Journal articles on the topic 'Corporate Governance Mechanisms Shareholder Value'
To see the other types of publications on this topic, follow the link: Corporate Governance Mechanisms Shareholder Value.
Create a spot-on reference in APA, MLA, Chicago, Harvard, and other styles
Consult the top 50 journal articles for your research on the topic 'Corporate Governance Mechanisms Shareholder Value.'
Next to every source in the list of references, there is an 'Add to bibliography' button. Press on it, and we will generate automatically the bibliographic reference to the chosen work in the citation style you need: APA, MLA, Harvard, Chicago, Vancouver, etc.
You can also download the full text of the academic publication as pdf and read online its abstract whenever available in the metadata.
Browse journal articles on a wide variety of disciplines and organise your bibliography correctly.
1
Li, Weian, and Jianbo Niu. "Private interest and social interest of shareholders: empirical evidence from China." Corporate Ownership and Control 5, no. 1 (2007): 254–61. http://dx.doi.org/10.22495/cocv5i1c2p1.
Full textAbstract:
We try to explore the relation among three factors: the private benefits that main shareholders can obtain from the firm, the social benefits derived from a certain ownership structure and the ownership concentration costs. Different corporations have different optimal governance mechanism. Noticing the substitute relation between the level of the management-and-shareholder-conflicts and the different governance mechanism, we take use of the data from China’ stock market and conduct an empirical analysis on the influence both of the different shareholder’s participating in governance and the ownership structure over corporate performance, and have reached two conclusions. First, in the companies with a higher level of conflicts between the management and the shareholders, the shareholder will be more active in participating in governance because the benefits earned here is much more than the company with a lower level of conflicts. Second, when the other governance mechanisms in one company perform poorly, the shareholder is less active in participating in governance because the extra benefits earned here cannot offset their costs. So only in these companies with poor governance mechanisms, the shareholders’ active monitoring can produce benefits. These conclusions can help our further research on the relationship among the shareholder supervision, ownership structure and corporate value, and we should also re-evaluate some traditional theoretical viewpoints
2
Nwoke, Uchechukwu. "Neoliberal corporate governance mechanisms." International Journal of Law and Management 61, no. 5/6 (October 31, 2019): 542–62. http://dx.doi.org/10.1108/ijlma-10-2018-0246.
Full textAbstract:
Purpose This paper aims to identify and analyze the neoliberal, Anglo-American corporate governance mechanisms which embed shareholder value in Nigeria, and assess how they constitute major “practical barriers” to effective corporate social responsibility (CSR) in the country. While some of these mechanisms operate internally – performance-related pay (executive remuneration) – the use of non-executive directors – others operate externally – the markets for corporate control and the stock markets. Design/methodology/approach The paper adopts the doctrinal approach through a critical evaluation of concepts. Using existing literature in the subject area, it evaluates the nature of these mechanisms and argues that their operations amount to “practical barriers” to effective CSR in the country. Findings The paper finds that the existence of these mechanisms incentivizes corporate managers to maximize shareholder value and raise the share price of corporations as high as possible. It also leads to the financialization of corporate governance, rent seeking and the pursuit of short-term profits by corporations. In this context, within the Nigerian corporate governance framework, the existence and operations of these mechanisms amount to “practical barriers” to effective CSR. Originality/value The paper offers a fresh insight into the existence and operations of the neoliberal corporate governance mechanisms which embed shareholder value. By critically assessing the operations of these mechanisms in the Nigerian situation, it extends the body of knowledge in this area by showing how they amount to practical barriers to effective CSR in the country.
3
Hennessey, Sean M. "Corporate governance mechanisms for publicly-traded companies." Corporate Ownership and Control 5, no. 4 (2008): 309–14. http://dx.doi.org/10.22495/cocv5i4c2p4.
Full textAbstract:
The resolution of conflicts between shareholders and managers, at minimal cost, is the goal of corporate governance. This paper discusses four mechanisms, two internal, two external, that attempt to ensure managers act in the best interests of shareholders: 1) the board of directors, 2) management compensation plans, 3) the market, and 4) takeovers. Theoretically, these four forms of corporate governance should ensure management maximizes shareholder value. But, agency costs are real for shareholders. In practice each the mechanisms may be severely limited in their ability to protect shareholders. The best protection is an independent, credible board of directors. Without good boards, shareholders are left to the mercy of the agents. In such cases, it is very difficult, and expensive, to discipline the senior managers of a publicly-traded company
4
Li, Ting, Xinlei Zhao, and Aiwu Zhao. "Voting with hands, earnings management and corporate governance." Review of Accounting and Finance 18, no. 2 (May 13, 2019): 178–97. http://dx.doi.org/10.1108/raf-02-2016-0016.
Full textAbstract:
Purpose Motivated by managers’ intentions to pursue private interests by engaging in earnings management, this paper aims to investigate whether voting with hands (shareholders cast votes on shareholder proposals) by shareholders acts as an external disciplining mechanism over earnings management relative to corporate governance. Also, as corporate governance can scrutinize managers’ behavior, this study also examines whether there is a substitutive relation between shareholder proposals and corporate governance mechanism. Design/methodology/approach First, this paper uses ordinary least squares (OLS) regressions of discrepancy accruals on the percentage of “For” votes for shareholder proposals to test the incremental effect of shareholder proposals on earnings management. Second, firms receiving shareholder proposals are matched with those not receiving proposals by propensity scores, and the levels of earnings management and corporate governance between these two groups are compared by univariate analysis and OLS regressions. In addition, six portfolios are created based on whether firms receive shareholder proposals, as well as on the levels of corporate governance, to assess whether external control from shareholder proposals can substitute internal control for corporate governance in disciplining earnings management. Regressions of earnings management on corporate governance (shareholder proposals) are conducted in the sub-samples formed on shareholder proposals (corporate governance) to further explore the above substitution effects. Findings Based on a sample of 2,041 firm-year observations from 2001 to 2010, this paper finds that the “For” votes received from the shareholder proposals have a significant negative relationship with the practice of earnings management, even when corporate governance is controlled. The negative relationship between shareholder proposal and magnitude of earnings management is also found to be stronger when firms have weak corporate governance. The overall evidence suggests that the external control from “voting-with-hand” shareholders has a significant impact on earnings management. In addition, shareholder proposals can substitute the monitoring mechanism for corporate governance in constraining managers’ myopic behavior. Originality/value This paper contributes to the extant literature by using the percentage of “For” votes for shareholder proposals as a proxy for shareholder pressure and concerns. This study contributes to the earnings management literature by showing the disciplinary effect of outside shareholders on managers’ reporting behavior. Also, it contributes to the corporate governance research by presenting that shareholder proposals can substitute for the internal control of corporate governance in decreasing earnings management. This paper should be of interest to investors and standard setters.
5
Kay, John, and Aubrey Silberston. "Corporate Governance." National Institute Economic Review 153 (August 1995): 84–107. http://dx.doi.org/10.1177/002795019515300107.
Full textAbstract:
Both those who are critical of the current structure of corporate governance, and those who support it, share a common set of prenaises. The corporation is owned by its shareholders: managers exert power and responsibility on behalf of their shareholders: corporate governance is a question of effective accountability to shareholders. If there are problems, they should be dealt with by making these mechanisms more effective. This article challenges that view.The principal-agent model bears no relationship to the way large companies are actually run. The attempt to bring reality in line with the model is one possible road to reform: another is to adjust the model to reality. Shareholders do not own large companies, in any ordinary sense of the word own. Firms like BT or BP are social institutions, owned by nobody. The distinction between plc and the owner managed limited company should be real, and not just titular. Corporate managers are not the agents of the shareholders, but the trustees of the assets of the corporation, which include its reputation, its distinctive capabilities, and the skills of the employees and suppliers. Their objective should not be to maximise shareholder value but to further the interests of the business.This account is probably a better description of the current state of British company law than the principal-agent model, but we advocate a new company statute to put the matter beyond doubt. Disposing of the fiction that executives are the agents of shareholders allows us to establish an effective system for achieving the key goals of corporate governance: freedom for managers to manage, combined with real accountability for their performance. We advocate a fixed four-year term for company chief executives, involving a wide ranging and searching review of effectiveness which would involve not only directors and shareholders but advisors, associated companies and employees.It is better that property should be private, but that man should make it common in use …. it is the task of the legislator to see that the citizens become like that. Aristotle
6
Lee, Ji-Hyun, and Su-Yol Lee. "Effect of the Absence of Unethical Controlling Shareholders on Firm Value and the Moderating Role of Corporate Governance: Evidence from South Korea." Sustainability 14, no. 6 (March 18, 2022): 3607. http://dx.doi.org/10.3390/su14063607.
Full textAbstract:
Prior research on unethical controlling shareholder is limited. This study examines the effect of the evanishment of unethical controlling shareholders’ risk on firm value and how corporate governance moderates this effect from a principal–principal agency perspective. This research proposes a contingent model of corporate governance as a mechanism to provide professional managers with managerial autonomy. This study identifies 43 cases of controlling shareholders of Korean conglomerates being absent due to their imprisonment from 2006 to 2015. The regression analysis results indicate that the evanishment of controlling shareholders’ risks does not significantly influence the affiliated firms’ value. This study supports the positive effect of corporate governance on firm value. Although the statistical significance is low, it observes a tendency for corporate governance to amplify the relationship between the dissolution of unethical controlling shareholders’ risks and firm value. This study contributes to the literature by being one of the first to explore unethical controlling shareholders’ risks based on corporate governance theory.
7
Liao, Qunfeng, and Bo Ouyang. "Shareholder litigation risk and real earnings management: a causal inference." Review of Accounting and Finance 18, no. 4 (November 11, 2019): 557–88. http://dx.doi.org/10.1108/raf-06-2018-0122.
Full textAbstract:
Purpose The authors study how shareholder litigation risk impacts a firm’s decision of real earnings management (REM). This paper aims to shed light on how shareholder litigation risk impacts REM. The authors further explore how the intensifying effect varies systematically conditioning on the degree of information asymmetry and the strength of internal corporate governance. Design/methodology/approach In this study, the authors use the 1999 Ninth Circuit Court ruling as a quasi-experiment that reduces shareholder litigation risk to address endogeneity and establish a causal inference. Findings The difference-in-difference tests suggest lower shareholder litigation risk intensifies REM. In other words, higher litigation risk mitigates REM. Cross-sectional test results suggest the negative effect of decreased shareholder litigation is more pronounced when monitoring difficulty is higher, when information environment is more impoverished and when internal corporate governance is weaker. The negative effect is also stronger in firms with higher sensitivity to legal threats. Originality/value Protection of investors’ interest is the focus of corporate governance. Designed as an important corporate governance mechanism, shareholder litigation enables investors to pursue legal actions to recover their losses in the event of corporate misbehaviors. However, whether shareholder litigation is an effective corporate governance tool and beneficial to shareholders and firms is not without controversy. The authors contribute to the debate by providing evidence that supports the argument that shareholder litigation threat significantly disciplines REM, a form of costlier earnings management technique and myopic investment behavior.
8
Al-Ibbini, Omran Ahmad, and Osama Samih Shaban. "Internal corporate governance mechanisms, investors’ confidence and stock price fluctuations risk." Journal of Governance and Regulation 10, no. 1 (2021): 22–28. http://dx.doi.org/10.22495/jgrv10i1art2.
Full textAbstract:
The primary goal of corporate governance is to create a balance of power-sharing among shareholders, directors, and management to enhance shareholder value and protect the interests of other stakeholders. The main aim of this study is to find out the effect of internal corporate governance in improving the confidence of investors and minimizing stock fluctuations risk. In order to achieve the objectives of the study, a questionnaire has been designed and distributed randomly to 200 traders at the Amman Stock Exchange (ASE). Resolution data were analyzed using the statistical program (Smart PLS), in addition to other statistical methods. The study concluded that there is a significant statistical effect of internal corporate governance mechanisms in improving the confidence of investors and minimizing stock fluctuations risk. Also, the study recommended to maintain the current level of investors’ confidence and to work on developing the legal framework for corporate governance in the light of the proposed development of a conceptual framework, and economic growth.
9
Valipour, Hashem, and Mostafa Sohouli Vahed. "Reviewing Conservative Relationship between Accounting and Corporate Governance Mechanisms." International Journal of Business and Management 12, no. 6 (May 18, 2017): 172. http://dx.doi.org/10.5539/ijbm.v12n6p172.
Full textAbstract:
This research has the aim of reviewing relationship between some corporate governance mechanisms and conservatism in financial reports. Conservatism is potentially useful for corporate governance in some ways: first it reduce opportunistic engagement of management against itself. Second, it results in management report about loss from selling assets and ceases operation and finally it prevents continuity of management investment in projects with negative net present value. Estimated coefficient of independent variable of ownership concentration is positive and their p-value is less than 5%, so it can be said that there is a positive and significant relationship between ownership concentration and conservative accounting and the first sub-hypothesis is accepted. Estimated coefficient of independent variable of BD (Board of directors) size is positive and its p-value is higher than 5%, so it can be said that there is no significant relationship between BD size and conservative accounting then the second sub-hypothesis is rejected. Estimated coefficient of independent variable of BD composition is positive and its p-value is less than 5%, so it can be said that there is a positive and significant relationship between BD composition and conservative accounting then the third sub-hypothesis is accepted. Estimated coefficient of independent variable of shareholder directors is negative and its p-value is higher than 5%, so it can be said that there is no significant relationship between shareholder directors and conservative accounting then the forth sub-hypothesis is rejected.
10
Mohammad Kamal Hossain, Md. Shajul Islam, and Md Moslahur Reza. "Do Corporate Governance Mechanisms Truly Act as the Drivers of Shareholder Value in the Banking Sector in Bangladesh? Evidence from the Economic Profit Perspective." International Journal of Business and Society 23, no. 2 (August 8, 2022): 1005–24. http://dx.doi.org/10.33736/ijbs.4855.2022.
Full textAbstract:
This study examines whether corporate governance mechanisms (CGMs) truly act as the drivers of shareholder value (SV) in the banking sector in Bangladesh from the economic profit perspective. The study employs a random-effects model to test hypotheses in a sample of 29 banks listed on the Dhaka Stock Exchange for the period 2014–2018. Relying on the test results of CGMs on SV measured from the economic profit perspective, this study finds that only the independent audit committee acts as a driver of truly creating shareholder value. Contrary to expectations, other CGMs in the analysis (e.g. board size, independent non-executive directors, audit committee size, audit committee meetings, and institutional shareholding) are not found to create true shareholder value. The outcomes of the study are a matter of concern for the regulatory bodies of the Bangladeshi banking sector and institutions involved in constructing the code of corporate governance, as the existing CGMs are suboptimal in the sense that they do not truly act as value-driving mechanisms for shareholder value.
11
Maulana, Ilham, Bambang Haryadi, and Mohammad Arief. "The Corporate Governance Mechanism on Earnings Management and Firm Performance." AKRUAL: Jurnal Akuntansi 14, no. 1 (September 26, 2022): 1–16. http://dx.doi.org/10.26740/jaj.v14n1.p1-16.
Full textAbstract:
Corporate governance mechanism is a form of supervision of the company to run effectively and efficiently to improve firm performance and value. The supervision that corporate governance mechanism provide is to lesser the agency conflicts due the different interest between manager and owner such earnings management that is detrimental to shareholders. This study examines corporate governance as a supervisory mechanism that aims to improve firm performance, value and minimize earnings management. Then, we analyze the possibility that corporate governance mechanisms can improve firm’s performance and value by controlling earnings management. Using data of banking companies from 2018-2019 then tested using partial least squares with the WarpPLS application, we found evidence that corporate governance mechanisms positively influence the company's financial performance. Corporate governance mechanism has a negative effect on firm value. Corporate governance mechanisms have a negative effect on earnings management. Then earnings management does not provide a mediating effect in the relationship of corporate governance with the company's financial performance and firm value.
12
Füerst, Oren, and Sok-Hyon Kang. "Corporate governance, expected operating performance, and pricing." Corporate Ownership and Control 1, no. 2 (2003): 13–30. http://dx.doi.org/10.22495/cocv1i2p1.
Full textAbstract:
We examine whether ownership and governance characteristics are associated with the firm’s operating performance and stock price. We hypothesize that while ownership structure and governance mechanisms impact the firm’s operating performance, they can also impact stakeholders’ abilities to expropriate rents from other stakeholders. We use a two-step estimation approach to assess whether the benefit of a better governance system manifest itself as higher operating performance or a premium on share price. To mitigate potential problems from using conventional accounting performance measures, we use Ohlson’s (1995) expected residual income (ERI) valuation metric which incorporates the expected operating performance of the firm. Results suggest that (1) higher share ownership of the CEO, corporate insiders, and outside directors has a strong positive association with both firm performance (measured by the ERI metric) and market value; (2) large ownership of outside shareholders has a negative association with the firm’s operating performance; (3) presence of a controlling shareholder is negatively related to market value; (4) after controlling for ownership, there is no improvement in operating performance or share value from having greater representation of outside directors, or having a larger board; and (5) variables representing the CEO’s stature – the CEO’s tenure and the board chairmanship – have a negative association with operating performance or market value.
13
Happ, Christian, and Dirk Schiereck. "Seasoned equity offerings and corporate governance in Europe." Journal of European Real Estate Research 10, no. 2 (August 7, 2017): 170–94. http://dx.doi.org/10.1108/jerer-05-2016-0019.
Full textAbstract:
Purpose This paper aims to analyze the effects on shareholder value caused by the announcement of seasoned equity offerings (SEOs) by real estate firms from 12 European countries. Design/methodology/approach A 4-factor model event study is conducted to assess the impact of SEO announcements on firm value. Additionally, a cross-sectional regression is run to identify factors that aggravate or mitigate the documented announcement effects. Findings Significant wealth losses of −1 per cent are found on the announcement day of an SEO. However, firms with good corporate governance and a low probability of overinvesting experience less negative announcement effects. Research limitations/implications The present study considers equity financing. In this context, investors seem to thoroughly assess the implications of capital increases by looking at quality indicators. For firms with good corporate governance, management incentivizing mechanisms and a lower probability of overinvesting, shareholders’ trust in the management mitigates the bad signal that the announcement of an SEO usually conveys. Originality/value The finding of corporate governance as a value enhancing factor in the context of equity offerings, even during periods of financial turmoil, is reassuring to both managers and regulators.
14
Amartey, Larry Amartei, Mei Yu, and Osita Chukwu-lobelu. "Corporate governance in Ghana." Journal of Financial Regulation and Compliance 27, no. 2 (May 13, 2019): 126–40. http://dx.doi.org/10.1108/jfrc-12-2017-0111.
Full textAbstract:
Purpose This study aims to examine the mechanisms that were being used to enhance board accountability of Ghanaian listed banks, and how board accountability can be improved. Design/methodology/approach The 2011 and 2016 annual reports of listed banks on the Ghana Stock Exchange were examined, and a survey questionnaire was sent to board members of nine banks. Findings The results show that the directors of Ghanaian listed banks prioritise a shareholder approach to accountability, with a shift towards stakeholders. Audit committees, external audits and internal audits were the main mechanisms used by these banks to enhance board accountability. Some of these mechanisms were not used effectively by a number of these banks. Practical implications Board accountability can be improved by appointing very competent people to the board, the national adoption of a mandatory code of corporate governance, regular rotation of external auditors and requiring non-executive directors to stand for re-election more frequently. Our research identifies weaknesses of accountability mechanisms and offers timely recommendations for banks and regulators to build stronger corporate governance systems. Originality/value This study obtained valuable opinions of the boards of directors, provides insights on boards of Ghanaian listed banks and contributes to the literature of corporate governance and accountability in Africa.
15
Djoutsa Wamba, Leopold, Eric Braune, and Lubica Hikkerova. "Does shareholder-oriented corporate governance reduce firm risk? Evidence from listed European companies." Journal of Applied Accounting Research 19, no. 2 (May 14, 2018): 295–311. http://dx.doi.org/10.1108/jaar-02-2017-0033.
Full textAbstract:
Purpose The purpose of this paper is to explore the impact of the mechanisms of corporate governance on the volatility of companies’ financial profitability. Design/methodology/approach For the period 2002-2014, the authors evaluate the relations linking various indices involved in corporate governance with the systematic risk supported by these companies for a sample of 355 firms domiciled in Europe. To empirically test these relationships, the authors calculated a synthetic index of corporate governance quality (QGI) based on the 53 items of assessment of the companies’ governance proposed by the database ASSET4. Following the method used by Boncori et al. (2016), the authors first reduced the number of dimensions of corporate governance by performing a principal component analysis of the sample, which resulted in the following five components: management’s shareholder commitment, shareholder rights, characteristics of the board of directors, transparency of the financial information and independence of the audit. Findings The results of the tests indicate that the synthetic index of governance that the authors have built is only significant at the 10 percent threshold. The impact of this variable on the systematic risk of the company is of the order of one-tenth of a point. The decomposition of this index into five variables shows that management’s commitment to shareholders and the effectiveness of the board of directors in carrying out its supervisory tasks are likely to reduce, but again to a limited extent, the risk borne by the company. Research limitations/implications This observation guides the future work in introducing variables that reflect the social responsibilities of the companies in the sample in order to distinguish the effects of social responsibility from those of purely shareholder-oriented governance on systematic risk. Practical implications This paper demonstrates the interest of good governance on the risk of firms and identifies certain characteristics upon which to act. Originality/value Although the relations between corporate governance mechanisms and profitability expectations have been the subject of numerous studies, few authors have examined the influence of governorship on the volatility of this profitability, particularly in Europe. To the best of the authors’ knowledge, the rare work on this topic relates to only a limited number of countries.
16
Puni, Albert, and Alex Anlesinya. "Corporate governance mechanisms and firm performance in a developing country." International Journal of Law and Management 62, no. 2 (March 31, 2020): 147–69. http://dx.doi.org/10.1108/ijlma-03-2019-0076.
Full textAbstract:
Purpose The purpose of this study is to examine the influence of corporate governance mechanisms recommended by the Securities and Exchange Commission (SEC) of Ghana on firm performance as measured by accounting-based ratios (return on assets, return on equity and earning per share) as well as market-based measure (Tobin’s Q) among listed Ghanaian companies from 2006 to 2018. These mechanisms are: board composition (board size, inside directors and outside directors), board committees (audit, remuneration and nomination), chief executive officer (CEO) duality/separation, board meetings and shareholder concentration. Design/methodology/approach The study used panel regression analysis of data from 38 listed firms in Ghana from 2006 to 2018 to test how each corporate governance variable initiated by the SEC of Ghana contributed to firm performance. Data were extracted from the annual reports of listed companies. Findings The study found that the presence of both insiders and outsiders on the corporate board improved financial performance. Similarly, board size, frequency of board meetings and shareholder concentration/ownership structure generally had a positive impact on financial performance. However, the presence of board committees generally had a negative impact on financial performance while CEO duality had no impact on financial performance. Practical implications The study contributes to the understanding of how good corporate governance practices affect firm performance for both academics and particularly Ghanaian policymakers. Originality/value This study provided new findings to bridge the gaps in the general corporate governance literature relative to the lack of consensus on financial impacts of corporate governance mechanisms. The finding contributes to knowledge by providing new and original evidence that some current corporate governance mechanisms are not effective in minimizing the agency problem in a developing setting. Furthermore, the authors anticipate that the outcomes of this research, which so far is the most comprehensive study in the Ghanaian context in terms of the coverage of corporate governance mechanisms specified by the SEC of Ghana, can significantly shape corporate governance discourse, practices and policies in Ghana, particularly and in other developing countries generally to improve financial performance and corporate sustainability.
17
Nour, Abdulnaser Ibrahim, Abdel-Aziz Ahmad Sharabati, and Khitam Mahmoud Hammad. "Corporate Governance and Corporate Social Responsibility Disclosure." International Journal of Sustainable Entrepreneurship and Corporate Social Responsibility 5, no. 1 (January 2020): 20–41. http://dx.doi.org/10.4018/ijsecsr.2020010102.
Full textAbstract:
Developed countries are increasingly concerned about the relationship between corporate governance and corporate social responsibility disclosure while developing countries recently started to take care of this issue. Therefore, the main objective of the study is to examine the effect of the board mechanisms of corporate governance on the extent of social responsibility disclosure of Jordanian public industrial companies during the period (2010 to 2014). In this research, descriptive statistics are used to study variables, both correlation matrix and collinearity diagnostic are used to test whether multicollinearity problem exists. Finally, OLS regression analysis is used to test the hypotheses of the study. The results show that the extent of social responsibility disclosure is positively affected by board size and percentage of women on board, negatively affected by duality and board average age. Board meetings and board composition are insignificant to social responsibility disclosure. The study faces several limitations where the measurement of corporate social responsibility requires human judgment, which is subjective and ambiguous. Furthermore, the study sample was limited to industrial companies. Understanding the relationship between CG and CSR is very important because the CG mechanism is an obligation to protect and improve social, economic, and environment, as well as the welfare of society. CSR elements should be included within the companies' vision, mission, strategies and daily practices to maximize the shareholder value.
18
Asamoah, Emmanuel Selase, and Albert Puni. "Corporate governance and financial performance of listed companies: A case of an emerging market." Corporate Governance and Sustainability Review 5, no. 3 (2021): 8–17. http://dx.doi.org/10.22495/cgsrv5i3p1.
Full textAbstract:
Corporate financial performance (CFP) is a key benefit that comes with the adoption and implementation of a good corporate governance structure in organizations. The objective of this paper is to analyze the effect of the six (6) broad corporate governance structures (board composition, board committees, separation of CEO/chairman, size of board, number of board meetings held, and shareholder concentration) on CFP measured by ROA, ROE, EPS, and Tobin’s Q among Ghanaian companies. The target population for the study was the companies that were listed on the Ghana Stock Exchange (GSE) for the period 2015–2020 and purposive sampling methods were deployed in the sample selection. The study found that using ROA as a performance indicator, corporate governance variables affected CFP by 18.95% whilst it influenced ROE by 29.71%. Additionally, corporate governance mechanisms impacted EPS by 52.53% when it was used as a performance indicator and 18.01% when Tobin’s Q was the performance index. The paper concludes that companies that implement the corporate governance guidelines on best practices stand a better chance of enhancing CFP especially with performance targets that integrate shareholder value maximization.
19
Holmstrom, Bengt, and Steven N. Kaplan. "Corporate Governance and Merger Activity in the United States: Making Sense of the 1980s and 1990s." Journal of Economic Perspectives 15, no. 2 (May 1, 2001): 121–44. http://dx.doi.org/10.1257/jep.15.2.121.
Full textAbstract:
This paper describes and considers explanations for changes in corporate governance and merger activity in the United States since 1980. Corporate governance in the 1980s was dominated by intense merger activity distinguished by the prevalence of leveraged buyouts (LBOs) and hostility. After a brief decline in the early 1990s, substantial merger activity resumed in the second half of the decade, while LBOs and hostility did not. Instead, internal corporate governance mechanisms appear to have played a larger role in the 1990s. We conclude by considering whether these changes and the movement toward shareholder value are likely to be permanent.
20
Baporikar, Neeta. "Corporate Governance and Value Creation." International Journal of Asian Business and Information Management 7, no. 2 (April 2016): 51–61. http://dx.doi.org/10.4018/ijabim.2016040104.
Full textAbstract:
Corporate governance is a complex issue, the focal point of which is the exercise of power. The power has limits, however, imposed by both legislation and contracts. Also, even if the overarching power belongs to the shareholders, residual power cannot be exercised to the detriment of the rights of the other stakeholders. Because the governance system and resulting structures have a major influence on the decision-making processes within a company, financial analysts must understand the governance mechanisms. Moreover, in the business world today, corporate governance is a factor in competitiveness that is as important as the quality of a company's human resources, its know-how, and its innovation capacity. Through in-depth literature review and contextual analysis the aim of this paper is to under the corporate governance perspective and also to review for understanding the corporate governance and value creation experience from India.
21
Sablowski, Thomas, and Joachim Rupp. "Die neue Ökonomie des Shareholder Value." PROKLA. Zeitschrift für kritische Sozialwissenschaft 31, no. 122 (March 1, 2001): 47–78. http://dx.doi.org/10.32387/prokla.v31i122.752.
Full textAbstract:
In this paper we argue that the growing importance of the stock mark et i s one central element of t he s o called New Economy. W e analyse the economic and political reasons, the mechanisms and consequences of the increasing capital market orientation of enterprises. In the first section we want to show the fundamental difference between the maximisation of the stock price and of the profitability of the corporation. T he r easons o f the increasing c apital m ark et o rientation a re d ealt w ith in the second section. In the third section we are discussing the shareholder value concept. The institutional changes we can find in the German Corporate Governance system which are connected with the shareholder value debate are described in the fourth section. The last section sums up the consequences and the specific contradictions of the increasing capital market orientation like the contradiction between long-term and short-term maximisation of returns, the impending hollowing-out of firm competencies, and the proliferation of cash burning business models.
22
ElKelish, Walaa Wahid. "Corporate governance risk and the agency problem." Corporate Governance: The International Journal of Business in Society 18, no. 2 (April 3, 2018): 254–69. http://dx.doi.org/10.1108/cg-08-2017-0195.
Full textAbstract:
Purpose This study aims to investigate the relationship between corporate governance risk and agency costs across different countries. Design/methodology/approach Corporate governance risk indicators were obtained from the Institutional Shareholder Services Europe (S.A.) for 4,135 firms across 27 countries. Agency costs and other control variables were derived from companies’ annual financial reports using the DataStream database. Ordinary least squares multiple regression analysis model was used to test the study hypothesis. Findings Agency costs have a significant negative impact on corporate governance risk across countries. The extent of corporate governance mechanisms used, however, varies across geographic regions and industry types. The relationship between corporate governance risk and agency costs is more obvious in the non-financial than financial sector. These results were robust after several statistical checks. Practical implications The findings will help stakeholders, including corporate management, regulators and investors to improve corporate governance mechanisms and capital allocation decisions across countries. Originality/value Evidence is provided on the role of agency costs in corporate governance risk across geographic regions for financial and non-financial companies. The paper also overcomes common problems in corporate governance research such as construct validity, limited data and endogeneity.
23
Pham, Peter Kien, Jo-Ann Suchard, and Jason Zein. "Corporate governance and alternative performance measures: evidence from Australian firms." Australian Journal of Management 36, no. 3 (December 2011): 371–86. http://dx.doi.org/10.1177/0312896211413035.
Full textAbstract:
We examine the extent to which individual monitoring mechanisms enhance firm performance and shareholder value. We use a sample of Australian firms, from 1994 to 2003, to analyse the relationship between firm performance and corporate governance. This provides a long time series of governance data by international standards and allows us to study governance–performance dynamics over an extensive period. We use Stern Stewart & Co’s economic value added (EVA) as an alternative performance measure and provide a comparison to Tobin’s Q. However, similar to the international evidence, we do not find a significant relationship between either of the performance measures and corporate governance. Using various econometric techniques we show that our results are also robust to endogeneity biases that can arise in the governance–performance relation.
24
Rocca, Maurizio La, and Fabiola Montalto. "THE VALUE OF BLOCKHOLDERS SHAPED BY MODERATORS." Journal of Business Economics and Management 14, Supplement_1 (December 24, 2013): S313—S327. http://dx.doi.org/10.3846/16111699.2013.794750.
Full textAbstract:
This paper investigates the role of moderators in affecting the relationship between ownership and value. The results generally reveal a positive influence of blockholders on performance, that is significantly affected by moderating factors. The link becomes negative in listed firms, as well as in family ones, and vanishes in financial constrained ones. Moreover, in case of managerial opportunism, the role of blockholders increases the positive effect of ownership on performance. Conversely, new governance reforms, improving the investors’ protection, have resized the centrality of the majority shareholder. Overall, results can be used to make recommendations on how to improve corporate and country-specific governance mechanisms.
25
Jin, Justin, and Na Li. "The frequency of say-on-pay vote, shareholder value, and corporate governance." Corporate Ownership and Control 19, no. 2 (2022): 46–59. http://dx.doi.org/10.22495/cocv19i2art4.
Full textAbstract:
Using a sample of 1,079 public firms listed on the U.S. stock market that filed the results of their frequency votes in 2011, we examine the market reaction to shareholders’ decision on the frequency of the say-on-pay vote, and the relation between such decision and firms’ existing corporate governance structures. When firms release the results of their shareholders’ frequency vote in Form 8-K, we find that market reaction was significantly positive for firms with excess CEO equity pay, and for firms whose shareholders’ preference for the frequency is the same as that recommended by the board. This positive market reaction is more pronounced for firms where shareholders change the recommendations of the boards by demanding more frequent votes on executive compensation. Overall, our study on the frequency of votes provides new insights that are different from prior studies, which mostly focus on say-on-pay votes. We show that the market perceives the shareholders’ frequency vote as a value-increasing governance mechanism and a complement to the existing corporate governance
26
Brandão, Isac de Freitas, Alessandra Carvalho de Vasconcelos, Márcia Martins Mendes De Luca, and Vicente Lima Crisóstomo. "Composition of the board of directors and pay-performance sensitivity." Revista Contabilidade & Finanças 30, no. 79 (March 2019): 28–41. http://dx.doi.org/10.1590/1808-057x201806610.
Full textAbstract:
ABSTRACT This article investigates, in the Brazilian capital market, the effect of the composition of the board of directors on executive compensation sensitivity to market performance, known as pay-performance sensitivity (PPS). Due to potential agency conflicts between controlling and minority shareholders and between shareholders and managers, members of the board of directors of the executive board or those appointed by the controlling shareholder might have less independence, something which may compromise monitoring effectiveness and, consequently, reduce the PPS. The purpose is contributing to understand the agency conflicts that have taken place in the Brazilian capital market and to define the configuration of the monitoring and compensation mechanisms that minimize total agency costs, maximizing shareholders’ wealth. The research results have implications for understanding the agency relations and for corporate governance in the Brazilian capital market. It is concluded that the relation between the monitoring exercised by the board of directors and executive compensation is a condition for its effectiveness as a governance mechanism in the Brazilian capital market. Data within the period 2013-2015 from 92 companies that participate in the Brazil 100 Index (IBRX 100) of the São Paulo Stock, Mercantile & Futures Exchange (BM&FBOVESPA) were analyzed. In addition to tests of difference between mean values and correlation, estimates were processed through feasible generalized least squares modeling. The independence of the board of directors vis-à-vis the controlling shareholder and the executive board may work as a corporate governance mechanism supplementing executive compensation. The results of this study indicate that the proportion of executives and independent members in the board of directors reduces the PPS, a measurement for executive compensation effectiveness made operational by the contemporary relation between increased managers’ compensation and increased company’s market value.
27
Pourmansouri, Rezvan, Amir Mehdiabadi, Vahid Shahabi, Cristi Spulbar, and Ramona Birau. "An Investigation of the Link between Major Shareholders’ Behavior and Corporate Governance Performance before and after the COVID-19 Pandemic: A Case Study of the Companies Listed on the Iranian Stock Market." Journal of Risk and Financial Management 15, no. 5 (April 30, 2022): 208. http://dx.doi.org/10.3390/jrfm15050208.
Full textAbstract:
One of the basic functions of establishing corporate governance (CG) in companies is improving performance and increasing value for shareholders. Expanding the company’s value will ultimately increase the shareholders’ wealth. Therefore, it is natural for shareholders to seek to improve their performance and increase the company’s value. If CG mechanisms cannot perform this function in companies, they do not have the necessary efficiency and effectiveness and, therefore, cannot improve the efficiency of companies. This article investigatedthe connection between the power of major shareholders and the modality of CG of companies listed on the Iranian capital market before and after the COVID-19 pandemic. The statistical sample of the research included120 companies listed on the Tehran Stock Exchange for the selected period from 2011 to 2021. The results showed that the concentration of ownership is harmful to adopting corporate governance (GCG) practices. In particular, the high level of voter ownership concentration weakens the corporate governance system (CGS). The results of this study, which was conducted using panel analysis, revealed that the concentration of ownership impairsthe quality of CGS, and major shareholders cannot challenge the power of the main shareholder; it alsonegatively affected the quality of businessboards, both during and before the COVID-19 pandemic. The competitiveness and voting rights of the major shareholders negatively affectedthe quality of board composition before and after the COVID-19 pandemic. The concentration of voter ownership also negatively affected the quality of CGS, both during and before COVID-19, and the competitiveness and voting rights of major shareholders before COVID-19. This concentration positively affected the quality of CGS after the COVID-19 pandemic.
28
Tampakoudis, Ioannis, Michail Nerantzidis, Demetres Soubeniotis, and Apostolos Soutsas. "The effect of corporate governance mechanisms on European Mergers and Acquisitions." Corporate Governance: The International Journal of Business in Society 18, no. 5 (October 1, 2018): 965–86. http://dx.doi.org/10.1108/cg-05-2018-0166.
Full textAbstract:
Purpose The purpose of this study is twofold: First, to assess the economic impact of Mergers and Acquisitions (M&As) on European acquiring firms from the beginning of the sixth merger wave onward. And second, to investigate the effect of CG mechanisms such as board size, voting rights and anti-takeover provisions (ATPs) on acquirers’ gains, along with a set of control variables. Design/methodology/approach For the purpose of the study, the authors use a sample of 349 completed M&As across all business sectors between European firms from 01/01/2003 to 31/12/2017. Abnormal returns are estimated by applying an event study methodology, and the effects of CG mechanisms are assessed with univariate and multivariate cross-sectional regressions. Findings The authors present evidence that acquirers realize significant positive excess returns upon the announcement of M&As. The authors find past profitability to be a strong indicator of value creation, while most of the traditional firm-specific and deal variables fail to interpret the results. The authors’ analysis indicates that the examined CG measures have a significant effect on acquirer’s gains. More specifically, the authors find that boards in excess of eight directors are negatively related to announcement-period abnormal returns. In contrast, the wealth effects for acquiring firms are positively related to shareholders’ voting rights and/or to the number of ATPs. The estimated coefficients of all three CG mechanisms are statistically significant across alternative model specifications. Research limitations/implications A clear implication is that the existence of certain CG mechanisms leads to value-enhancing strategic decisions for European acquirers. In terms of policy direction, the authors’ findings assist practitioners and/or national and transnational institutions in perceiving the efficacy of certain CG practices. Practical implications This study indicates that Corporate Governance Statements (CGSs) fail to provide adequate information to investors to understand in-depth the CG mechanisms that companies apply. Thus, the authors recommend that CGSs should provide not only narrative information but also information that may generate value for shareholders and other stakeholders as well. Such information should be qualitative and/or quantitative in nature and be made available to market participants to support their decision-making. Originality/value To the authors knowledge, this is the first study that investigates the effect of CG on the economic impact of M&As for European acquirers, using three widely examined CG mechanisms, namely, the board size, the voting rights and the ATPs. The authors’ empirical findings form the basis for further examination of the linkage between M&As and CG, with the intention of establishing the appropriate CG framework that will ensure shareholder wealth creation. This line of research could produce new insights in the field, allowing investors and policymakers to appreciate the benefits of effective CG.
29
Rao, Ananth. "Empirical Analysis of Joint Impact of Enterprise Risk Management and Corporate Governance on Firm Value." International Review of Advances in Business, Management and Law 1, no. 1 (April 8, 2018): 34–50. http://dx.doi.org/10.30585/irabml.v1i1.66.
Full textAbstract:
This paper analyzes simultaneity and endogeneity of ERM and Corporate Governance. It assesses quantitative relationship between Corporate Governance, ERM and value of the firm. The research results provide quantitative justifications for the boards to make investments in ERM and Corporate Governance initiatives for improved shareholder wealth. 3SLS-IV system modelling was applied on 2004-11 data of Gulf Cooperation Council financial institutions. Our research confirms the simultaneity and endogeneity of Corporate Governance, ERM and Firm Value determinants. Firm value is jointly and positively impacted by ERM & Corporate Governance initiatives although the impact was less significant. Unexpectedly, ERM initiative was significantly and negatively impacted by determinants such as intangibility, and profitability. Firm size was the only determinant that showed significant and positive impact on firm value. Relative to UAE the corporate governance mechanism was active in Bahrain, Saudi Arabia, Kuwait and Oman firms. Further, the existence of audit committees in the GCC firm’s boards and ERM adoption significantly positively impacted the corporate governance by 3.42% and 1.7239% respectively.
Keywords: Corporate Governance, Enterprise Risk Management, Firm Value, Simultaneity, Endogeneity, Gulf Cooperation Council (GCC) economies.
JEL codes: C15, C21, C51, D57, F30, G21, G32, G34, K22, L21, M31, M41, N25, O16
30
Utama, Cynthia Afriani, Sidharta Utama, and Fitriany Amarullah. "Corporate governance and ownership structure: Indonesia evidence." Corporate Governance: The International Journal of Business in Society 17, no. 2 (April 3, 2017): 165–91. http://dx.doi.org/10.1108/cg-12-2015-0171.
Full textAbstract:
Purpose The purpose of this study is to investigate simultaneous relations between corporate governance (CG) practice and cash flow right, cash flow leverage (the divergence between control right and cash flow right of controlling shareholders). The two ownership measures reflect alignment and expropriation incentives of controlling shareholders. This study also examines the effect of multiple large shareholders (MLSs) on CG practice. Design/methodology/approach The study uses publicly listed companies (PLCs) excluding those from the Indonesian finance sector during 2011-2013 as the samples of the study. Two-stages least squares regression models were used to test the simultaneous relations between CG practice and ownership structure variables. The study develops a CG instrument to measure CG practice based on ASEAN CG Scorecard, that comprehensively covers OECD CG principles and that can be used for panel data. Findings CG practice has a positive influence on cash flow right and has a marginally negative impact on cash flow leverage, while cash flow right and cash flow leverage have a marginally negative impact on CG practice. Further, the existence of large MLS complements CG practice, but as the control right of the second largest shareholders becomes closer to the largest shareholder, the complement relation becomes less important. State- or foreign-controlled PLCs practice better CG than other PLCs. Research limitations/implications Studies on CG/ownership structure need to treat CG and ownership structure as endogenous variables in their research design. In addition, the level of rule of law in a country should be taken into account when examining the relation between CG and ownership structure. The interrelation among CG, ownership structure, capital structure and firm performance has been studied in the context of dispersed ownership structure and strong rule of law. Thus, future study needs to examine the interrelation among these four concepts in countries with high concentrated ownership and weak rule of law. Practical implications To minimize the risk of expropriation, investors in the capital market need to select shares of PLCs that practice CG suitable for the ownership structure of PLCs, have high ownership by the largest shareholder and have no divergence between control and ownership right, and or have MLSs. PLCs may need to choose the level of CG mechanism in the context of their ownership structure and consider the benefits and costs implementing them. Social implications The study supports the “one size does not fit all” perspective on CG and, thus, it supports the recently enacted financial service authority (FSA) rule requiring PLCs to follow the “comply or explain” rule on the CG code for PLCs. The FSA needs to enforce the compliance of PLCs with CG rules and encourage PLCs to implement CG in substance, not just in form. To strengthen the positive impact of good CG practice in attracting investments in capital market, the regulator needs to improve investor protection rules and ensure strong rule of law. Originality/value The study is the first to examine the simultaneous relation between CG practice and both cash flow right and cash flow leverage of the largest shareholder. It is also the first that investigates the impact of MLS on CG practice. It explores the complement and substitution relation between the two concepts in reducing agency costs. In term of research design, the study develops a CG instrument that is based on OECD CG principles, that can be used for panel data and that uses public information.
31
Rudenok, Olha. "CORPORATIONS' OWNERSHIP CONCENTRATION: THEORETICAL ASPECT." Scientific Notes of Ostroh Academy National University, "Economics" Series 1, no. 21(49) (June 24, 2021): 33–40. http://dx.doi.org/10.25264/2311-5149-2021-21(49)-33-40.
Full textAbstract:
Corporate governance and its mechanisms, including ownership structure, have a long history of research. Many scientific papers show that when the ownership concentration grows above a certain limit, it not only directly affects the performance of firms and their value but also indirectly affects the mechanism of corporate governance. In the case of the concentration of ownership, majority shareholders can gain significant control over the firm to obtain private benefits from minority shareholders. In such circumstances, special attention should be paid to the concentration of ownership and its relationship with the activities of the firm and its value. The article highlights the essence of the concept of "ownership concentration" from the standpoint of corporate governance and from the standpoint of the characteristic of the corporations' capital structure. The peculiarities of corporate governance in Ukraine and in the world are generalized with their division into internal and external mechanisms. The concentration of ownership as a tool of corporate governance is determined since the fact that there are shareholders with significant stakes that have the necessary incentives and resources to monitor and discipline management. It is noted that the ownership concentration can be considered as a tool to compensate for the shortcomings (ineffectiveness) of external mechanisms of corporate governance. As a quantitative indicator of capital structure, the ownership concentration is measured by the number of shareholders and the percentage of their individual or collective ownership of shares, considering exercising control influence on the joint-stock company. The threshold of concentrated ownership is indicated, based on Ukrainian legislation and existing approaches.
32
Bellalah, Mondher. "On investment performance, value creation, management and corporate governance: The French case." Corporate Ownership and Control 1, no. 4 (2004): 72–80. http://dx.doi.org/10.22495/cocv1i4p6.
Full textAbstract:
This paper studies corporate governance, investment, value creation and their effects on corporate performance in some European countries and in particular in France. It accounts for specific aspects of investment performance, governance, management and entrepreneurship. Corporate governance systems can be identified by the degree of ownership and control and the identity of controlling shareholders. In outsider systems characterized by wide dispersed ownership as in the U.S and UK, the main specificity is the conflict of interest between strong managers and widely-dispersed weak shareholders. In insider systems characterized by concentrated ownership or control as in Germany and Japan, the main specificity is the conflict of interest between controlling shareholders (or block holders) and weak minority shareholders. There are several models of corporate governance since each country has developed a variety of mechanisms to overcome agency problems arising from the separation of ownership and control. Some results are reported using a data base conceived by IPAG students.
33
Shah, Idrees Ali, Syed Zulfiqar Ali Shah, Muhammad Nouman, Farman Ullah Khan, Daniel Badulescu, and Laura-Mariana Cismas. "Corporate Governance and Cash Holding: New Insights from Concentrated and Competitive Industries." Sustainability 13, no. 9 (April 25, 2021): 4816. http://dx.doi.org/10.3390/su13094816.
Full textAbstract:
The present study empirically investigates the effect of corporate governance on the value of cash holding, usage of excess cash, and firm performance in concentrated and competitive industries in the context of less developed countries. The empirical analysis was conducted in the panel data setting using Pakistan as a case study. Our findings suggest a strong relationship between the value of cash holding and corporate governance, and the complementary effect of product market competition for corporate governance. This suggests that the external market discipline is also needed, in addition to good governance, to resolve agency problems in less developed countries. This is because less developed countries are usually characterized by lower competition, poor mechanisms for shareholder protection, and weak legal systems. Consequently, agency problems are greater in less developed countries compared to developed countries. Our findings also indicate that firms with good governance dissipate less excess cash on internal investment, dividends and diversification in competitive industries. Moreover, the significant positive relationship between the lagged excess cash and corporate governance dummy interaction with the dividend supports the dividend outcome model, particularly in the concentrated industries. Finally, our results suggest that the efficient utilization of excess cash, induced by good governance, leads to better corporate performance in less developed countries.
34
Dogru, Tarik. "Corporate Investment and Hotel Firm Value: Does Corporate Governance Matter in Financially Constrained Firms?" Cornell Hospitality Quarterly 59, no. 4 (October 15, 2018): 339–51. http://dx.doi.org/10.1177/1938965517748772.
Full textAbstract:
Corporate investments are expected to create value for firms. Although some studies report evidence supporting such expectations, many studies document contradictory findings. However, it is not clear why corporate investments create value in some firms but reduce value in others. The purpose of this study is to examine the extent to which the quality of corporate governance and the degrees of financial constraints affect the relationship between corporate investments and hotel firm value in a unified model where both weak corporate governance and financial constraint problems are concurrently observed. Shareholders of poorly governed firms place a lower value on corporate investments compared with those of well-governed firms, whereas shareholders of financially constrained firms perceive corporate investments to be of greater value compared with those of unconstrained firms. The results further showed that CEOs of financially constrained firms make value-increasing investments despite poor corporate governance mechanisms. Theoretical and practical implications are discussed within the realm of corporate finance theories.
35
García-Ramos, Rebeca, and Myriam García Olalla. "Insiders ownership and firm value in southern Europe." Corporate Ownership and Control 9, no. 2 (2012): 498–510. http://dx.doi.org/10.22495/cocv9i2c5art4.
Full textAbstract:
The effectiveness of the insider ownership as an internal governance mechanism is addressed in the Southern European context using a sample of publicly traded firms during the 2001-2007 periods. A cross country and panel data design is used, taking into account the endogeneity problem arising in studies of corporate governance. The results provide new evidence of the influence of the insider ownership on firm value by testing a non-linear relationship. Our study supports both the convergence of interests and the entrenchment effect. It also shows whether there are significant differences in the estimated relationship between family and non-family firms. We find that when the large shareholder has not a family nature, firm value initially declines with insider ownership, then increases, and, finally, increases again. However, when the large shareholder has a family nature, firm value initially increases with insider ownership and then decreases
36
Sacristán-Navarro, María, and Laura Cabeza-García. "When family firm corporate governance fails: the case of El Corte Inglés." Journal of Family Business Management 10, no. 2 (November 4, 2019): 97–115. http://dx.doi.org/10.1108/jfbm-02-2019-0010.
Full textAbstract:
Purpose The purpose of this paper is to describe internal corporate governance mechanisms in family firms as well as conflicts that may arise among shareholders and family members in the absence of specific corporate governance mechanisms. Design/methodology/approach After presenting theoretical concepts, the authors study the case of Spanish family firm El Corte Inglés to understand some of the corporate governance difficulties the company has experienced over the past few years. Findings This case illustrates how corporate governance problems can arise because the right mechanisms have not been used, leading to conflicts among family members, valuation problems and power struggles. Practical implications There is a need for family firms to employ suitable corporate governance mechanisms as governance complexity increases. Originality/value This study aims to contribute to the understanding of corporate governance problems among family members and their possible solutions.
37
Mili, Mehdi, and Sami Abid. "Do corporate bond recovery rates monitored by corporate governance mechanisms?" Managerial Finance 42, no. 8 (August 8, 2016): 830–48. http://dx.doi.org/10.1108/mf-06-2015-0180.
Full textAbstract:
Purpose – The purpose of this paper is to examine the relationship between corporate governance (CG) and firms’ bond recovery rates (RRs). The authors hypothesize that governance features impact RRs by controlling agency costs that result from conflicts between bondholders and shareholders. The authors also test the relationship between CG and RRs during the last crisis. Design/methodology/approach – The authors use a generalized method of moments regression model to test the relationship between CG and firms’ bond RRs. The authors employ a direct measure of recoveries rates from Moody’s ultimate recovery database covering the period from 2003 to 2012. Both firm-level CG and country-level variables are used to examine the determinants of corporate bonds RRs. Findings – The results support a significant impact of CG mechanisms on bond RRs mainly during crisis period. The authors find that firms operating with CEO-Duality decrease their bond RRs during financial crisis. This implies wealth transfers from bondholders to shareholders and provides one explanation why some firms operate with weak governance. Originality/value – This paper provides the first direct evidence that corporate bond RRs are directly related to CG mechanisms. The authors combine firm-level CG and country-level variables to examine the determinants of corporate bonds RRs. Earlier studies focussed on financial firm-level data and macro-economic variables. The authors also test the impact of board composition and ownership structure on bond recoveries.
38
Nguyen, Thi Tuyet Mai, Elaine Evans, and Meiting Lu. "Independent directors, ownership concentration and firm performance in listed companies." Pacific Accounting Review 29, no. 2 (April 3, 2017): 204–26. http://dx.doi.org/10.1108/par-07-2016-0070.
Full textAbstract:
Purpose The purpose of this paper is to investigate the impact of independent directors on firm performance in Vietnam and identify how different types of ownership structure and the presence of controlling shareholders influence the relationship. Design/methodology/approach For a sample of 217 non-financial Vietnam-listed companies during the period from 2010 to 2014, this study uses the ordinary least squares regressions to estimate the relationship between independent directors and firm performance. Two econometric techniques – the fixed effects estimation and the difference in difference estimation – are used to control for endogeneity. The results are also robust to the lag variable of independent directors. Findings The results reveal that independent directors have an overall negative effect on firm operating performance. This finding may be because of information asymmetry, expertise disadvantage and the dominance of ownership concentration that prevent independent directors from fulfilling their monitoring function in governance. The negative relationship between independent directors and firm performance is stronger in firms where the State is a controlling shareholder. Research limitations/implications Findings suggest that changes relating to independent directors, as a response to the new corporate governance code in 2012, do not have a positive effect on the relationship between corporate governance and firm performance. Further reform is required to improve internal control mechanisms and corporate governance systems in Vietnam. Originality/value This is the first study to provide a robust evidence on the relationship between independent directors and firm performance in Vietnam as well as to explore the impact of the type of controlling shareholders on the relationship.
39
Francis, Bill, Iftekhar Hasan, and Qiang Wu. "The Benefits of Conservative Accounting to Shareholders: Evidence from the Financial Crisis." Accounting Horizons 27, no. 2 (February 1, 2013): 319–46. http://dx.doi.org/10.2308/acch-50431.
Full textAbstract:
SYNOPSIS Using the recent financial crisis as a natural quasi-experiment we test whether, and to what extent, conservative accounting affects shareholder value. We find that there is a significantly positive and economically meaningful relation between conservatism and firm stock performance during the current crisis. The result holds for alternative measures of conservatism and is validated in a series of robustness checks. We further find that the relation between conservatism and firm value is more pronounced for firms with weaker corporate governance or higher information asymmetry. Overall, our paper complements LaFond and Watts (2008) by providing empirical evidence to their argument that conservatism is an efficient governance mechanism to mitigate information risk and control for agency problems, and that shareholders benefit from it. JEL Classifications: M41; M48; G01.
40
Agyemang, Otuo Serebour, and Monia Castellini. "Corporate governance in an emergent economy: a case of Ghana." Corporate Governance 15, no. 1 (February 2, 2015): 52–84. http://dx.doi.org/10.1108/cg-04-2013-0051.
Full textAbstract:
Purpose – The purpose of this study is to examine corporate governance practices in an emerging economy. It focusses on how ownership control and board control systems operate in corporate organisations in an emergent economy, assuming that these systems are essential for enhancing good corporate governance practices in emerging countries. Design/methodology/approach – The paper builds on descriptive multiple-case study with multiple units of analysis to divulge how ownership control and board control systems function to ensuring effective corporate governance in publicly listed corporate organisations in Ghana. A criterion-based sampling technique is used to select the companies. Thereafter, three techniques of data collection are used to gather data from the companies: archival records, semi-structured interviews and observation. Findings – By linking the gathered data to the paper’s theoretical propositions, the study highlights that all the companies are characterised by the presence of large shareholders, and, in consequence, they tend to exert extensive control over the activities of the companies through their involvement in the decision-making processes. However, whilst the presence of large shareholders has the tendency to solve the agency problem, it poses challenges in regards to minority shareholders’ interests in these corporate organisations. The study also reveals that boards of directors tend to exercise control over corporate organisations when majority shareholders stop interfering in their dealings. This implies that when major shareholders fully partake in corporate decision-making processes of companies, boards of directors seem to be sheer advisory bodies to management. Research limitations/implications – This is a paper to shed light on corporate governance practices in four large publicly listed corporate organisations on the Ghana Stock Exchange, so the observable facts do not apply to other emergent economies. In addition, the sample does not represent all corporate organisations in Ghana; thus, the empirical observations cannot be generalised to other organisations that have not been included in this study. However, the empirical results can be applied to other similar corporations in Ghana and other emergent economies in an analytical sense. With the application of inductive reasoning, the results can be applied to provide important appreciation in an effort to understand the structure of corporate governance practices in organisations in developing countries. Practical implications – A comparative analysis of the empirical observations from this study and the recommended guidelines of corporate governance of Ghana has been carried out, and aspects in which organisations need to reform and improve to fully comply with the guidelines are highlighted: director independence, director evaluation, introduction of new directors and board education. This could possibly be the foundation upon which corporate governance structures in these organisations can be restructured and further enhanced. Originality/value – The majority of the studies of corporate governance in emergent economies have used quantitative techniques to examine the relationship between corporate governance mechanisms and firm performance. However, this study takes a different approach to examine corporate governance practice in an emergent economy by using a comprehensive and defensible qualitative analysis to examine relations between ownership structure and shareholder control, and board of directors and board control. In addition, it highlights how ownership and board control systems interact in corporate organisations in emergent economies.
41
Zulkafli, Abdul Hadi, Fazilah Abdul Samad, and Izani Ibrahim. "Ownership monitoring mechanism and corporate performance: evidence from banking firms in Asian emerging markets." Corporate Ownership and Control 5, no. 3 (2008): 349–57. http://dx.doi.org/10.22495/cocv5i3c3p3.
Full textAbstract:
Corporate governance is regarded as a major issue during the post-financial crisis period in Asia. These countries have implemented corporate governance reforms to enhance the protection of their shareholders and stakeholders interests. Such reforms may affect the conduct of business of all corporations in the region as it allows for greater monitoring especially by the shareholders. Unlike earlier studies which focused on non-financial firms, this study analyzes the corporate governance involving ownership monitoring mechanism of listed banking firms in nine Asian emerging markets which are Malaysia, Thailand, Philippines, Indonesia, Korea, Singapore, Hong Kong, Taiwan and India. It is found that ownership monitoring mechanisms of the banking firms in Asian emerging markets are negatively related with firm value measured by Tobin’s Q
42
Pagano, Marco, and Giovanni Immordino. "Corporate Fraud, Governance, and Auditing." Review of Corporate Finance Studies 1, no. 1 (June 21, 2012): 109–33. http://dx.doi.org/10.1093/rcfs/cfs001.
Full textAbstract:
We analyze corporate fraud in a setting in which managers have superior information but are biased against liquidation because of their private benefits from empire building. This may induce them to misreport information and even bribe auditors when liquidation would be value-increasing. To curb fraud, shareholders optimally design corporate governance by jointly choosing audit quality and managerial compensation. We analyze how country-level rules affect these firm-level choices. Our analysis underscores that different country-level governance provisions have different effects on firm-level governance: Some act as substitutes of internal governance mechanisms, whereas others enhance their effectiveness and therefore complement them. (JEL G28, K22, M42)
43
Bouaziz, Souha Siala, Ines Ben Amar Fakhfakh, and Anis Jarboui. "Shareholder activism, earnings management and Market performance consequences: French case." International Journal of Law and Management 62, no. 5 (June 15, 2020): 395–415. http://dx.doi.org/10.1108/ijlma-03-2018-0050.
Full textAbstract:
Purpose The purpose of this study is to investigate the impact of the relationship between shareholder activism and earnings management on the market performance of French companies. Design/methodology/approach This study used 385 firm-year observations drawn from a sample of French companies belonging to the SBF 120 index from 2008 to 2012. Data was collected from annual reports of sample companies. To measure earnings management, this study used the model of Raman and Shahrur (2008). The relationship between shareholder activism, earnings management and market performance using the panel data regression model was empirically examined. Findings The results prove that shareholder activism, as indicated by shareholder proposals, has no impact on market performance. However, the existence of shareholder activism affects the market performance positively. In fact, a minimum of proposals proves that shareholder activism plays an appropriate and effective role in creating value. Thus, several activists would resort to “a private activism” which could be the best and the least expensive form. This form of activism is called “behind the scenes.” Findings also show that earnings management has a negative impact on market performance. As a matter of fact, these findings allow to conclude that the firm performance decreases whenever managers undertake to earnings management. Also, earnings management behavior is mainly opportunistic. Finally, the relationship between shareholder activism and earnings management has no impact on market performance. This result reveals that shareholder activism proves to be an ineffective mechanism that does not alter the accounting choices, particularly in relation to earnings management. This result shows the inability of active shareholders to define and implement strategies across their proposals, namely, “the lack of monitoring competence.” Research limitations/implications It is important in future research to evaluate the impact of behind the scenes interventions on corporate governance. Also, this paper gives a larger dimension to the effect of shareholder activism on the market performance in the specific context of earnings management, thus justifying the need to expand this study using other methodologies to deepen and better understand this relationship in this context. Practical implications The paper's evidence contributes to an understanding of corporate governance. The finding of this study will help in monitoring and controlling fraudulent earnings management practices that effect on market performance. Further, this study is important to investors, academics and policymakers, as it demonstrates that governance reforms that encourage firms to adopt better governance practices that reduce the likelihood of earnings management. Originality/value To the best of the author’s knowledge, this paper pioneers in focusing on the impact of the shareholder activism and earnings management on the market performance because previous studies put more emphasis on pair-wise relations (Shareholder activism-earnings management, earnings management-market performance and shareholder activism-market performance). This study provides empirical evidence on the effectiveness of the relationship between shareholder activism and earnings management on market performance.
44
Millson, R., and M. Ward. "Corporate governance criteria as applied in private equity investments." South African Journal of Business Management 36, no. 1 (March 30, 2005): 73–85. http://dx.doi.org/10.4102/sajbm.v36i1.622.
Full textAbstract:
Ineffective governance has often formed a backdrop to corporate failure with the resultant negative impact on stakeholders. In the field of private equity, investors have consistently received financial returns that outperform those of listed equities. This research investigates the relationship that private equity principals seek with their agents.The “agent-principal” relationship in private equity investments was investigated through a literature review and a survey of experienced private equity practitioners identified the key characteristics associated with this relationship. A conjoint analytical technique was used to measure the relative importance of the various attributes and the degree of preference or utility value for these attributes amongst a sample of 27 experts.The field research established that private equity investments are characterised by, inter alia, proactive agent-principal relationships; a relatively high level of shareholder activism; insistence on transparency; non-executive influence; and active performance management. While the implementation of these lessons may be a subject for future research, the current research has identified and prioritised corporate governance mechanisms that may be more generally applied.
45
Ebimobowei, Appah. "Corporate Governance Characteristics and Firm Value of Deposit Money Banks in Nigeria." British Journal of Management and Marketing Studies 5, no. 2 (September 11, 2022): 109–29. http://dx.doi.org/10.52589/bjmms-rbdlyevj.
Full textAbstract:
The degree of corporate and market procedures, lack transparency, distortions and poor corporate practices which results in corporate failures and abysmal corporate financial performance negatively influence corporate objectives. Hence, this study investigated the effects of corporate governance mechanisms on the value of deposit money banks in Nigeria from 2010 to 2020. The specific objectives include investigating the relationship between board size and Tobin q; evaluating the relationship between board independence and Tobin q; determining the relationship between board ownership and Tobin q; investigating the effect of gender diversity on Tobin q and evaluating the relationship between board meetings and Tobin q. The study population consisted of all deposit money banks and the Taro Yamene method of sample size determination was applied. The secondary data for the study was from the published financial statements of sampled banks for the period after the validity and reliability test of data. The data obtained were tested using univariate, bivariate and multivariate analysis. The results from the multiple regression results disclosed that board independence, the board size, ownership structure, gender diversity and board meetings positively and significantly influence the value of deposit money banks in Nigeria. The study concluded that corporate governance attributes positively and significantly affect the value of deposit money banks in Nigeria. The study made several recommendations amongst others that board sizes should be enhanced as this allows for the appropriate combination of directors. A large board increases the chance of directors having appropriate knowledge, skill and networks. The knowledge, skill and networks of directors may increase the financial performance of an organisation. Also, deposit money banks in Nigeria should have non-executive directors who act as professional advisers to ensure that competition among insiders encourages measures consistent with the maximisation of shareholder value. Hence, the implication of this study provides that the implementation of corporate governance characteristics enhances the value of firms in deposit money banks in Nigeria.
46
Mahyudin, Wan A'tirah, and Romzie Rosman. "VALUE-BASED INTERMEDIATION AND REALISATION OF MAQASID AL-SHARIAH: ISSUES AND CHALLENGES FOR ISLAMIC BANKS IN MALAYSIA." Advanced International Journal of Banking, Accounting and Finance 5, no. 2 (December 1, 2020): 34–44. http://dx.doi.org/10.35631/aijbaf.25003.
Full textAbstract:
The expectation of stakeholders towards Islamic banks has changed and goes beyond avoiding riba and compliance with Shariah but to become value-based intermediaries and fulfil the objective of Shariah Many studies argue that the goals of Islamic banking should not be restricted to maximizing shareholder wealth but should also entail raising the standard of living and welfare of the community. This paper aims to discuss the issues, trends, and challenges for Islamic banking in Malaysia towards satisfying various stakeholders’ needs through the implementation of value-based intermediation (VBI). VBI has been firstly introduced by Bank Negara Malaysia in 2017. In VBI, maqasid al-shariah is established as the fundamental framework in deciding the underlying values, moral compass, and goals in Islamic finance. Thus, realisation of maqasid al-shariah has created its own challenges in VBI implementation. Some earlier studies have discussed issues related to the principles and approaches related to VBI but neglecting other important mechanisms to drive its successful implementation. This review paper highlighted that corporate governance and performance measures are essential elements in VBI implementation. Future studies are encouraged to further explore the possible indicators that can fairly assess the efforts of Islamic banks in satisfying stakeholder needs in line with maqasid al-shariah. Further studies in corporate governance also deemed important to establish the relationship between the key corporate governance players and stakeholder management in Islamic banks.
47
Sumayyah, Sumayyah, and David Sulistiyantoro. "Corporate Governance dan Kesulitan Keuangan: Perspektif di Indonesia." Wahana: Jurnal Ekonomi, Manajemen dan Akuntansi 25, no. 2 (August 31, 2022): 189–200. http://dx.doi.org/10.35591/wahana.v25i2.397.
Full textAbstract:
The aims of this study is to get empirical evidence regarding corporate governance on the financial distress of firms listed in Indonesia Stock Exchange (IDX). The sample used was 1527 public firms listed in the Indonesia Stock Exchange from 2018 until 2020. The data analysis technique used is multiple linear regression analysis using eviews statistic. The results show that three proxies of corporate governance have a positive effect and the other three have a negative effect on the financial distress. Three proxies that have a positive effect on financial distress is family ownership, institutional ownership and board independence. Three proxies that have a negative effect on financial distress is foreign ownership, public ownership and board size. This srtudy is expected to describe the mechanism of corporate governance, especially companies experiencing financial distress in the midst of the Covid-19 pandemic and economic instability in Indonesia so as to increase shareholder value.
48
Grandori, Anna, and Giuseppe Soda. "Governance and organisation design: A negotiation and network analytic approach." Corporate Ownership and Control 6, no. 3 (2009): 489–503. http://dx.doi.org/10.22495/cocv6i3c4p8.
Full textAbstract:
This paper proposes a negotiation analytic approach to the design of corporate governance mechanisms. The main research questions addressed in the paper are: Which packages of governance mechanisms maximize the utility of firm representatives – CEO – and human resource providers? On which matters do interests converge and on which do they diverge? Which packages are Paretorankable and which are not? Where are there areas of preferences balancing and effective negotiation? The answers to those questions structure the “governance game”, indicating what are the interesting and sensible values for each mechanism, and what are the most interesting (value adding) combinations among policies on each mechanism. The approach is applied to a database of preferences over a wide array of governance and organisational mechanisms, expressed by two samples of relevant actors (CEOs and high potential managers working in 315 firms – domestic or subsidiaries – located in Italy) and contributes both in method and in the substantive identification of solutions. Results indicate, that the governance game is less adversarial than suggested by ‘shareholder views’, but also less generically cooperative than suggested by ‘stakeholder views’; and develops policy implications by identifying on which matters preferences converge or diverge, among themselves and with respect to the solutions applied in practice. The framework and the findings offer new propositions about the design of CG structures, different from those based on the extant conventional approaches to CG.
49
Wahasusmiah, Rolia, and Ferlinda Ayu Bella Arshinta. "Pengaruh Ukuran Perusahaan, Investment Opportunity Set, dan Corporate Governance terhadap Nilai Perusahaan dengan Kinerja Keuangan Sebagai Variabel Intervening pada Perusahaan LQ45." MBIA 21, no. 1 (April 30, 2022): 1–17. http://dx.doi.org/10.33557/mbia.v21i1.1681.
Full textAbstract:
The value of the company is reflected in the share price. The higher the value of the company indicates the prosperity of its shareholders. This study aims to analyze the firm size, Investment Opportunity Set, and corporate governance mechanisms on firm value with financial performance as an intervening variable. The population of this research is the LQ45 company. The selected sample is 15 companies that use a purposive sampling method based on the 2015-2019 annual financial statements. Methods The analysis uses a qualitative descriptive method. Hypothesis analysis in this study uses Multiple Linear Regression. This study indicates that the Investment Opportunity Set variable and the independent commissioner variable, part of the corporate governance mechanism, affect firm value. Firm size and corporate governance mechanisms consisting of audit committees, institutional ownership, and managerial ownership do not affect firm value. Financial performance variables cannot influence the relationship between the variables Investment Opportunity Set, institutional ownership and managerial ownership with firm value. Financial performance variables can influence the relationship between firm size variables, corporate governance mechanisms consisting of audit committees and independent commissioners with firm value.
Keywords: Firm Size, Investment Opportunity Set, Firm Value, Financial Performance.
Abstrak
Nilai perusahaan dicerminkan dengan harga saham, semakin tinggi nilai perusahaan menunjukkan kemakmuran shareholdernya. Penelitian ini bertujuan untuk menganalisis pengaruh ukuran perusahaan, Investment Opportunity Set, dan mekanisme corporate governance terhadap nilai perusahaan dengan kinerja keuangan sebagai variabel intervening. Populasi penelitin ini adalah perusahaan LQ45 dengan sampel Sampel terpilih sebanyak 15 perusahaan dengan teknik metode purposive sampling. Data berdasarkan publikasi laporan keuangan tahunan periode 2015-2019. Metode Analisis menggunakan metode deskriptif kualitatif. Analisis hipotesis dalam penelitian ini menggunakan Regresi Linier Berganda. Hasil penelitian ini menunjukkan bahwa variabel Investment Opportunity Set dan variabel komisaris independen yang merupakan bagian dari mekanisme corporate governance berpengaruh terhadap nilai perusahaan. Variabel ukuran perusahaan, dan mekanisme corporate governance yang terdiri dari komite audit, kepemilikan institusional, dan kepemilikan manajerial tidak berpengaruh terhadap nilai perusahaan. Variabel kinerja keuangan tidak mampu mempengaruhi hubungan antara variabel Investment Opportunity Set, kepemilikan institusional dan kepemilikan manajerial dengan nilai perusahaan. Variabel kinerja keuangan mampu mempengaruhi hubungan antara variabel ukuran perusahaan, mekanisme corporate governance yang terdiri dari komite audit dan komisaris independen dengan nilai perusahaan.
Kata kunci: Ukuran Perusahaan, Investment Opportunity Set, Nilai perusahaan, Kinerja Keuangan.
50
Yan, Caiyu, Hongqu He, Juan Li, Shuang Cheng, and Yanjun Zhang. "The underlying mechanism of corporate governance in China." Chinese Management Studies 13, no. 2 (June 3, 2019): 447–67. http://dx.doi.org/10.1108/cms-10-2016-0202.
Full textAbstract:
Purpose This paper aims to propose a strategy to analyze management governance in China. Design/methodology/approach This paper incorporates data on 989 Chinese listed firms over 2006 to 2016. A fixed effects model with panel data and an F-test are applied to exploit the relationship between management ownership and firm performance. A threshold model is introduced to explore the impacts of other governance mechanisms on management governance. Findings This paper finds an inverted U-shaped relationship between management ownership and firm performance. Furthermore, the threshold model demonstrates that large shareholders strengthen the positive effects of management governance and attenuate its negative effects; board size strengthens the positive effects of management governance but cannot attenuate its negative effects; and independent directors attenuate the negative effects of management governance. Practical implications This paper indicates that increasing management ownership could motivate managers to ameliorate the agent’s moral hazard problem which link the firm value premium when management ownership is less than 20.286 per cent. However, equity incentives are very rare in China. Thus, the authors expect that equity incentives will be a common phenomenon in Chinese listed firms. Originality/value This paper contributes to corporate governance literature by shedding some light on management ownership to explore the effects of management ownership. Specifically, this paper explores the effects of management ownership on firm performance and the impacts of other governance mechanisms on management governance to shape the management governance in China.