Showing papers in "Corporate Governance in 2021"

Corporate governance and COVID-19: a literature review

Abstract: The purpose of this study is to review the literature on corporate governance (CG); environmental, social and governance (ESG) issues and corporate social responsibility (CSR) during the Coronavirus disease 2019 (COVID-19) pandemic and addresses three research questions: What are the characteristics of the literature on CG and COVID-19? What are the themes in CG in the COVID-19 era? and What are key areas of future research on CG and COVID-19?,The authors attempted a systematic literature review of 62 studies published in 2020. The authors used four criteria to identify characteristics of the literature on CG and COVID-19 and three criteria to identify key themes in the literature addressing CG and the pandemic. The authors analyzed answers to the above research questions and proposals from studies reviewed to guide future research.,CG in the context of COVID-19 has been studied mostly in developed countries and within a theoretical framework. As accounting data are insufficient, more research is required in all countries (developed, emerging and other). Further, there are no conclusive results regarding the relevance of ESG and CSR to financial performance. Future research should use additional methodologies and data sources to fully explain the impact of COVID-19 on CG.,Practitioners and policymakers could benefit from the study, as the authors present key challenges to CG for the present and the future.,This study is the first to provide a systematic literature review on CG during the COVID-19 pandemic and presents current trends, challenges and avenues for future research.

Firms’ performance during the COVID-19 outbreak: international evidence from 13 countries

Abstract: Purpose: The purpose of this paper is to explore the impact of firm-, finance- and country-specific indicators to the performance of companies under the COVID-19 outbreak. Design/methodology/approach: The study uses a regression performance model for enterprises during the COVID-19 crisis. The investigation is based upon a data set of 5,730 firms from 13 countries collected by the World Bank through enterprise surveys. The author combined the analysis of traditional performance measurements with the testing of relatively novel variables. Findings: This study confirms the significance of multiple factors for company performance: sector, size, participation in exports and market demand for firms’ products. Robust financing solutions during the coronavirus pandemic period include equity contributions, followed by firms’ cash balances and debt. Support by a government, however, has not yet been confirmed as a significant source of finance. This paper also suggests the importance of country-specific factors for the performance of enterprises, including the level of economic development and the corporate governance infrastructure. Practical implications: The research outcomes might assist regulatory bodies, policymakers and companies in their formulation of public and corporate governance strategies concerning future emergency preparedness and responses. Originality/value: This paper is among the first empirical studies in the management realm that addresses the impact of COVID-19 on company performance, with cross-national empirical data. © 2021, Olga Golubeva.

Corporate governance and financial distress: Asian emerging market perspective

Abstract: The purpose of this paper is to examine the impact of corporate governance index (PAKCGI) on firm financial distress for a sample of 152 non-financial firms listed at Pakistan Stock Exchange (PSX) over the period from 2003 to 2017.,To examine the impact of PAKCGI on financial distress (Altman Z-Score), random effect model is applied. The PAKCGI is a self-constructed index based on the five important factors of corporate governance practices, i.e. board of directors, audit committees, right of shareholders, disclosures and risk management. The binary coding approach is adopted for the construction of PAKCGI. Altman Z-Score model is used as a proxy for financial distress indicator. The absolute value of Altman Z-score has been taken as financial distress indicator.,The outcomes of the study indicate a positive impact of PAKCGI on risk of firms’ financial distress. The positive coefficient of PAKCGI implies that the good corporate practices work as catalyst to reduce risk of financial distress in Pakistan. A significant negative impact of block holders on financial distress suggests that the concentrated block ownership take monopolistic decision to protect their interests. It has also been observed that significant positive impact of institutional ownership on financial distress exists in the Pakistani listed firms. Furthermore, this study also reveals that significant negative association between board size, CEO duality and financial distress indicator.,The findings may encourage the Pakistani listed companies to follow and implement good corporate governance practices, which would lead to increase the confidence of investors, regulators and stakeholders.,The current study extends the corporate governance literature by examining the relationship between the corporate governance attributes and the financial distress status of Pakistani listed companies. From the academic perspective, this paper adds to the knowledge concerning the association between corporate governance practices and risk of financial distress in emerging markets.

COVID-19 response: students’ readiness for shifting classes online

Abstract: Purpose: Coronavirus disease 2019 (COVID-19) pandemic has led education institutions to move all face-to-face (F2F) courses online across the globe The purpose of this study was to investigate Indian students’ perception of readiness for this sudden shift and at the same time, report a possible approach of good institutional governance to respond to such an unprecedented crisis Design/methodology/approach: This study followed a mixed approach combining both quantitative (e g survey) and qualitative (e g interview) methods A survey was distributed among 100 purposively selected students out of which 50 were college students and 50 were from secondary schools following heterogeneous purposive sampling techniques In total, 30 participants were interviewed as per a set interview protocol Data were analyzed descriptively and inferentially based on several demographic differences Findings: Findings revealed that students were neither satisfied nor ready for this sudden shift toward online education rather they felt fear, uncertainties, and several challenges owing to a deep digital divide to adapt to this unprecedented shift They were found absorbed in memories of F2F mode before the COVID outbreak and take this online shift as a temporary adjustment owing to respond to the pandemic finding no possible alternate Originality/value: This study contributes and extends corporate governance literature by offering new evidence of perception differences between the company and customers as well Education providers often assume that students desire online courses for their convenience and believe it equivalent to or better than F2F courses This study challenges these managerial perceptions by examining students’ studies empirically and the findings will help regulators and policymakers to change accordingly © 2020, Emerald Publishing Limited

The COVID-19 pandemic, social sustainability and global supply chain resilience: a review

Abstract: The purpose of this paper is to examine the impacts of the COVID-19 pandemic on global supply chain sustainability and provide an important pathway to develop an initial understanding of how organizations can develop more resilient and socially sustainable supply chains in a post-COVID world.,To gain fresh insights on the effects of the COVID-19 pandemic on supply chain social sustainability and resilience issues, an extensive literature review was conducted. To this end, recent scholarly research articles, articles from practitioner journals, magazine articles and policy documents and reports, as well as blogs and briefings published by international organizations were critically reviewed.,The findings suggest that the COVID-19 pandemic has been associated with a major shake-up of global supply chain operations and has contributed to varied sustainability outcomes. While the pandemic caused reductions in greenhouse gas emissions and air pollution, it has had serious social implications for the livelihoods and well-being of workers and their families. The findings further suggested that it is imperative for companies to build resilience in their global supply chain operations to better respond to future shocks and disruptions by adopting strategies such as employee protection schemes, advanced digital technologies, diversification, localization and regionalization and stakeholder collaboration.,This review paper contributes to emerging global supply chain sustainability literature and practice by synthesizing and explicating the impacts of the COVID-19 pandemic on supply chain social sustainability and resilience. In addition, this paper offers some practical recommendations to enhance the social sustainability impacts and resilience of global supply chains in a post-COVID world.

CSR disclosure and firm performance: evidence from an emerging market

Abstract: This study aims to investigate the effect of corporate social responsibility (CSR) disclosure on firm performance, considering both firm profitability and firm value in an emerging market, India.,The study examines the effect of CSR disclosure on firm performance using panel regressions for the final sample that consists of 386 companies listed in the BSE 500 index, India. It covers all major players in the capital market for ten years from 2007–2016.,The result shows a trend toward the negative effect of CSR disclosure on firm profitability and firm value in India; this negative effect is mainly influenced by environmental disclosure score and social disclosure score. An adverse effect of firm profitability and firm value on CSR disclosure is also observed to underline the inverse relationship.,The study provides implications to consumers, investors, managers and policymakers. Firstly, consumers have to be more aware of CSR initiatives of companies, and they should support those companies to do more. Secondly, investors can use the ESG disclosure score as a signal for the level of CSR activities, which negatively affects firm performance. Thirdly, managers have to consider CSR more seriously and spend CSR amount wisely after proper research and not just to meet the mandatory limit. In addition, managers have to take necessary actions to make the public aware of the CSR activities of the company to gain an advantage in the future. Finally, policymakers have to give more emphasis on the promotion of CSR activities to reach the ultimate consumers who lie in the remote areas of the country, and more awareness has to be given to them regarding CSR activities.,The findings contribute to the literature by providing insights on CSR disclosure and firm performance relationship in India, an emerging market with increasing international attention where such studies are scant and less clear, especially after the amendments in the Companies Act, 2013. Furthermore, the measurement of CSR disclosure using environmental, social and governance (ESG) score is novel in the Indian context.

The role of consumer happiness in brand loyalty: a model of the satisfaction and brand image in fashion

Abstract: Purpose The study of the antecedents to loyalty is of great interest to both academics and professionals in the context of fashion consumption. The purpose of this paper is to define a SEM model, in which brand image and its dimensions, as well as consumer satisfaction and consumer happiness as mediators, are explained as antecedents to loyalty. Design/methodology/approach A transversal descriptive study based on primary data were, therefore, carried out using a survey with a sample of 2,515 consumers representing the Spanish population. The Partial Least Square method was applied to test the hypotheses. Findings The results of this research tell us which variables have a positive influence on consumer loyalty to fashion brands, where brand image, satisfaction and consumer happiness are the determining variables of loyalty. Research limitations/implications This model has important implications and contributes both to the literature and to the choice of differentiation and brand positioning strategies for marketing to a global and highly competitive market. Originality/value One of the novelties of this study is the fact that it considers the consumer happiness variable as an antecedent to loyalty in the fashion consumer sector.

The impact of board characteristics on corporate investment decisions: an empirical study

Abstract: The purpose of this study is to investigate the influence of board characteristics on firms’ investment decisions.,The study used data sourced from annual reports of firms listed on the Ghana Stock Exchange from 2014 to 2018. Descriptive analysis was performed to provide the background statistics of the variables examined. This was followed by a regression analysis which forms the main data analysis.,The multiple regression analysis results indicated that the proportion of independent directors and financial experts on the board are negatively related to firm investment. These findings imply that independent directors and financial experts on the board can help firms reduce overinvestment and improve investment efficiency.,The extant literature shows that the board of directors are an effective mechanism to reduce agency problems in firm decisions and operating performance. However, there has been little research on the role of the board of directors in corporate investment policy.

Board’s financial expertise and corporate social responsibility disclosure in China

Abstract: This study aims to investigate the impact of the board’s financial expertise (BFE) on corporate social responsibility (CSR) disclosure in China.,Using a sample of Chinese listed firms from 2009-2016 (making 3272 firm-year observations), this study uses the generalized method of moments (GMM) and panel data estimation techniques.,Using the resource dependence theory, the findings of this study are twofold. First, the is positively associated with the disclosure level of CSR. Second, this positive impact is more pronounced in firms with female CEO and state ownership. The findings are robust to the potential issues of endogeneity and sensitivity analyses.,Practically, the findings hold value for the senior management of Chinese firms to ensure the presence of financial experts in boards to yield both financial and non-financial outcomes.,This study points out how financial experts on boards influence the societal outcomes via disclosure of CSR. Financial experts encourage participation in social and sustainable practices which creates a positive image of the firm not only in the eyes of society but also for investors.,This study is unique and contributes to the extant literature by examining the impact of a new attribute, i.e. the BFE on the level of CSR disclosure in China.

Does board gender diversity matter? Evidence from hostile takeover vulnerability

Abstract: Theory suggests that the market for corporate control, which constitutes an important external governance mechanism, may substitute for internal governance. Consistent with this notion, using a novel measure of takeover vulnerability primarily based on state legislation, this paper aims to investigate the effect of the takeover market on board characteristics with special emphasis on board gender diversity.,This paper exploits a novel measure of takeover vulnerability based on state legislation. This novel measure is likely exogenous as the legislation was imposed from outside the firm. By using an exogenous measure, the analysis is less vulnerable to endogeneity and is thus more likely to show a causal effect.,The results show that a more active takeover market leads to lower board gender diversity. Specifically, a rise in takeover vulnerability by one standard deviation results in a decline in board gender diversity by 10.01%. Moreover, stronger takeover market susceptibility also brings about larger board size and less board independence, corroborating the substitution effect. Additional analysis confirms the results, including propensity score matching, generalized method of moments dynamic panel data analysis and instrumental variable analysis.,The study is the first to explore the effect of the takeover market on board gender diversity. Unlike most of the previous research in this area, which suffers from endogeneity, this paper uses a novel measure of takeover vulnerability that is probably exogenous. The results are thus much more likely to demonstrate causality.

The impact of COVID-19 pandemic on student learning performance from the perspectives of community of inquiry

Abstract: Purpose This paper aims to investigate the impact of the coronavirus disease (COVID-19) pandemic on university students during the Movement Control Order (MCO) and Recovery Movement Control Order (RMCO). MCO was introduced in March 2020, and the learning process switched from face-to-face to online learning in schools and universities. Subsequently, with the reduced number of daily cases and active cases of COVID-19, the Malaysian Government implemented RMCO from 10th June to 31st December 2020, which had more relaxation of restrictions. This study particularly focuses on students studying in higher education institutions by analysing the impacts of the community of inquiry on students learning performance. The construct of the community of inquiry includes social presence, cognitive presence and teaching presence. Design/methodology/approach This paper provides quantitative analysis, independent sample t-tests and multiple linear regression on the students’ learning performance using the framework of community of inquiry. This paper presents the analysis of the online learning preference of 282 university students during MCO and 456 students during RMCO. Findings The results showed that there is a significant difference in students learning process during MCO and RMCO. The findings also indicated that the social presence is the most important factor in affecting learning performance during the MCO period and it changed to teaching presence during RMCO. Students lost motivation and could not perform well using online learning methods during the MCO period but the situation improved during RMCO. Research limitations/implications This research helps to identify the impact of the pandemic on higher education and provides insights into reshaping the future of higher education system. Practical implications Students are isolated from their peers in the learning process and struggle to adapt to the new normal in online learning. The teaching faculties are picking up new skills to deliver online courses and manage the risk as best as they can. This study presented the impact of the pandemic on students learning performance and explored the space for universities as business organizations to provide better infrastructures and platforms for online learning while battling with cash flow and debt level during this challenging time. Social implications Students need peer support and guidance from the faculty team in their learning journey. The study provides a better understanding of how we shall promote a better higher education environment, either blended or online learning. Originality/value To the best of the author’s knowledge, this is the first study to examine the impact of the community of inquiry on students learning performance during the COVID-19 pandemic. Students suffered during the MCO period and the learning experience got better when they were able to adapt to the changes. The higher education system needs a reform and the agency theory in corporate governance plays an important role in the transformation.

The impact of audit committee attributes on the quality and quantity of environmental, social and governance (ESG) disclosures

Abstract: The purpose of this research is to ascertain the impact of audit committee (AC) activism and independence on the quality and quantity of environmental, social and governance (ESG) disclosures for energy sector firms in Australia. This paper aims to understand how AC attributes such as meeting frequency, and the number of independent directors influence the compliance with the global reporting initiative (GRI) guidelines and quantity of ESG disclosures.,Bloomberg ESG disclosure scores and company reported AC attributes are collected and analysed using the pooled ordinary least square (OLS) regression framework with Petersen’s (2009) technique by using a two-dimensional cluster at the firm and year level. Further, this paper uses a lagged independent variable and two-stage least square approach to address endogeneity concerns.,The results show a significant positive effect of AC activism and independence on the level of compliance with the GRI guidelines, indicating the favourable effect of AC attributes on ESG reporting quality. Likewise, AC attributes positively affect the quantity of ESG disclosures. Notably, the impact of AC attributes is more pronounced on environmental disclosures.,This paper validates the significance of the management control mechanism in improving the quality and quantity of ESG disclosures for an environmentally sensitive sector, hence offering a potential answer to reduce agency and legitimacy issues for the sensitive industry firms.

CSR committee attributes and CSR performance: UK evidence

Abstract: This study aims to explore the set of corporate social responsibility (CSR) committee attributes that may enhance CSR performance and CSR strategy formation and reduce CSR controversies.[AQ1] Towards this end, the study also explores the differences between companies with and without CSR committees in terms of these three CSR performance facets.,The study uses a sample of financial times stock exchange (FTSE) 100 non-financial companies in 2015–2017. Kruskal-Wallis test is conducted to test the differences in CSR performance in firms with CSR board-level committee, CSR management committee and no committees. Additionally, a regression model is used to explore the attributes of CSR committees that lead to better/less CSR performance and CSR strategy/CSR controversies. A two-stage least squares regression model was used as a robustness check.,Firms with board CSR committee have better CSR performance and CSR strategy and lower CSR controversies than both firms with no CSR committees and firms with a CSR management committee. Regression results show that CSR committees that are predominantly consisting of independent board members, chaired by a female director and setting more meetings have better CSR performance. Additionally, CSR committees were found to have lower CSR controversies when having more independent directors and a chair with CSR expertise. CSR strategy was better with the CSR committee represented by a larger group of members.,This study makes several contributions to the sustainability governance literature and regulatory/guidance interfaces. There is extant literature examining audit committee attributes and their effects on various firm outcomes. The same can be said on the regulations of the audit committee. CSR committees’ composition and benefits are, by far, less regulated and largely under-researched. Hence, this paper is considered an early attempt to explore the CSR performance improvements a CSR committee may bring and the composition that would bring better CSR performance.

Does board gender enhance Palestinian firm performance? The moderating role of corporate social responsibility

Abstract: This study aims to examine how the salient board gender diversity among board directors affects firm performance both directly and indirectly, through the role of corporate social responsibility (CSR) in listed firms on the Palestine Stock Exchange over the period 2010–2017.,Based on panel data of 384 observations from all firms listed on the Palestine Security Exchange during the period from 2010 to 2017, this study uses panel data regression to examine the effect of the predictors on firm performance. In addition, to mitigate the endogeneity issue, the analysis was repeated by using one-step generalized method of moments.,The results show that board gender diversity has a positive and insignificant influence on firm performance. However, under the moderating effect of CSR, the finding turns from positive insignificant to positive significant.,The study is timely given that gender diversity plays pivotal roles in determining the performance in terms of monitoring and controlling and further willing to engage in social responsibility. The prior research in Palestine has never investigated the effect of board gender diversity. As such, Palestine has not established a legal quota of minimum female representation on boards, and because of it, the country has weak women’s representation among firms. It, therefore, becomes a necessity to examine the influence of board gender diversity on the financial performance of listed firms in Palestine. Besides, the mixed result in previous literature on the board gender diversity and firm performance indicates that there is an indirect effect that needs alternative explanations.

Corporate Social Responsibility Actions and Organizational Legitimacy at the Peak of COVID-19: a Sentiment Analysis

Abstract: Purpose: This paper aims to analyse stakeholder sentiment about the corporate social responsibility (CSR) actions implemented by Italian companies between February 20, 2020 and April 20, 2020, which was the first peak in the outbreak of the COVID-19 health emergency in Italy. Design/methodology/approach: Using sentiment analysis, the impact of COVID-19 on CSR actions is analysed through reactions to the news published on Twitter by a sample of Italian news agencies. Findings: The analysis indicates that the actions most appreciated are those that are more radical, e.g. where the company has converted part of its production to make goods that are useful in dealing with the COVID-19 emergency. The study identifies a new category of actions definable as “crisis-shaped CSR.” Practical implications: This is one of the first studies concerning the effects of the pandemic on both CSR actions and organizational legitimacy. Originality/value: This work explains which strategic approach to CSR is the most effective in supporting corporate reputation in times of crisis, this study identified which of the CSR initiatives adopted by companies in Italy were more effective in stimulating positive interactions and sentiment among the general public. © 2021, Emerald Publishing Limited.

Corporate governance practices and the pandemic crisis: UK evidence

Abstract: This paper aims to investigate the impact of the COVID-19 pandemic on the corporate governance practices in the UK. The authors adopt a case study approach and use content analysis, using internal and external media releases as well as annual reports to analyse the impact of the pandemic on governance practices.,The research design is qualitative in nature and adopts a case study approach. HSBC, an international bank, is used as the case study and a content analysis of internal and external information released after the COVID-19 outbreak is used. Themes arising from the analysis are discussed and recommendations are made.,Results from the thematic analysis show that firms must be resilient in difficult times, follow sustainable practices and are attentive to the well-being of their employees. Firms must address the adequacy of IT Infrastructure and assess the IT related risks during these times.,The pandemic crisis triggered unprecedented changes in the manner the firms are governed and managed. The recommendations made by the study have practical implications for firms who can adopt them to be make the business resilient and sustainable.,To the best of the authors’ knowledge, this is the first study to explore the impact of the pandemic and analyse firms’ responses to the crisis in the corporate governance context. This study contributes to the corporate governance literature by providing insights of the impact of the COVID-19 pandemic.

The impact of board composition on the dividend policy of US firms

Abstract: This paper aims to examine whether the characteristics of boards are more important in determining dividend policy than management characteristics. The authors show that as the final declarers of dividend policy is a firm’s board, the composition of a firm’s board significantly subsumes the effect of management characteristics that may also influence dividend policy.,Using the dividend declaration dummy variable, the authors run a fixed effect logistic regression of the dividend indicator on board characteristics, and managerial characteristics with firm level controls, year effects and industry effects while clustering standard errors at the firm level. For dividend yield variable which is censored at zero, they use a fixed effect Tobit regression.,The results of the study show that board characteristics such as average age, female presence and size have a strong positive significant effect, whereas board independent chair and voting right of directors have a negative significant effect on the likelihood of dividend declaration. For dividend yields, the results suggest that the presence of directors with financial expertise and the board size are the main influencers of dividend policy. Managerial characteristics are subsumed by director characteristics for determining dividend policy. The results overall support the evidence on the monitoring role of boards on management.,The originality and value of this study lies in the approach of including a comprehensive number of board characteristics unlike previous studies which makes the study of the influence of board composition on dividends more encompassing.

Corporate governance and firm performance: empirical evidence from Pakistan

Abstract: Purpose The purpose of this research is to look into the governance–performance relationship in the context of critical firm characteristics, such as firm size. Design/methodology/approach Based on total assets, sample firms were classified as small or large. The governance index, which is based on 29 governance provisions covering the audit committee, board committee, ownership and compensation structure of the respective firm, measures governance quality among sample firms. A higher governance index indicates a higher level of governance quality and vice versa. Accounting and market value measures are used to determine firm profitability. The authors used the two-stage least square (2SLS) method of estimation of the model to eliminate the simultaneous equation bias. Findings Corporate governance (CG) appears to have a positive impact on accounting return and market indices (Tobin’s Q), but it has little impact on return on equity. In terms of firm size, larger companies profited more from better governance implementation than smaller firms that lacked these principles, thus improving CG. The findings indicate that small businesses should improve their governance mechanisms to reap the benefits of CG in terms of increased profitability. Research limitations/implications There are certain drawbacks to this research. First, the authors omitted qualitative aspects of CG from the CG index, such as the board’s decision-making process, directors’ perceptions of the board’s position and directors’ age and qualifications. Such a qualitative component will improve the governance index in the future while building the governance index. Second, as the current study only looks at the nonfinancial sector, caution should be exercised before applying the findings to the entire population. Practical implications The findings show that companies that follow good governance standards have better accounting and market efficiency than those that do not. As a result, good governance practices can help firms in developing countries improve their performance. Academic researchers, regulators, investors, lenders and practitioners can find the findings useful in establishing a true relationship between firm performance and CG practices in Pakistan. Originality/value The relationship between governance and profitability in the context of firm size is examined in this research. Firms with varying resources and ability to implement CG codes have varying effects on profitability. To the authors’ knowledge, there was a gap in the literature that addressed this topic in the local context.

Does the board diversity impact bank performance in the MENA countries? A multilevel study

Abstract: The purpose of this study is to examine the impact of board diversity (e.g. nationality, gender and educational level) on financial performance for a sample of banks listed in 11 countries in the Middle East and North Africa region.,This paper uses the system generalized method of moments estimation approach on the data of banks listed in the MENA countries over the period 2011–2018 to investigate the relationship between board diversity and financial performance. Also, the findings are supported by additional robustness tests, including ordinary least squares, fixed and random effect techniques.,The empirical results show that there is a significant relationship between board diversity and financial performance in banks. Specifically, the findings demonstrate that board diversity related to nationality has a significant positive impact on bank performance. The findings also show an insignificant association between gender and educational level diversity and bank performance. The robustness analysis supports the findings of the baseline model.,The study provides multi-country evidence on the importance of board diversity in the MENA region and it sheds light on possible tracks for future reforms aimed at enhancing the effectiveness of the board’s functions.,This paper extends the existing literature by providing empirical evidence on the association between board diversity and financial performance of banks in the MENA countries. This paper also provides preliminary evidence on the importance of board diversity to influence financial performance.

Facing a global crisis - how sustainable business models helped firms overcome COVID

Abstract: Purpose: The purpose of this study is to analyse how implementation of corporate social responsibility (CSR) policies following United Nations’ Global Compact (UNGC) guidelines can contribute to firm’s performance during a global crisis, such as the case of COVID-19 Based on the triple bottom line theoretical framework, this work explores the relation between the creation of value and sustainable business models with long-term strategies and strong policy commitments, and their performance in the stock market years later during a crisis By doing so, new insights on strategic management to create value and consolidate sustainable business models are provided Design/methodology/approach: The present study analyses firms within the context of the European Union, considering the involvement of the region in achieving sustainable development In particular, the long-term impact in the usage of the UNGC management model and the firm's sustainability performance based on the results during COVID-19 crisis To achieve this goal, energy firms operating in Spain and subscribing to UNGC were evaluated, specifically those publicly listed in the IBEX35, benchmark index of Spain's Stock Market Interconnection System In addition, firms were also considered regarding the strong impact within their industries not only nationally but also worldwide Findings: Findings show long-term CSR strategies and a strong commitment to sustainable development contribute to firm’s overcoming periods of economic crisis In addition, considering the environmental impact of the firms’ actions, transition to sustainable business and widening portfolio in the case of energy firms proved to have a positive impact in overcoming a hard context such as COVID-19 The virtuous cycle can be created by honouring the social contract, yet the tools and management models shall be further tailored to ensure an effective win-win situation Originality/value: This study evaluates a company's strategic involvement in sustainability, considering the UNGC 10 principles and SDG and the effects of these strategies in the long-term Specifically, the role of UNGC management model is evaluated in designing effective policies that can help firms better overcome a context of crisis such as COVID-19 Consequently, researchers studying business strategy can incorporate the findings in strategic planning Practitioners can learn the implications of CSR strategic planning in the long-term Moreover, work illustrates corporate results in sustainability matters after the first decade of the UNGC management model and the impact of a crisis context © 2020, Emerald Publishing Limited

Ownership structure, board characteristics and dividend policy: evidence from Turkey

Abstract: This study aims to investigate the impact of ownership structure and board characteristics on dividend policy in the listed Turkish firms between 2013 and 2019.,This study uses the probability of paying dividends, dividend payout ratio and dividend yield measures. The suitable regression procedures (logit, probit and Tobit models) are used to examine the research hypotheses by focusing on a panel data set drawn from the Borsa Istanbul (BIST) 100 index, excluding financial and utility firms.,The empirical findings indicate that institutional and concentrated ownerships are significant and positively associated with dividend payouts, whereas family ownership does not influence dividend policy. On the other end, board size is positive, while chief executive officer duality is negatively related to dividend policy. Additionally, the female directors and board independence are insignificant in influencing firms to pay high dividends.,Future researchers can validate this paper’s findings by considering the stock dividends as well. Additionally, future researchers may investigate the relationship between these constructs by extending the sample size of firms listed on BIST or in other emerging markets.,This study’s findings may serve policymakers, regulators, investors and academic researchers to get valuable guidance from relevant literature. The Turkish firms may improve dividend policy by implementing the regulatory framework introduced by the Capital Markets Law in 2012 for effective monitoring and protecting the minority shareholders’ rights. The controlling shareholders may alleviate principal-principal conflicts by ensuring the independence of directors and increasing the number of female directors according to the critical mass of at least 30% of board members.,This study contributes to agency theory and signaling theory by considering ownership structure and board attributes among Turkish firms related to dividend payments.

CSR during COVID-19: exploring select organizations’ intents and activities

Abstract: Purpose: This paper aims to explore the immediate proactive corporate social responsibility (CSR) efforts undertaken by select organizations in India in response to the coronavirus (COVID-19) pandemic and the approach they have adopted toward it. Design/methodology/approach: Semi-structured interviews were conducted with 27 senior managers across top Bombay Stock Exchange indexed organizations from the manufacturing and services sector in India during the national COVID-19 pandemic lockdown between March and June 2020. Manual content analysis and the Gioia method were used to arrive at the insights. Findings: Results of the analysis showcase the spirited immediate CSR measures undertaken by the select organizations in the broader interests of the community at large. The study also highlights the need for a paradox approach toward CSR strategy. Research limitations/implications: Given that the present study adopts an exploratory qualitative research design, the scope for generalization is rather limited. Practical implications: This paper classifies COVID-19 related initiatives undertaken by selected few top organizations in India and attempts to justify the need to opt for a paradox approach toward CSR strategy. Originality/value: To the best of the author’s knowledge, this is one of the first few studies to have attempted to put forth a dialog at the intersection of COVID-19 and CSR with rich insights gained from qualitative data collected during India’s intense lockdown period and offering a different perspective with the inclusion of paradox theory into the discussion. © 2021, Emerald Publishing Limited.

Gender diversity and bank risk-taking: an empirical investigation in Italy

Abstract: Purpose The purpose of this paper is to investigate the relationship between gender diversity and the risk profile of Italian banks during the period 2015–2019. This study examines whether the presence of female board directors or top executives has any significant effect on bank risk-taking. Design/methodology/approach To explore the influence of women on bank risk-taking, the authors analyzed a sample of 387 Italian banks and developed an econometric model applying unbalanced panel data with firm fixed effects and controls per year. Within a multivariate regression model, the authors considered five risk dimensions to verify the effect of gender diversity. Findings The findings suggest that female board directors and executives are considerably more risk averse and less overconfident than their male colleagues, thus confirming a negative causality between risk-taking and gender diversity. The results reveal that banks headed by women are less risky because they report higher capital adequacy and equity to assets ratios. As credit risk in female-led banks is no different from male-led ones, higher capital adequacy does not derive from lower asset quality because it is linked to the higher risk aversion of female directors and top managers. Research limitations/implications From a theoretical standpoint, the results suggest that having women in executive positions entails different risk implications for Italian banks; from a managerial perspective, the results highlight conditions that may promote the role of women in the banking sector. The conclusions are of particular significance because they provide some support for the view that regulators should favor gender quotas in the board management of banks to reduce risk-taking behavior. Originality/value This paper offers an in-depth examination of the risk practices of banks and it attempts to bridge the gap in prior literature on the risk profile of the Italian banking industry given that few empirical studies have examined the determinants of risk-taking in this field, to date. The findings on the higher risk aversion of women directors advance the understanding of the determinants of risk-taking behavior in banks, suggesting that gender quotas in bank boards can contribute to reducing risk-taking behavior. This also unveils some policy implications for bank regulatory authorities.

Board diversity and firm efficiency: evidence from China

Abstract: The purpose of this paper is to explore how multiple facets of board diversity influence technical efficiency (TE) and total factor productivity (TFP).,The authors measure board diversity in two dimensions: relation-related dimension (age and gender) and task-related dimension (tenure, education and expertise). The authors use a balanced panel data of 806 nonfinancial Chinese firms over the period 2009–2017. The authors use a two-stage approach for analysis. In the first stage, the authors use a non-parametric frontier approach to calculate the TE and factor productivity scores. In the second stage, the authors regressed these scores on board diversity attributes (relation-related diversity and task-related diversity).,By using tobit regression and two-step system GMM, the authors find that board diversity improves TE and TFP. The authors’ analyses illustrate that a higher diversity on corporate board (in terms of age, gender, tenure, education and expertise) positively influence firm efficiency.,The findings have important implications for policymakers. The findings suggest that regulators should devise policies to encourage board diversity. Because a diverse board can bring knowledge, skills, abilities, expertise and experience of diverse group members, which will ultimately enhance a firm’s efficiency. Especially, in the emerging markets (such as China), there is still a need for standard governance mechanisms; therefore, the authors suggest that policymakers should develop regulations and promote diversity of directors as one of the factors for improving the governance mechanisms, which will ultimately improve firms productivity.,Prior studies mostly considered only one dimension (such as gender) of diversity and, therefore, have overlooked how other dimensions influence firms. The authors consider several dimensions of diversity and quantify them into relation-related (age and gender) and task-related (tenure, education and expertise) attributes and show how they influence firms’ efficiency. To the best of the authors’ knowledge, this is the first study to comprehensively investigate how several facets of diversity influence a firm’s TE and TFP.

Can board diversity predict the risk of financial distress

Abstract: The purpose of this study is to explore whether different board diversity attributes (corporate governance aspect) can be used to predict financial distress. This study also aims to identify what type of prediction models are more applicable to capture board diversity along with conventional predictors.,This study used Chinese A-listed companies during 2007–2016. Board diversity dimensions of gender, age, education, expertise and independence are categorized into three broad categories; relation-oriented diversity (age and gender), task-oriented diversity (expertise and education) and structural diversity (independence). The data is divided into test and validation sets. Six statistical and machine learning models that included logistic regression, dynamic hazard, K-nearest neighbor, random forest (RF), bagging and boosting were compared on Type I errors, Type II errors, accuracy and area under the curve.,The results indicate that board diversity attributes can significantly predict the financial distress of firms. Overall, the machine learning models perform better and the best model in terms of Type I error and accuracy is RF.,This study not only highlights symptoms but also causes of financial distress, which are deeply rooted in weak corporate governance. The result of the study can be used in future credit risk assessment by incorporating board diversity attributes. The study has implications for academicians, practitioners and nomination committees.,To the best of the authors’ knowledge, this study is the first to comprehensively investigate how different attributes of diversity can predict financial distress in Chinese firms. Further, this study also explores, which financial distress prediction models can show better predictive power.

Impact of audit committee characteristics and external audit quality on firm performance: evidence from India

Abstract: The purpose of this paper is to analyse the influence of audit committee characteristics and external audit quality on the performance of non-financial public limited companies listed on the National Stock Exchange 100.,One-way random effect panel data regression was applied to 74 non-financial firms in the Nifty 100 from 2014 until 2019. The overall audit committee index and external audit index were built based on the new Indian Companies Act, 2013 and on a review of the literature to capture the impact of the new Act on firm financial performance.,The outcome of the study revealed that there is lack of evidence to show that audit committee characteristics improve the performance of top Indian non-financial listed firms. However, external audit quality was found to have a significant positive impact on the financial performance of firms as measured by Tobin’s Q, while firm size and leverage were found to have a significant impact on the financial performance of firms as measured by return on assets and return on equity.,This paper will be greatly beneficial for financial practitioners and policymakers because it provides practical suggestions and recommendations about the types of external audit that are indispensable for the overall effectiveness and performance of firms. The study findings may also aid strategic policy formulation and execution for better corporate governance practices for the purpose of profit and wealth maximisation.,To the best of the authors’ knowledge, to date, no previous research has evaluated the effects of audit committee features and external audit quality on the financial performance of firms in India after the implementation of the new Companies Act, 2013. Hence, this study fills this void in the present literature by examining the overall features of the audit committee and external audit and their impact on firm performance in the setting of India.

The effect of ESG on value creation from mergers and acquisitions. What changed during the COVID-19 pandemic?

Abstract: The purpose of this study is to investigate the relationship between environmental, social and governance (ESG) performance and shareholder wealth in the context of mergers and acquisitions (M&As) before and during the coronavirus (COVID-19) pandemic.,This paper uses a sample of 889 completed M&As announced by US firms between 1 January 2018 and 31 July 2020. Announcement abnormal returns are estimated using an event study methodology and the relation of ESG performance to shareholder value creation is tested with univariate and multivariate cross-sectional regressions.,This study provides evidence for a significant negative value effect of ESG performance for the shareholders of acquiring firms during the entire sample period. The negative effect appears to be stronger, as the onset of the COVID-19 crisis. This suggests that, during the pandemic-driven economic turmoil, the costs of sustainability activities outweigh any possible gains, providing evidence in support of the overinvestment hypothesis.,The results of the study have important implications for firms, investors and policymakers. Firms should be more cautious with regard to extensive investments in ESG activities, particularly during economic turmoil. For shareholders, the results suggest that ESG engagement is not a resilience factor in an exogenous shock such as the COVID-19 pandemic. In terms of policymaking, the sustainability disclosure framework should remain voluntary allowing firms to report material ESG-related issues. The main limitation of the study is related to data availability regarding ESG performance.,To the best of the knowledge, this is the first study that investigates the effect of ESG performance on shareholder value in the market for corporate control before and during the COVID-19 pandemic.

Contextual and corporate governance effects on carbon accounting and carbon performance in emerging economies

Abstract: This paper aims to explore the driving forces for having carbon reporting and carbon reduction management strategies in emerging and developing countries.,The methodology employed uses logit and linear panel data models and generalized moments method, to avoid endogeneity problems.,The results show that the carbon reporting decision is positively related to being located in Africa or America (as opposed to Asia), publishing a sustainability report and having certain corporate governance (CG) attributes such as a corporate social responsibility (CSR) committee, larger board size and an executive compensation policy based on environmental and social performance. Regarding the driving forces leading to a reduction of carbon emissions, no evidence is obtained on the effect of the variables considered.,The evidence obtained is valuable, as it can help standard-setters in these geographical areas to promote actions in the field of CG to increase transparency. Nonetheless, additional measures to disclosure should be needed in the future to help decrease carbon emissions more effectively.,Raising awareness amongst companies helps mimetic isomorphism take place so that efforts can be made to report levels of pollution in an initial phase, which hopefully in the future may be managed to try to keep a decreasing path. Therefore, implications of this research are crucial for emerging and developing countries, as they are especially vulnerable to climate change.,To the best of the authors’ knowledge, this is the first paper to look into this phenomenon in emerging and developing countries from Asia, Africa and America. This contribution is unique as this research shows that location, publication of a sustainability report together with some CG attributes are drivers for carbon transparency.

Do female executives and CEO tenure matter for corporate cash holdings? Insight from a Southeast Asian country

Abstract: This paper aims to investigate the relationship between female executives, chief executive officer (CEO) tenure and corporate cash holdings in the context of the developing Southeast Asian capital market (Indonesia).,The sample was screened from 231 publicly listed companies in the Indonesian Stock Exchange. The period of observation was 2011–2017. Two measures were applied for corporate cash holdings: the ratio of cash and cash equivalent to total assets and cash and cash equivalent to net assets. Three surrogate indicators were used for female executives: female CEO, the proportion of female members in the board of management and the number of female members in the board of management. CEO tenure is the length of time a CEO has been a member of the board of management. This study uses panel data regression analysis, including the fixed effect model with clustered standard errors.,The empirical evidence indicates that female executives and CEO tenure are positively and negatively associated with corporate cash holdings, respectively, and both are significantly related. Additional analysis using lagged independent variables remains consistent with the main analysis, suggesting that corporate cash holding becomes higher as a female presence in the board of management increases.,Empirical tests set in Indonesia suggest that female executives are more conservative and risk-averse, thereby holding more cash with a precautionary motive. The findings also imply that CEOs with long tenure focus on long-term performance such as increasing research and development investments or capital expenditure, thus holding less cash. Accordingly, policymakers and regulators should promote diversity issues proportionally and advance to the board level.,This study contributes to the field of executive and CEO studies by enriching the empirical findings in related topics. In addition, to the best of the authors’ knowledge, this is one of the first studies applying two measures of cash holdings in the setting of a developing Southeast Asian capital market (Indonesia).

Workplace happiness as a trinomial of organizational climate, academic satisfaction and organizational engagement

Abstract: Purpose The present research aims to study the correlations among organizational climate, academic satisfaction and organizational commitment as factors that influence happiness at work by applying a structural equation model to Spanish National Police cadets. Design/methodology/approach A descriptive, quantitative, correlational, exploratory and cross-sectional empirical study was carried out. A measurement instrument was applied to a target population of 397 student-inspectors enrolled for the 2018–2020 academic year on the executive scale at the National Police School (EPN) in Spain. A sample of 190 surveys was obtained, of which 33 were open competition, 52 were competitive examinations and 105 were selective seniority. Findings Structural equation modeling shows that academic satisfaction, organizational climate and practical organizational commitment are recommended variables for assessing happiness within organizations. On the other hand, there is a bit of a positive relationship between happiness and practical organizational commitment. The same is not true for the parameters of academic satisfaction and organizational climate. Originality/value This study fills a gap in the literature on the analysis of governance models in public administration. This is particularly relevant in professions that require a high degree of engagement with citizens, such as police officers. According to the authors’ knowledge, this study is one of the first works to analyze corporate governance in police cadet schools in Spain under the happiness management approach. It contributes by offering a better understanding of the psychosocial variables that affect the existence of good governance.