, independent CG committee and larger trustee and audit firm size. Third, the authors find that CS structure has a positive effect on FP, but this is moderated by TBD and CG quality. The evidence is robust to different econometric models that adjust for alternative measures and endogeneities. The authors interpret the findings within explanations of a theoretical perspective that captures insights from different CG and CS theories.,Existing studies that explore TBD, CG, CS and FP in charities are rare. This study distinctively attempts to address this empirical lacuna within the extant literature by providing four new insights with specific focus on UK charities. First, the authors provide new evidence on the relationship between TBD and CS. Second, the authors offer new evidence on the moderating effect of CG on the TBD-CS nexus. Third, the authors provide new evidence on the effect of CS on FP. Finally, the authors offer new evidence on the moderating effect of TBD and CG on the CS–FP nexus.

Governance structures, cash holdings and firm value on the Ghana Stock Exchange

Abstract: There is an existing relationship among shareholders, boards of directors and management of companies. Corporate governance practices of companies are expected to ensure that this relationship maximises the wealth of shareholders. Differences exist among corporate governance of companies listed on the Ghana Stock Exchange. Companies, for purposes of liquidity, hold cash, but cash holdings also add to the cost of financing, according to working capital theories. The study, thus, sought to examine the relationship between corporate governance practices, ownership structure, cash holdings and firm value.,The study deployed the seemingly unrelated regression to reduce the problem of multicollinearity resulting from the strong relationship between cash reserves and some control variables.,The study found no significant relationship between board size and firm value. Similar findings were also made on the relationship between proportion of non-executive directors on the board and firm value. However, firms audited by the big four audit firms are valued higher by the capital market. Cash holdings of firms negatively affect performance, and this is statistically significant. A positive relationship arises between a firm’s cash holdings and its value as a result of debt financing, even though this is not significant.,The study is the first of its kind that deploys Tobin’s Q as a measure of firms’ value to reflect investors’ valuation of firms in Ghana. The study is also the first of its kind to test the interactive effect of debt financing and cash holdings on firm value in Ghana.

The role of the board in voluntary disclosure

Abstract: Since 2012, the Brazilian Stock Exchange has recommended that listed companies inform them if they have conducted voluntary disclosure. The purpose of this study is to describe the voluntary disclosure by companies listed in the B3 in Brazil and to analyze which characteristics of the board of directors influence this disclosure.,The study involves quantitative research using a sample of 285 companies and 575 reports from 2011 to 2014. A fixed-effects regression model with panel data was used for the analysis.,The results were statistically significant for gender and duality variables, which confirms the theory that the presence of women as members of the board positively influences voluntary disclosure and that chief executive officer and chairman of the board positions have a negative effect. The age and independence of the board variables did not present statistical significance.,As a theoretical contribution, the authors aim to complement sustainability, finance and strategy research by using agency theory and measuring the variable of voluntary disclosure and the board, which is rarely studied in this context.,As social and empirical contributions, a better understanding of this theme in the context of emerging countries, which is the peculiarities of Brazil with little information transparency and well-known corruption scandals, is likely to aid investors. Increased access to company information can help investors better select their investment portfolios and assist in the choice of their board representatives in companies in which they have participation and voting rights.,The fact that Brazil is an emerging country, where the lack of transparency of information and corruption in these environments stand out the importance of studying the subject of voluntary disclosure in this context. All data were collected manually specifically for this research.

Role of media and independent directors in corporate transparency and disclosure: evidence from an emerging economy

Abstract: The purpose of this paper is to examine the impact of corporate governance, with particular reference to the role of independent directors on boards and audit committees, and media coverage on corporate transparency and disclosure. In addition, the paper also investigates the role of the media on independent directors’ behaviours towards corporate transparency and disclosure.,The paper uses the well-developed two-step system generalised method of moments approach on a sample of 99 Pakistan stock exchange (PSX) listed financial firms over the period 2007-2012.,The empirical analysis shows that media and independent directors on audit committees play a significant positive role in line with agenda setting and agency theories in promoting corporate transparency and disclosure. On the contrary, the boards’ independent directors are risk-averse and hold the information to protect their reputation. Nevertheless, the study does not find any significant influence of media coverage on independent directors’ behaviours in promoting corporate transparency and disclosure.,The findings provide some useful insight into cost benefits analysis of media coverage towards an understanding of independent directors’ behaviours for promoting transparency and disclosure in financial sector. Moreover, the study findings can be useful for both shareholders and stakeholders in taking decisions about firm activities.,To the best of the authors’ knowledge, this is the first study that proposed and tested a multi-level framework for corporate transparency and disclosure practices. In addition, this study is also among the very few studies that use financial sectors as a sample, in particular, and media coverage, specifically, thus adding some value to the limited literature.

Governance implications of the UN Higher Education Sustainability Initiative

Abstract: This paper aims to review the progress of a sample of (n = 307) signatories in the Higher Education Sustainability Initiative which commits higher education institutions (HEIs) to make smart commitments to achieve one or more of the UN sustainable development goals (SDGs).,A preliminary survey of n = 307 HEIs via online questionnaire and database search was conducted.,Findings reveal a difference between HEI governance, that is “instrumental”, and governance, that is “holistic”, in relation to sustainability.,Implications identified for achieving SDGs in general and for academic–business partnerships, in particular.,Practical implications for enterprise (developing a tool to measure sustainability mindset) and for enterprise education (sharing of best practices from other HEIs).,Improved understanding of the sustainability mindset will inform decisions about approaches to governing and operationalising sustainability in organisations.,The survey is not original but the emphasis on sustainability mindset (compassion, empathy and connectedness to SDGs) is.

Social capital as a new board diversity rationale for enhanced corporate governance

Abstract: The benefits of board diversity are often categorized into five distinct business rationales: talent rationale, market rationale, litigation rationale, employee relations rationale and governance rationale. However, if resource dependency theory’s focus on the director’s ability to secure important resources for the firm is considered, social capital as a viable additional rationale for board diversity can also be considered. The purpose of this paper is to argue that diverse members of the board are likely to have social capital that differs from non-diverse members of the board. Consequently, that diverse social capital can bridge the board to new resources for advice and counsel, legitimacy, channels for communication and access to important external elements, thus making a strong argument to be included as a rationale for board diversity.,It is intended to provide a conceptual discussion on whether enhancing the board’s social capital is perhaps a viable and overlooked rationale for board diversity.,Consistent with the other five rationales for board diversity, this analysis suggests that social capital should be considered as a sixth rationale for board diversity. Social capital serves a role in governance and rises to the standard of other rationales for board diversity.,Boards may not recognize that social capital is a strategic resource and sufficiently diverse groups such as women and minorities may be more likely to contribute non-overlapping social capital networks, which may translate into greater external influence and thus additional resources for the firm. This paper may help to influence the viewpoints of directors on who is valuable as a board member.,Existing board diversity rationales do not include social capital as a primary rationale for board diversity. It may be possible that social capital becomes a legitimate sixth rationale for board diversity.

Corporate governance and tax disclosure phenomenon in the Malaysian listed companies

Abstract: Purpose This paper aims to examine the impact of corporate governance internal mechanisms on tax disclosure in non-financial firms in Malaysia. Managerial ownership and incentive compensation are used as proxies to reflect corporate governance conduct. Design/methodology/approach This study uses panel data set to analyse 286 non-financial listed companies on Bursa Malaysia for the years 2010-2012. Tax disclosure was gathered from the financial statements, particularly in the consolidated of tax expenses. Tax disclosure was measured using modified effective tax rate reconciling items. Multivariate statistical analyses were run on the sample data. Findings This study finds that managerial ownership and incentive compensation do not significantly influence tax disclosure. On the other hand, it is found that there are significant positive associations between each of firm size and industry dummy, and tax disclosure. This means that company-specific characteristics are important factors affecting corporate tax disclosure. Research limitations/implications This study extends the work of previous studies by suggesting that the signalling theory and the agency theory are the main theories concerned with tax disclosure and corporate governance. The authors add an additional appreciation of the contribution of corporate governance from the interested parties’ tax disclosure evaluation in the Malaysian environment. Practical implications The evidence found by this study has important policy and practical knowledge implications for the authorities, researchers, decisionmakers and firm managers. The findings provide them with some relevant insights on the importance of corporate governance practices from the companies’ perspectives and contribute to the discussion of who verifies and deduces from tax disclosure directed by companies. Originality/value To the best of the authors’ knowledge, this study is the first attempt to examine the influence of the corporate governance internal mechanisms on tax disclosure in a developing nation like Malaysia. Although this paper focuses on a single country, it contributes significantly to the debate about tax disclosure in relation to “comply or explain”, as suggested in the Code of Corporate Governance. This study shows that companies are trying to avoid as far as possible disclosing tax-related information.

The impact of flexible corporate governance disclosures on value relevance. Empirical evidence from South Africa

Abstract: Considering that the Johannesburg Stock Exchange (JSE) has enacted in its Listings Requirements, compliance of listed firms to International Financial Reporting Standards (IFRS) and King Code of Good Corporate Governance, this study aims to investigate the impact of internal corporate governance attributes on the value relevance of accounting information in South Africa.,The fixed effect generalised least squares regression is used for the period from 2002 to 2014. Proxies for internal corporate governance are the size of the board, leadership structure, board activity, staggered board, boardroom independence, presence of key committees and board gender diversity. Value relevance is measured using the adjusted R2 derived from a regression of stock price on earnings and equity book values by following Ohlson’s accounting-based valuation framework.,The findings suggest that the net asset value per share is value-relevant in South African listed firms and also when the boardroom is largely independent. The value of earnings per share (EPS) is more robust when corporate governance structures, such as separating the roles of chief executive officer and chairperson, proportion of board-independent board members and presence of board committees, are in place. This suggests that EPS favours agency and resource dependence theories.,The value relevance of accounting information in the South African financial market underscores the importance of requisite rules and supervision regarding financial reporting to allow asset owners and managers in the allocation of capital decisions. This study supports the view that corporate governance plays a key role in ensuring, amongst others, credible financial reporting. The outcome of this study could inform the JSE to enforce, even stricter, compliance with IFRS and corporate governance to improve the value relevance of financial information.,Significant corporate governance reforms around the world suggest that regulators and policy makers consider corporate governance as a pertinent tonic in ensuring, amongst others, credible financial reporting. The implications of the study might assure users of financial information of how compliance to corporate governance practices may influence the value of the firm. This paper provides empirical evidence in the South African context that EPS, unlike net asset value per share, is driven by corporate governance structures.,The period of this study is unique, because it covers a relatively stable economic period before the financial crisis, a challenging and unstable period of time when the financial crisis materialised, and the aftermath of the financial crisis. In addition, the examination period of the study also covers the two corporate governance reforms in South Africa, King II in 2002 and King III in 2009, as well as the new Companies Act No. 71 of 2008. These exogenous factors may influence the results.

Related party transactions, corporate governance and earnings management

Abstract: Following the contingency perspective, this paper aims to examine if a good corporate governance structure is able to reduce earnings management made through related party transactions. The authors expect that a high-quality corporate governance influences private benefit acquisition and reduces the positive association between related party transactions and earnings management.,A two-stage least squares instrumental variable approach is used to further address endogeneity concerns in this study. The model is organized into three parts: the construction of the corporate governance indicator, the first stage regression to compute the predicted corporate governance indicator and the second stage regression (ordinary least squares multivariate regressions) to analyze the relationship between related party transactions and earnings management. The analysis focuses on a sample of Italian listed companies over the period 2007-2012.,The study finds that the interaction between sales-related party transactions and corporate governance is negatively associated with abnormal accruals, signaling that corporate governance quality reduces the positive association between sales-related party transactions and earnings management, consistently with the contingency perspective.,The research contributes to literature by empirically testing the assumption of contingency perspective. In particular, the results provide new insights to the academic community, underlying that good corporate governance mechanism helps to reduce earnings management behavior through related party transactions.

Women directors’ propensity towards risk in technology firms

Abstract: Purpose This study aims to investigate the impact of the presence of women directors on firm’s risk-taking behavior in industries where innovation is pivotal and how this impact varies across ownership structure. Design/methodology/approach A sample of 71 listed technology firms on the National Stock Exchange of India for the period of 2008 to 2013 was used. Generalized method of moment estimation technique was used for data analysis. Findings Results reveal a positive impact of the presence of women directors on technology firms’ risk-taking behavior measured in terms of R&D spending, which is in contrast to the traditional notion that women are risk-averse. Further, results also reveal that family ownership negatively affects the impact of the presence of women directors on risk taking in technology firms. Practical implications The findings of the study suggest that females are risk takers in the context of R&D-intensive technology firms, thus providing new insight for policymakers to formulate more effective board gender diversity policies. Originality/value Based on the integration of agency and behavioral theories, it is suggested that female executives may be risk-averse or risk-takers depending on contextual factors such as innovation and ownership, which drive the impact of the presence of women directors on firms’ risk-taking behavior.

When do regulations matter for bank risk-taking? An analysis of the interaction between external regulation and board characteristics

Abstract: According to previous international studies, the impact of external regulation on bank risk is ambiguous. The purpose of this paper is to ask the question, “When do regulations matter for bank risk-taking?” by reporting the first empirical investigation of how the relation between bank regulations (capital requirements, official supervisory power and market discipline) and bank risk-taking is moderated by board monitoring characteristics.,Using SYS-GMM, the analysis of the interaction between bank-level boards of directors’ attributes (board size, board independence and board gender diversity) and external regulation is based on a sample of 493 banks operating in 54 countries over 2001-2015, accounting for three measures of bank risk-taking.,Regulations matter for bank risk-taking conditional on board characteristics: board size, board independence and board diversity. With the exception of capital requirements, the market discipline exerted by external private monitoring and greater supervisory power are unable to mitigate the propensity to greater risk-taking by banks resulting from larger board size, higher board independence and greater gender diversity of the board.,The bank risk empirical literature is still silent as to the interaction between board governance and regulation for the purpose of examining banks’ risk-taking. This paper fills this gap, thus making a significant contribution by extending our knowledge of whether and how board governance moderates the relationship between external regulation and bank risk-taking.

Does corporate governance structures promote shareholders or stakeholders value maximization? Evidence from African banks

Abstract: The purpose of this paper is to explore the relationship between corporate governance structures and stakeholder and shareholder value maximization perspectives in 267 African banks from 2006 to 2011.,The authors used the Prais–Winsten ordinary least squares and random effect regression models to explore this relationship to ensure consistency and efficiency in results. The data for this study were collected from Bankscope.,The results of this study show that corporate governance structures such as CEO duality, nonexecutive members and extreme large board size lead to a reduction in both shareholder and stakeholder value maximization. However, audit independence and board size also promote both shareholder and stakeholder value maximization. Although gender diversity promotes profit maximization, it was not significant in any of the models estimated. The results further suggest that the same corporate governance structures promote and detract shareholder and stakeholder value maximization in Africa although the effect of corporate governance structures was weightier on shareholder value maximization confirming the agency theory.,From these findings, bank management must pursue the institution of good corporate governance structures and avoid weak corporate governance structures to promote shareholder and stakeholder value maximization. Also equity holders may have to pay particular attention to corporate governance structures because they benefit the most from the institution of good corporate governance structures.,This study explores and compares how corporate governance structures promote shareholder and stakeholder value maximization separately in African banks. To the best of the authors’ knowledge, this is the first of such studies.

Sustainability in the Pakistani hotel industry: an empirical study

Abstract: This paper aims to look at the sustainability practices adopted by the Pakistani hotel industry. Sustainability is a relatively under-researched notion from the perspective of the developing world, and in particular, the research lacks evidence from the Pakistani hotel industry.,The authors follow an exploratory multiple case study design to study the sustainability practices adopted by the Pakistani hotel industry. Semi-structured interviews are conducted with the senior hotel managers.,The results suggest that sustainability is only partially integrated into the business strategy for most of the sample hotels, and a systematic approach to sustainability is currently lacking. Overall, the central focus of the hotels is on developing commercial performance, whereas some fragmented social and environmental sustainability initiatives are implemented on an ad hoc basis.,This study identifies some practical issues and challenges in relation to sustainability implementation in the Pakistani context. It is suggested that the government, community organizations and the private sector firms need to actively collaborate to promote the sustainability agenda.,This paper extends the extant literature by exploring sustainability implementation in the Pakistani hotel industry. While there is limited sustainability research in the context of the developing world, this study contributes by bridging this gap in the present literature.

The mediating effect of dividend payout on the relationship between internal governance and free cash flow

Abstract: This paper aims to examine the mediating effect of dividend payout on the relationship between internal governance mechanisms (board of directors and ownership structure) and the free cash flow level.,Linear regression models are used to investigate such relationships applying data from a sample of 207 non-financial firms listed on the Gulf Cooperation Council countries’ stock markets between 2009 and 2016. To test the significance of mediating effect, the author uses the Sobel test.,The author finds a partial mediation effect of dividend on the relationship between both board independence and managerial ownership and the level of free cash flow. The results confirm the major role of outside directors in corporate governance. This governance mechanism contributes to the protection of shareholders’ interests through a generous dividend policy. However, the author finds that large managerial shareholdings increase the level of free cash flow through lower dividend payouts. This result suggests that powerful managers follow their preference of retaining excess cash to their own interests.,This paper offers insights to policy-makers of emerging economies interested in the development of the corporate governance. This study provides guidance for firms in the construction and implementation of their own corporate governance policies.,The main contribution of the present paper is to examine the dividend payout as a potential mediating variable between internal governance mechanisms and free cash flow. Moreover, it highlights the issue of efficient management of substantial funds in Sharia-compliant and non-Sharia-compliant firms.

Ownership structure and bank performance in EU-15 countries

Abstract: The purpose of this paper is to investigate the impact of ownership structure on bank performance in EU-15 countries Specifically, it examines to what extent shareholder type and the degree of shareholder concentration affect the banks’ profitability, risk and technical efficiency,This study uses a sample of 1,459 banks operating in EU-15 countries from 2011 to 2015 It constructs a set of continuous variables capturing the ownership nature, the concentration and their interactions, and estimates an instrumental variable random effect (IV-RE) model In addition, a panel data stochastic frontier analysis is conducted to estimate the time-varying technical efficiency for profitability and costs,The empirical analysis shows that bank performance is affected by shareholder type When regressed against the entrenchment behavior of the controlling owner hypothesis, banks with large-block shareholders are more profitable, less risky and more profit efficient Further, ownership concentration reverts the negative effect related to the institutional, bank and industry ownership,The results support the hypothesis that concentrated ownership helps to overcome agency problems They also confirm that managerial involvement in banks’ capital enhances a bank’s profit and its volatility,To the best of the authors’ knowledge, this is the first study to consider the ownership nature, the concentration and their interaction using continuous variables, which allows for more precise inferences The results provide new evidence that bank profitability, cost efficiency and risk are affected by the type of direct shareholders

The myth of the “good governance code”: an analysis of the relationship between ownership structure and the comply-or-explain disclosure

Abstract: The purpose of this paper is twofold: first, to assess the degree of disclosure about compliance with corporate governance code and the explanations provided by Italian firms and second, to analyze the relationships between this disclosure and different variables of ownership structure.,The sample was composed of 75 non-financial companies listed in Italy in 2016. Content analysis of the corporate governance statement and ordinary least squares (OLS) multiple regression models were used to test the hypotheses.,Companies tended to comply with the corporate governance code and to disclose this information, but when they decided to not comply, they did not provide adequate explanations. Findings revealed a negative relation between ownership concentration and the disclosure analyzed. Results also highlight that a more equal distribution of shares among larger shareholders is beneficial for disclosure. Moreover, the presence of a dominant financial shareholder at a high level of ownership concentration creates inefficiency of the degree of adherence to the comply-or-explain principle.,This study examines in depth the underexplored issue of “explanation” and exceeds the issue of ownership concentration, which has already been examined extensively, raising the issues of counterweight power and shareholders’ identities, which remain underexplored. In this way, results presented contribute to explaining some causes of the diverse findings that research has found about the relationship between ownership concentration and voluntary disclosure, demonstrating the importance of counterweight power and largest shareholder’s identity. Consequently, when self-regulating initiatives are designed and implemented, legislators, regulators and managers should not ignore the characteristics of the firms’ ownership structure.

Role of public policies in promoting CSR: empirical evidence from business and civil society of UAE

Abstract: This paper aims to explore the intermediary roles that public policies play in stimulating government agencies, businesses and civil society to engage in a corporate social responsibility (CSR) agenda.,Issues related to decision-making of public policies are increasingly complex. Therefore, analytical hierarchy process has been used to prioritize public policy practices for CSR in the UAE. Data were collected from experts working in businesses and civil society organizations.,Findings suggest that businesses and the civil society confirm the importance of standardization and law enforcement public policy practices in issues related to CSR in developing countries. The endorsing style of public policies was the least important approach to encouraging CSR implementation in the UAE.,Results are derived from a limited amount of empirical data only in one country; therefore, these cannot be generalized. Future research from other countries is needed.,Outcomes from this study will help the government enhance its role as mediator among all agents and help with designing public policies that encourage adoption of CSR by business firms while maintaining competitiveness in the economy.,A framework consisting of five public policy categories – mandating, facilitating, partnering, endorsing and empowering roles – and 29 sub-policy practices is introduced. This study provides an important technique for analyzing the importance of public policies in promoting CSR. It offers insights into a population that shapes a CSR agenda.

Board independence, state ownership and stock return volatility during Chinese state enterprise reform

Abstract: This study aimed at investigating the influence of corporate governance on firm risk during the Chinese state enterprise reform. The purposes of this study are to examine the effects of board independence, state ownership and other governance variables on firm risk and to check the influence of controlling shareholder types on firm risk.,This study uses the dynamic and static panel model to estimate the effects of board independence, state ownership and other governance factors on return volatility. To examine the influence of controlling shareholder types on corporate risk-taking, this study further used the treatment effect model (or sample selection model) to analyze the effect of private, state-owned enterprise (SOE) entity, central government and local government controls on corporate risk-taking.,It was found that the enforcement of board independence significantly increases firm risk. The strategy of decentralizing state enterprises (from central government to local government) is a good way to achieve stable stock returns.,This study contributes to existing knowledge in several ways. First, it focused on independent directors rather than on the size of the corporate board. Second, it highlighted the impacts of state ownership and control on corporate risk. Instead of treating all types of state ownership as homogenous, SOEs are further classified into directly controlled and indirectly controlled, in line with prior studies.